Resolutions for 2008

As we look back at 2007 it was a rough year for terrestrial radio in nearly every direction. From the sales picture, to the ratings/PPM/sample problems, on to new media competition, the woes of the record industry, royalty increases, sinking station values, the failure of HD Radio, lots of stations for sale living in limbo, and the lack of investment in the product in many places paints a pretty bleak picture.


Looking ahead to 2008 we have a lot on our plate. Hopefully we can set a few goals and priorities that we can all work on.


The first is making our products exciting again. That goes back to the basics of ENTERTAINING THE AUDIENCE. We are not going to do much entertaining with another list 0f 400 songs to spin and a big voiced announcer hyping it up between every song over and over till we pound it into their heads. We need to get close to the community and the target audience in the streets and in their computers.


We also have to work as an industry to get a ratings system that at least has some accuracy in the way the data is collected and with an representative sample. It's obvious that Arbitron's Diary system and land line based sample is falling way behind in credibility.


The first area is one we can start on in every market on any station. Yes, it takes a big effort and some budget to improve our efforts to be more entertaining, but it's one that we can all accomplish in any station in any market. If we can start keeping our focus on this core task I bet the list will look a lot better at the end of 2008.


Happy New Year - after we celebrate tonight let's get to work - there's a lot to accomplish, but it all starts with the basic core mission to entertain the audience.

PIC&N??? Plus Cell Phone Only Numbers

A couple of News highlights from this week:

Re-Regulation: The FCC is proposing new regulations on broadcasters that would force more localism, round the clock staffing, a return to citizen advisory boards and more coverage of news/politics. Some of the trades are claiming that the de-regulation pendulum is swinging back to more regulation. We've been in this de-regulation mode for over 20 years now in radio and many have forgotten the old days of the FCC.

They used to have a policy at the FCC where broadcasters had to operate in the Public Interest Convenience and Necessity - PIC&N. It looks like we are heading towards a return to those standards. In reality it's a good move for broadcasters. We need to get back in the business of being local champions if we are going to navigate through the new media and multi-platform fog. I suspect we'll see a lot of industry wide moves to push back on this change, but perhaps we should embrace it instead. It sort of reminds me of the U.S. auto industry fighting MPG standards only to watch imports move in and win a lot of market share with higher MPG cars. We are seeing industry after industry embracing 'green' and working harder on community image.

In programming we'd better start preparing to serve our communities better, even if the FCC doesn't push forward. But, in an election year and with lots of congress behind the movement for their own election sake we'd better start preparing now.

Cell Phones: We also got some other news from the govt. This time from the Center for Disease Control with a new study on cell phone only individuals. Yes, the CDC did the study because they collect data and just like our ratings systems they are struggling with polling the cell phone only individuals. You can read the USA Today report on the study here. The cliff notes version:

• Cell Only Households - 14%
• Cell and Land Lines - 59%
• Land Line Only - 24%
• 18-30s Cell Only - 30% and growing every day.

These numbers were compiled in the first 6 months of 07 so the cell only numbers will only be bigger when we get another report in 6 months.

Also in the news Arbitron has announced that they will FINALLY be trying to develop a plan to get to the cell phone only households. They are going to try and use an 'address based' sample and match up the addresses with the phone data then try and use the mail to reach out to the cell only folks and get permission to call them on their cell. The grand experiment starts in 08 and may be used in some markets in 09. By then we could see over 40% of the 18-30s being excluded from the sample and maybe 23% or more from the 12 plus population.

All of this doesn't take into account the people who don't pay attention to their land lines at all. They have one out of habit, but they have really converted to the cell phone for most of their communication. The land line is hooked up to an answering machine and call ID and unless they know who you are - it's off to voice mail land. We are not moving fast enough here - relying on the snail mail to help is going to be a slow process. We could pick up the pace if we could work on texting, emailing, and even reaching out more in the web world to gather more sample.

Christmas List For Programmers

It's that time of the year when we make our list and check it twice - hopefully we've been nice and Santa will deliver. What's on the list for radio programmers? Here's a few suggestions:

