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PPMs 'Increase Radio Ad Spend'
Research released by the US Radio Advertising Bureau (RAB) indicates that the use of Portable People Meters (PPMs) to gather radio ratings will increase advertising spend. The study, funded by PPM developers Arbitron, estimates that switching to PPMs could bring in an extra $696m a year.
Of the 500 decision-makers interviewed, 17% of ad agency respondents and 23% of advertisers said they would increase radio spending if PPMs were introduced. Meanwhile, 8% would decrease radio spending if the industry retained the diary system.
Looking at the level of spending, advertisers plan an average 2% cut in annual radio spend if diaries are used, while a switch to PPMs would bring a 3% increase. The study estimates that, if PPMs are introduced across the market, revenues will grow by $414m a year. If diaries remain, the industry will generate $282m less in annual revenue. However, there is clearly still some way to go for PPMs: 67% of advertisers and 23% of agencies told the interviewers that they were not familiar with Arbitron's PPM initiative.
The research suggests that the implementation of PPMs would have an impact on the timing of ads, as well as spending. Current PPM test results show that the average radio station shows 10 to 20% higher audience figures during the day and at the weekend than when paper diaries are used. There is a similar sized drop in morning drive-time listening. Of those interviewed, 66% of agencies and 62% of advertisers said they would spend more on ads at other times of the day if this trend continued.
'The results of the study verify that advertisers and agencies are eager to embrace electronic measurement,' according to Gary Fries, President and CEO of RAB, adding that there is 'a risk of loss of advertising dollars for media that do not advance to a more reliable and better measurement platform'. However, he remains somewhat cautious about the new technology, stating that the industry needs to review these findings 'with a full understanding of both the perils and opportunities that electronic measurement holds'.
Other participants in the study include Forrester, which conducted the research, and David Pearlman of Pearlman Advisors.
The RAB is online at www.rab.com while Arbitron's web site is www.arbitron.com
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