Monday, April 24, 2006

How We Rate, Part 1

I promised you a glimpse behind the curtain at The BizRadioNetwork, revealing some real results of our labors for the first fourteen months of our operation. Let me first explain why what I am about to show you is significant.

In the world of Commercial Radio, price is determined by audience size. Audience size is determined by popular content. The more people who listen, the more a station can demand in rates for its airtime.

Stations pay the light bill (and their employees) by selling airtime, and the more airtime sold, the more profitable the station. The paradox is, the more commercials a station plays (increasing its profitability), the number of people listening diminishes (because of the loss of content.) A successful, revenue generating station can soon implode as it kills off the audience it attracted by driving it away with less content and more commercials.

Audience listening has always been measured theoretically. Those of you who luxuriate in statistics will really get off on this, because Radio listening metrics are nothing more than educated guesses. In Television, The Neilsen Ratings are king, with nightly reports on how many watched what show. In Radio, The Arbitron Company is the primary ratings provider.

Basically, Arbitron calls you up and asks you to take part in a survey of your Radio listening habits. They ask you to write down what stations you listen to, where you’re listening (at home, at work, in the car, etc.) and for how long, in a weekly diary. Then they ask you to return that completed diary.

Arbitron crunches the numbers on all the diaries they receive, and after weeding out the one’s that are unusable (some people just can't color inside the lines), render an official estimate of a city's Radio listening audience. Generally, the workable sample of diaries is between 1,000 and 1,500, and from this small number of representative diaries, Arbitron will generate a “book” of who listens to what Radio Station for how long. They chop up this data six ways to Sunday, with demographic information breakouts, so that if you’re wanting to advertise on a station that plays Traditional Swahili Standards, Top-40, or Gregorian Chants, you’ll know where to go.

Swahili and Gregorian Monks generally don’t appeal to a very wide audience, so you aren’t likely to see many stations catering to that crowd. Business Talk formats fare about as well, but for a different reason: while the information is valuable, it is of interest to only a limited segment of the listening audience.

“So how did you guys pull-off putting The BizRadioNetwork on the air,” you may ask.

Glad you asked that.
We did it because enough people recognized the value of the format, and put their money where their mouths—or in this case, their ears—are, and invested cash in the company to resurrect the format.

“So how many people are listening?”

Wrong question.
The answer is not how many are listening, but what kind of listeners are attracted to our Network. The question should be “who listens” to The BizRadioNetwork, and anecdotally, how many are there?

Arbitron is not going to reflect well the audience this Network has amassed. Why? Remember the mechanics of how Arbitron surveys listening audiences? Ask yourself—if I called you and offered you a dollar to list your radio listening habits in a daily diary, and send it back to me…would you?

Frankly, I haven’t the time to spend on that, and you probably don’t either. What kind of individual has time to perform such a survey? Likely, not the kind of listener The BizRadioNetwork seeks to attract…so, any Arbitron measurement of our listening audience is going to be flawed by virtue of an under sampling.

How many people listen to the BizRadioNetowork? All of the ones who do.
And what I will show you tomorrow are the hard data points about these people that we’ve gathered: how old they are, what they make, what they drive…and what they listen to. I will also share with you an exciting improvement to gathering data on Radio listening habits that Arbitron is testing, which shows promise in providing more accurate surveys, translating into more accurate reports on stations' performance.

I think you will find it a compelling story, and a fascinating peek behind the driving force—the mojo—of this Network. See you in the morning on the Radio.

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