1. Better Ratings: The old diary/ballot system with land line telephone recruited samples is our worst enemy. It's not fair, accurate or trustworthy and we have the technology to make it better. PPM now seems a long ways off and for most of the markets beyond market 40 in the U.S. and outside the top 10 in Canada we might as well put 'world peace' on our list. Perhaps our wish here should be for a competitor for Arbitron and BBM - maybe that would speed up the process.
2. HD Radio: This is looking like that toy that you wanted as a kid and when it arrived you had big plans to play with it all the time. By January it was sitting at the bottom of the toy box. No budget to make the new channels happen, no radios in the field to broadcast to, and lots of other toys for the audience to play with.
3. Music: Wouldn't it be great if we had a steady supply of great music for our formats? One that we could rely on to bring the best to us in an organized manner without the mess around royalty issues.
4. The Web: We could all use a lot more presence on the web. Some of it takes money, but lots of it takes dedication, awareness, and discipline to actually make it happen. While we might have lots of little 'stocking stuffers' for Santa to bring here a lot of this is up to us to dive in and stake a claim in the new frontier.
5. More Talent: Everyone has gone through a lot of downsizing and we all operate with a lot fewer bodies and less talent in the building than we did 10 years ago. Just building more formatic jukeboxes is not a road radio can win on anymore. We need the magic personalities, creative imagers, and the people to build those all important local ties/images bring to great stations. It takes money, but how well are we using the resources we have?
6. Better Team Management: We all have to make the most of what we have. Over the years I've seen lots of stations turn in great progress and ratings not because they spend the most, but because the team is inspired by the leadership. Santa can't put leadership in his sack and get it down the chimney - we have to learn how to do it.
7. A Big Promotion Budget: Yes we'd all like to give away big prizes in contests, have billboards all over town, and maybe a new TV spot running all the time, but again we have to ask - are we using the resources we have? Is your imaging organized to make the most of the huge cume you already have (PPM has proven we have TONS of cume). Are you taking advantage of building a full presence at community events? Do you have a strong calendar of on air events and promotions to keep the audience entertained all the time? Are you using all the tools and toys of the web to interact with the audience and build more loyalty with them?

As I look down this list the presents are either ones that Santa can't make with the Elves (like the Music, HD and Ratings issues) or ones that we really need to 'make ourselves' (Promotions, Talent, team management and the Web). So now it's your turn on Santa's Lap and the list is down to ------ Guitar Hero 3. Merry Christmas.

Canadian Ratings System - BBM

The ratings for the Fall are out in Canada this week and going over the markets it's interesting to note some of the differences in the Canadian BBM system and Arbitron in the states.

The larger markets have 4 reports a year based on a diary system (they call them ballots) and sample procedures similar to the diary systems in Arbitron. There are no monthly reports and the surveys periods are shorter - they actually have some months where you can give the staff a vacation.

There are plans for the People Meter (PPM) technology to start being used later in 08 in the bigger markets and phase it's way to the top markets.

They also release ALL the markets on the same day at the same time. You just download the whole country. The Fall (or S4) results came out last Monday so it was number crunching time on the trusty laptop in my office as we work with a number of Canadian stations. Overall a good book worth popping a Molson over at the end of the day.

Looking over the trends in sample return in nearly every market I tapped into the news was disturbing at best. The sample returns are suffering the same problems we see with Arbitron. The under 44 year olds are falling apart. BBM doesn't contact the panel on cell phones and with the growth of the cell only households or people just ignoring their land lines it's getting harder to turn in a sample in almost any of the 18-44 cells. In the last year you can see the samples fall to 1/2 of what they were just 18 months ago. It's almost like a plague has gone across Canada. The numbers are starting to wobble a lot and we are seeing the same wild swings and 'what the hell' results in the demos.

I can remember going to my first Auditorium Music Test in Canada. It was snowing in January, the roads were bad, yet the place was packed. We had to worry about too many people showing up as they over recruited and we hit the ATM for a few more bills to cover the overage. Most other tests I'd worked with for the last 18 years in the states always needed a few make-goods and we nervously counted the heads in the room always coming up short. Here in Canada they were eager to contribute their opinions.

Well it looks like those days may be in the past when you look at the BBM sample returns.

BBM needs to act soon. Just take a look south at the rather sudden awakening on sample/panel returns at Arbitron. Now forced to delay the PPM roll out and watch the stock and perhaps their credibility suffer. Just moving away from the ballots/diaries to a better data collection system will not be enough to compete with all the new media. We (the buyers and sellers) have to have faith in the currency (the ratings) and that MEANS A RELIABLE SAMPLE.

Hopefully BBM and the broadcasters throughout Canada will stand up and nip this before it gets to a damaging stage. In fact it may already be there.

A Great Programmer and Person

Got some sad news late on Tuesday that Jim Steel has passed away.


Jim was the Operations Director for the Clear Channel stations in Lincoln and Omaha when I worked with the markets. Jim was just working with Lincoln at first, but the management team couldn't get enough of Jim so he ran between the 2 markets taking on all kinds of exciting and challenging programming experiences. He handled all of them with exceptional leadership, creativity and a deep love for the art of programming.


