In audio, as in video and website publishing, digital media presents business challenges and opportunities of many sorts. When the business model is funded by advertising sales, audience measurement is key. Subscription services like Rhapsody and Beats Music (soon to be Apple Music) compete with each other for consumer subscription dollars — audience metrics don’t play much role in attracting revenue. But radio platforms like Pandora and AM/FM broadcast compete with each other for advertising campaigns, where audience size and attributes make the difference between success and failure.
In this environment, digital disruption is felt in the fragmenting of audience ratings. The biggest line of fracture runs between analog and digital measurement. Ratings for broadcast radio (analog) are produced by entirely different methods from ratings for streaming radio (digital). That separation produces a bifurcated marketplace with two large, separated audiences presented to advertising buyers. The separation is artificial to the extent that consumers listen to both streaming radio and traditional radio.
Complicating matters further, there are three major audience components in radio: over-the-air broadcast, webcast streams from broadcast radio, and pureplay Internet streams from online publishers. Consumers easily listen to all three, and can move among them freely. Because those three audio components are not measured with a standard ratings technology, listeners are not presented to advertisers as a single, unified audio audience.
A Problem for All
Adding specialty listening like on-demand audio (podcasting) to the audio mix complicates things even more, but the central problem is this: Audience measurement in audio is conducted on multiple platforms with multiple technologies, resulting a fragmented view of the listening audience.
A fractured audience is clearly a problem on the buy side of the advertising market. Marketers using audio advertising want to reach receptive audiences regardless of what they listen to, where they listen, when they tune in, or how. Natalie Swed Stone, U.S. Director of national radio buying at OMD, discussed the problem with RAIN News. “Streaming is separate, terrestrial is separate, podcasting is separate,” she said in a phone conversation. “The marketers are looking for the audience! They are not thinking about it by platform.”
The fragmentation problem for agencies and advertisers results in a build-up of demand for some form of unified measurement. “There’s a ton of demand for some kind of unified measurement, dating back four or five years at this point,” said Matt Cutair, founder of AudioHQ, a digital audio ad sales company. “Agencies want consistent measurement. They want to know how audiences compare. They want to understand how typical user behavior occurs across digital radio and traditional radio.”
Steve Goldstein, EVP at Saga Communications for 30 years before leaving that radio group to start the podcast company Amplifi Media, said that part of agency demand for unified measurement is about efficient campaign planning. “From what I have seen from the top agencies, they are desirous of anything that makes their job easier and more holistic. They are just not going to go through the effort of trying to figure out all of these things separately.”
A fractured audience picture can make life difficult for stakeholders on the sell side, too. Broadcasters who stream their content cannot easily market their total audience — over-the-air plus streaming — to advertisers. The Nielsen-derived local market share might be the primary basis for selling ad inventory to local advertisers, while the streaming audience is left on the table. Steve Goldstein talked about the quandary for broadcasters.
“When I was at Saga, one of the big concerns was how difficult it was to monetize the stream, especially in medium and smaller markets,” said Steve Goldstein. “There was also the discussion of losing share to the stream. For example, if you’re a Chicago station with a three share, and a half share in the stream. That half share is worth much more when it’s put back in the pile of your overall rating than it is as a separate stream. The 3.5 aggregated together is worth more.”
Natalie Swed Stone observed that the lack of holistic audience reporting hurts the industry as a whole. “It hurts the medium and its marketing effort. When radio is reported down, or minimally up, and the reporting is from various entities — they’re not capturing the whole thing. They don’t know how to report it.”
“All sides would welcome something that would provide that unified answer, that common denominator,” said Cathy Csukas, founder of ad-rep company AdLarge.
Polarization
Radio ratings are polarized by Nielsen Audio on one hand, measuring over-the-air broadcast listening, and Triton Digital on the other hand measuring stream listening.
Nielsen Audio was created when media measurement company Nielsen acquired radio ratings firm Arbitron in 2013. Nielsen produces ratings only for AM/FM radio stations as of now, using a survey method that is similar to political polling.
