Competition for the Portable People Meter?

I recently read an article that featured an up and coming media measurement technology created by research firm Integrated Media Measurement Inc. (IMMI). Using cell phone based data collection, IMMI’s digital monitoring system measures audience exposure to multiple media platforms via codes embedded in the audible audio portion of the advertisement. This includes ads appearing in out-of-home TV, on-demand and time-shift viewing, radio, Internet, DVDs, audio CDs, theatrical films, entertainment venues, and mobile video and games.

Upon review of the article, I immediately asked myself, “What does this mean for Arbitron’s Portable People Meter (PPM)?” and “Do these two services compete for the same market?”

For over 50 years, Arbitron has enjoyed a monopoly on radio audience measurement — that is, until the recent announcement by Nielsen Media Research, which will be discussed later in the article. However, with the advent of digital media, the advertising industry has been trying to figure out how to measure audience exposure to advertisements across multiple media platforms. To date, no such all-encompassing audience metric system exists.

Setbacks for Arbitron

Arbitron’s PPM technology is similar to IMMI’s integrated media measurement system, which prompted the initial question, “What does this mean for Arbitron’s Portable People Meter (PPM)?” The PPM is a pager-like device that consumers wear. The device detects inaudible codes embedded in the audio portion of the signal. Arbitron says the PPM can measure audience exposure to programs on radio, television, Internet streams, in-store music, and audio from entertainment venues. So far, the PPM is only able to measure traditional radio listenership.

Arbitron first commercialized PPM ratings in the Philadelphia market in March 2007. Currently, the PPM is being used in 10 markets. IMMI’s media measurement system is currently measuring ad exposure in six markets.

While the PPM enjoys first-to-market status, Arbitron has faced many setbacks. For example, after the release of PPM ratings in Philadelphia, minority radio broadcast owners claimed the new measurement system under-samples minority radio listeners, in particular, African-Americans and Latinos. This delayed the PPM rollout for subsequent markets.

In addition, the New York State Attorney General is suing Arbitron, claiming false advertising and deceptive business practices. The New York City Council is requesting an FCC (Federal Communications Commission) investigation of the PPM because of the potential negative effects on diversity in media.

Most recently, Nielsen Media Research, the sole TV ratings currency provider, announced its re-entry into the U.S. radio ratings business. While most associate Nielsen with TV ratings, some might not realize Nielsen reported ratings for U.S. radio audiences nearly half a century ago. But most importantly, the PPM to date has not delivered on its promise of measuring media across multiple platforms.

Upon in-depth consideration of my initial questions, “What does this mean for Arbitron’s PPM?” and “Do these two services compete for the same market?” I must further explore the following questions:

  • Is IMMI’s new media measurement system poised to capitalize on the setbacks of the PPM?

    Possibly — and here’s why:

    1. Until Arbitron solves its existing problems, it’s unlikely the PPM will be used across all media platforms within the foreseeable future, as originally promised.
    2. Currently, major broadcast networks — NBC Universal, ABC and ESPN — as well as media agency Zenith Media support IMMI. Until November 2008, IMMI was engaged in a strategic partnership with Nielsen Media Research measuring out-of-home TV viewing. However, the companies announced the indefinite suspension of the out-of-home TV measurement service, citing “the current economic climate and limited economic support for the new measurement service” as rationale for the dissolution of the service. While this development is a major setback for IMMI, it appears the future success of digital media measurement is highly dependent on the outcome of the current economic condition in the U.S. for all companies involved.
    3. IMMI provides an attractive incentive to its panelists — US$50 a month or a free cell phone (which also serves as its data collection method). The PPM sample is offered “points,” although it is unclear what the “points” are.
    4. IMMI’s system does not require the panel to remember to wear the meter device. Instead, the data is recorded via the panelist’s cell phone, therefore solving the problem of under-sampling errors faced by the PPM — because who leaves home without their cell phone?
  • Does it make a difference that IMMI measures exposure to advertisements and the PPM measures programs?

    Yes. IMMI’s new system measures ad exposure and links this information to consumer action. The PPM is unable to provide this level of audience engagement. As new digital technologies provide new opportunities for the consumer, advertisers are somewhat confused. Advertisers want to know if their ads are effective, and the only way to know that is to know who is listening to or watching a commercial.

  • Does it matter that IMMI collects data from the audible portion of the audio versus PPM’s inaudible portion of audio?

    In order for the PPM to track media exposure, the programmer or distribution source (broadcaster, Internet station, advertiser) must encode its signal/program. IMMI technology requires no input from the broadcaster, distribution source or advertiser because IMMI’s embedded cell phone software records the audio and codes it into digital signatures for further analysis. IMMI’s passive digital monitoring requires no input from the advertiser or content distributor.

Evolving Standards

Upon further analysis, it’s obvious the two services perform different functions, yet they are very similar in terms of technology. It is doubtful that IMMI will become an industry standard for measuring audience exposure to advertisements, mainly because Arbitron and Nielsen are currency standards of media measurement.

Nonetheless, one could argue that digital media currency standards are evolving, and the current traditional measurement criterion is not relevant to measuring audiences across multiple media platforms.

While Arbitron has invested millions of dollars in the development of the PPM and is unlikely to give up the fight, Nielsen’s recent announcement and new services like IMMI only serve to weaken Arbitron’s position in the audience measurement realm. Until the PPM measures media across multiple platforms as it is was designed to do, then strategic opportunities will be created for companies like IMMI. It is clear that if IMMI (and similar companies) help their clients make sense of media exposure and audience engagement in the digital age, while providing reliable audience data, then IMMI could serve as an essential research resource for major marketers and media companies.

Heather Way is a research analyst at Parks Associates.

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