Jim had the love of music, the love of people around him and one-ness with the audience. All the ingredients of great programmers. Both markets grew from his efforts. He also deeply served his community - helping with any project he could find time for.


Jim called one day and explained that he had ALS - Lou Gehrigs disease. It was a sad moment for his family, the teams in both markets and all Jim's friends throughout our industry. He fought ALS for the last 5 years or so. Even though his condition became worse the stations fought to keep Jim on-board and did so with e-mail communication and stopping by to help him through the day at his home. Clear Channel owned Lincoln till last last year and still owns the Omaha stations and kept Jim on board through this awful disease.


No doubt it was a long battle with a terrible disease. Jim - we'll miss you and remember your leadership, creativity, and love of radio, but most of all we'll miss a great person.

Cell Phones Instead of PPM!!!

Tom Taylor's new Taylor On Radio-Info daily e-newsletter brought up a very interesting point in the November 20th issue on the technology to use Cell Phones instead of the Arbitron PPM system. Tom speculates on why Arbitron doesn't move to a Smart Cell Phone system instead of trying to equip enough people with PPM devices. Tom makes a GREAT point here.

If you don't get Tom's daily newsletter in your email - you are missing a great source for Radio and it's free - go here to subscribe.

Let's dive in and take a little deeper look at the possibility here.

• The technology has already been developed. Looking at the IMMI website they describe a system where the mic on the cell phone records 10 sec of audio every 30 seconds then links to a server and compares the files with audio recorded from radio station in the area. When they hit a match you have a listener.

• There are also other systems out there from Ipsos (a French based international research firm) that was planning on teaming up with The Media Audit to also produce cell phone based data collection. Ipsos already does this type of research in some European countries, but they don't explain their system on-line. When Clear Channel's campaign to look for rating alternatives faded away it looks like The Media Audit may have tabled the idea.

In reality moving to the Cell Phone for measurement would be a HUGE advantage and while PPM is still in it's infancy it's one that our industry NEEDs to push to pursue.

Look at the cost of rolling out a device like PPM with encoding all the stations, getting 100s of thousands of the devices out in the field, and spending tons on recruiting people to keep the meters. And now we have the big sample issue. Still using the old 'land line' system of contacting people to participate just isn't working - especially with all the younger demos. You can easily see a time in the next 5 years where the land line sample reach under 50% of the population and in 10 years a land line will be only for DSL or maybe TV delivery.

We are nearing a point where over 80% of the population has a cell phone and even in the older demos and lower income households the cell phone is becoming the affordable and easy way to communicate.

Even if PPM is rolled out in the top 70 markets we still have the sample issues and in the rest of the markets we will still be using diaries for at least 10 more years or longer. Bet on longer here as the cost of PPM is high and markets over #50 will be pushed out as costs soar. The real issue here is sample - land lines are a dead end. Throwing more money at people won't get them to bother - we have to get more passive in gathering the data. Just like the Web records your visit to this site, how long you stay, and where you came from - we can gather data on radio listening from cell phone dectors in the same way.

People are up-grading cell phones at a rapid pace and soon we will probably see most of the cell phones be the smart ones that could take on the technology to monitor radio usage.

It could also be possible to team up with the cell phone providers and be able to pull in HUGE samples. Paul Allen (a Microsoft founder) recently claimed that soon we will see cell phone services given away for the marketing power in you hand. It could also be 'given away' by allowing you to use your cell to monitor your radio listening. How about 'free texting' if you sign up to be included in the sample? I bet that would bring on some participants.

The technology also needs to be tweaked. In Tom's piece Arbitron's Pierre Bouvard brings up that cell phones are in purses and pockets and could be left behind or in front of a radio all day. PPM has a motion detector to determine if it's on a person or left behind. The IMMI system also relies on the mic in the phone and comparison software to determine who you are hearing.

How about the smart phones and just put in a little inexpensive chip that would receive the FM or AM signal. Not only could we get radio on cell phones, but the receiver could also pick up the encoded signal from us and the data could be passed on the phone network to the ratings service server. The systems in place download a program to the cell phone that sets up the data transfer. You could send it to 100s of thousands of phones already in the system.

All we need is accurate data on who has the phone for age/sex and where they live. In fact we could also see where they are with the GPS function.

While we could go to the trouble of calling their land lines and paying everyone lots of cash every month to stay in the sample or we could go another route. How about just taking a random sample of the data from the 100s of thousands of cell phones pumping in data and then sending off a text message where they verify age/sex and we have our sample.

