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‘Progress Towards a Common Ground’

Remarks by Arbitron’s CEO on Capitol Hill about the PPM

Here are remarks by Michael Skarzynski, CEO of Arbitron, to the U.S. House of Representatives Committee on Oversight and Government Reform on Dec. 2.

For more than 60 years, Arbitron has been dedicated to advancing the interests of the radio industry. We provide the quality data that allows radio broadcasters to make programming decisions — and advertisers to make their media buying decisions.

Today’s hearing is focused on Arbitron’s Portable People Meter — or PPM — and its impact on minority radio stations.

We share the concern regarding the health of this important voice of the broadcasting community. We are however confident that PPM is not the cause of the challenges faced by minority broadcasters.

It is encouraging to note that urban adult contemporary is the most listened to format in the top 16 PPM markets. This was reported just two days ago by an important trade publication, Inside Radio. We believe that the Inside Radio report is another strong indication that PPM continues to reflect reliably the listenership of all formats including urban and Hispanic.

Arbitron has worked to implement the PPM service responsibly and fairly — and we have always been sensitive and responsive to customer concerns raised about PPM.

Arbitron launched its innovative ratings service to help support the entire radio industry’s objective to have relevant, reliable data that enables it to compete against television, Internet and other media for advertising revenue.

While PPM represents a significant advance, it cannot do everything. It cannot solve the severe economic challenges that the radio industry has confronted for the last two years.

We have all felt the impact of a recession that has caused a drastic — and in some cases devastating — decline in radio advertising, with resulting significant declines in radio revenue. Further, PPM cannot address the high debt burdens faced by many radio broadcasters, including minority broadcasters.

Our radio broadcast customers asked Arbitron to develop an electronic measurement service that helps them showcase the value of radio.

Our advertising agency customers asked us to provide them a service that more accurately reflects exposure to radio.

We responded.

Solid methodology

The development of PPM is a reflection of our commitment to improving radio. Arbitron spent more than $100 million over 10 years developing this solution. We incorporated input from industry players and the technology has been thoroughly tested over time.

The PPM technology and methodology are solid. PPM was honored by Time magazine as one of the best inventions of 2007. PPM methodology was built on the MRC- accredited diary methodology and produces valid and reliable audience estimates.

In fact, PPM has been the audience measurement tool of choice for several years in a number of European countries, as well as Canada and Singapore.

Overall, we have received a great deal of positive customer feedback about PPM. Broadcasters are telling Arbitron that PPM provides reliable, timely and granular data.

Providing our broadcast customers the more timely PPM data has helped guide mid-course corrections and programming adjustments to advance their business.

For example, California radio station KJLH — owned by Stevie Wonder — added “The Steve Harvey Show” on Aug. 10, 2009. Current PPM data shows that KJLH, between September and October 2009 — experienced a 60 percent increase in morning drive share for persons 18–34.

When I joined Arbitron in January of this year, I made it my priority to visit customers personally. I learned from customers that there are powerful and constructive ideas about how we can improve our PPM service.

In fact, listening to our customers has helped us craft our continuous improvement program as we strive to improve our PPM service and make it a valuable asset for the industry. Every technology requires improvements and we believe we have been both proactive and responsive to making improvements.

This year we have:

  • • Expanded cell-phone-only sampling to a national average of 15 percent and we expect to increase to 20 percent by year-end 2010;
  • • Instituted country-of-origin reporting; and
  • • Expanded extensive training, in-person coaching and enhanced incentives to encourage greater survey participation.

Additionally, we are working with our customers and other industry leaders to develop an Engagement Index. As envisioned, the Engagement Index would be a metric that complements existing data and reflects an audience’s involvement and loyalty to a particular station.

This cooperative work could help all broadcasters, advertising agencies and advertisers have a balanced impact on radio ad planning and buying.

We have been working tirelessly with members of the minority broadcasting community and we believe that with your leadership and a continued dialogue we can make progress towards a common ground.

Mr. Chairman, Arbitron welcomes the opportunity to work with you and members of this committee to address the challenges of the minority radio broadcasters.