Triton Digital is the market-leading audience measurement firm for streaming audio, having developed the industry standard for measuring digital listening. It uses a census method of measuring audience, taken from computer logs. Triton has developed methodology that produces streaming ratings whose metrics are relatable to Nielsen’s Average Quarter Hour (AQH), Cumulative audience (Cume), and Time Spent Listening (TSL) benchmarks.
The result of this methodology division is two sets of ratings presented to advertisers and agencies planning audio marketing campaigns. In two of the largest buying platforms, Mediaocean and Strata, terrestrial broadcast ratings and pureplay streaming ratings derived from Triton Digital technology are presented apart from each other. Doug Sterne, VP of Audio Development and Industry Relations at Pandora, described how it works. “Both Triton-sourced data and Nielsen-sourced data appear on the same screen. The nuance is merely that they show those universes separately.”
Internet radio market leader Pandora and music service Spotify both subscribe to Triton Digital ratings. (Spotify operates an ad-supported freemium service alongside its retail subscription plan.) Would a unified ratings system, stitching together broadcast with its streaming counterpart, be unfavorable to the pureplay streamers like Pandora? In the battle for local advertising dollars, the greater share of ear in the local market has the advantage. In Steve Goldstein’s example, if local radio stations gain ratings share through holistic ratings that count both terrestrial and Internet listening, would Pandora be at a competitive disadvantage?
Doug Sterne of Pandora refutes that idea. “No, I think it’s great,” it told RAIN News. “The more transparency, and the more visibility, that buyers have into the total audience and options out there, the better. We consider ourselves part of this greater universe of audio consumption. The fact that usage is migrating more and more to mobile devices and personalized experiences is a good thing for us. But buyers need to see the entire picture.”
Nielsen’s Ambition
A model of unified measurement exists in the U.K., where RAJAR measures over-the-air radio and its simulcasts. “We have a completely integrated system,” RAJAR CEO Jerry Hill said. “So if the BBC is broadcasting over the air, on digital radio, on DTV, and online, we measure it all. Increasingly the U.K. is beginning to talk about an audio marketplace as opposed to a radio marketplace. Radio being part of that audio marketplace.”
The grail of audio, with the divisions between audio’s various delivery platforms erased, is an idea we heard over and over in conversations about unified ratings. Nielsen has recognized publicly the challenge and opportunity of being the 3rd-party provider of a total audience picture in audio. One recurring question among people we spoke to was not if, but when, Nielsen would bring a unified solution wholly to market.
According to Jeff Wender, speaking at RAIN Summit Indy last fall, Nielsen has owned a fully baked technology for measuring a holistic audio audience, for at least a year. In a recent Q1 2015 earnings call, Nielsen CEO Mitch Barns stressed advances toward the goal of a complete solution. “We made good progress on digital audio, where we’re working with more than 30 players across the industry to implement our SDK in their apps and players,” he said.
Nielsen has inched into the market with agreements to implement its measurement code into streaming players that radio stations use to deliver their simulcasts. The “SDK” (Software Development Kit) Barns referenced has become a keyword among the industry leaders we spoke to, one which might be translated as “Nielsen’s not-quite-here-yet solution for unifying radio audience measurement.”
Many people we spoke to for this article acknowledged that Nielsen’s incentive to introduce a unified ratings service is limited by the fact that it may hurt broadcasters more than it helps them. As the main ratings service provider to the broadcast radio industry, Nielsen Audio’s revenue comes from radio stations that do not gain any advantage from the integration of pureplay audiences into a total audio picture to advertisers, though they might be eager ta include their own online streams in Nielsen ratings. Market-leader Pandora claims 10 percent of U.S. radio listening — a disputed number among some broadcast advocates, but integrating pureplay share into a total audience picture marketed to advertisers does not favor broadcasters.
That perceived predicament yields some degree of pessimism among sellers who market streaming audio to advertisers. “I still think there’s a long road ahead to get to a point when we have a unified measurement source for the entire space,” said Matt Cutair of AudioHQ. “There’s still a tremendous disconnect between what traditional broadcasters want as it relates to data that’s going to show up in some sort of rating report, and what the pureplays like Pandora want.”
“It has to move quickly,” said Natalie Swed Stone. “The sooner the happens, the better it is for the seller.”