It's an ideal world where we have accurate data, coming in daily and it would probably cost a lot less than building a whole PPM system. Before we fund Arbitron's venture into building a proprietary infrastructure for the PPM, maybe we should look at funding the usage of Cell Phones instead. Not only would we get the data we'd also have FM/AM radios in every one's hands all the time. WOW.

Perhaps we need to quit complaining about sample issues and let new technology help us. There are lots of ideas and speculation in my piece, but we need to quit whining and start 'doing it.'

Sample Sizes and PPM

Arbitron continues to face a lot of challenges in rolling out PPM. On one side we have the reality that some ethnic formats are seeing less listening in the PPM system, on the other side the weak samples, especially in the younger 18-34 demos, are also a big concern. It sort of came to a head this past week as the news hit that Clear Channel, Cox, Radio One and Cumulus crafted a letter that calls for a full review from Arbitron. It's also spread to the media with NYC newspapers sounding some alarm bells.

Sample sizes are really at the heart of the issue. With the big increases in cost for each participant in PPM Arbitron is looking for ways to keep the sample as tight as realistically possible. In the diary samples in the medium and smaller markets 18-34 returns have been a disaster for nearly 20 years. Arbitron has tried to pay more and recruit harder but we still end up with a lot of books out there where 18-24 and 25-34 males (and even females) are doubling the value of the diaries to make the demo samples match the population proportions.

The reality in PPM is that the samples are a lot bigger than the 30 response minimum Arbitron requires to print a demo in the big PPM markets. There is no planned PPM market where there is a danger of living with as few as 10 people as rumored. You have to keep in mind that with the PPM meter keepers holding the device for every day of every week for up to 18 months you get a lot more data than in a diary system.

Look at it on a monthly basis. Let's say in a big market you have 1000 diaries in an average month. In any given week you have an average of 250 people with a diary to fill out. Now let's say you have 500 people holding the meters, bet remember in any given week you have all those 500 meters gathering data. In the diary system you only had 250 people so the data collected is really on twice the sample and a lot more reliable.

The big issue here is the 18-34 sample. As long as we are using land line phones to reach them it's a losing battle. This group is mobile and ignoring land lines for cell phones at a rapid rate. Till Arbitron finds a way to reach them via Text, IM, Email or maybe even in person they will be challenged in these demos and have to weight them up a lot.

The other issue is costs. They are paying more to PPM households and in some cases paying a lot more to hold them in the sample. Arbitron hasn't really spelled out the compensation, but off the record comments from some insiders claim it's a lot more to insure a successful roll out. PPM is a different system than the diaries and comparing the two in sample is misleading.

We all know we need PPM to compete with the stronger metrics advertisers get from other media. No question PPM is a lot better and more accurate than the old recall diary system. Both sides (Arbitron and the stations) need to work together and listen to each other carefully.

Recession

Surely CNBC will have bigger ratings as economic issues are clearly taking the spotlight. Rising Oil, the mortgage lending mess, the weaker dollar and the high cost of the war are starting to all combine and head us close to or into a recession. Retailers are already expecting a weaker holiday spending session and we've already seen the auto industry struggle for most of the past year. It's also affecting radio as the results from 3rd quarter in radio are disappointing and in some groups it's more about 'just getting 07 over with' at this point.

So let's say we go into an official recession which would probably be declared after more than a few months of a significant decline of economic activity, according to the National Bureau of Economic Research. According to the NBER we've been chugging along for the last 7 years without a recession - look at the history of 'official' recessions for the last 60 years:

July 1953-May 1954 10 months
Aug. 1957-April 1958 8 months
April 1960-Feb. 1961 10 months
Dec. 1969-Nov. 1970 11 months
Nov. 1973-March 1975 16 months
Jan. 1980-July 1980 6 months
July 1981-Nov. 1982 16 months
July 1990-March 1991 8 months
March 2001-Nov. 2001 8 months

They are usually not that long and over the last 20 years we've only 2 of them lasting a total of 16 months.

I bring this up not out of a desire to give up radio programming for economics, but perhaps to help your team as you plan for 08 just ahead. We shouldn't let the 'R' word worry us even though there will be lots of 'hype' around it. We also shouldn't let the 'R' word spook our advertisers and the teams inside the stations.

Remember we sell advertising and there are always products and services looking to brand themselves regardless of the economic conditions. Actually a recession is the perfect time to build a brand. You will likely see less competition, less clutter around your message, and remember the audience is STILL THERE. Just because they may be holding their wallets a little tighter they are still looking for entertainment and we offer it for free every day.