Nielsen Schmilsson

With due respect to our friend Harry Nilsson and his fabulous 1970 album "Nilsson Schmilsson, the title of this blog represents the dissatisfaction I detected following ratings company Nielsen's "PPM Enhancements and VOLTAIR Testing Update" webinar on TUESDAY (7/21).

Following the webinar, I spoke to 17 radio managers - a mix of station managers, program directors and chief engineers to hear their take on the ratings service that costs most of them six-plus figures or more a year.

Here are some of their thoughts:

1) The lab testing NIELSEN did with VOLTAIR is inconclusive in real-world analysis. Among the engineers I spoke with who were on the call, real-world PPM device sensitivity is difficult to duplicate in a lab environment. Actionable results in-lab will be few.

2)  In-cabin listening in a vehicle with open windows, low volume radio and even in-car talking is difficult to duplicate. Much of VOLTAIR’s benefit has been experienced in these real-world conditions.

3) In-office listening environments are also difficult to duplicate in order to feel confident in NIELSEN’s testing. The audio artifacts in these environments are tough to predict.

NIELSEN also stated that VOLTAIR can impact audio quality for listeners. There was little agreement with this statement among those I spoke with. As one PD put it, 'Would we be using it if the quality of our on-air sound was negatively impacted? No.'

4) The fact that NIELSEN admitted that VOLTAIR enhanced PPM in “some situations” is a confirmation that in NIELSEN’s eyes, VOLTAIR does improve their technology. Yet they step back by stating 'whether this is true listening is inconclusive at this point.'

Most radio managers I spoke with were disappointed with the call. After months of 'no comment' from NIELSEN, it was generally hoped that a more detailed and finite determination would be presented.

Confusion remains as to the actual meaning of NIELSEN's comment that "Nielsen will not support the VOLTAIRE product."

Image credit: radioinsights.com

NIELSEN most certainly will not technically support the VOLTAIRE product...we know that. Through a layer of gauze, the ratings company seems to imply that if a station is using the VOLTAIRE box once they roll out changes in the watermarking algorithm in fourth quarter and distribute new next-generation encoding monitors to all clients in 2016, possible ratings distortion penalties could be assessed.

We really don't know what NIELSEN will do and this is at the core of the ambivalence of most of the managers with whom I spoke. 

Questions remain:

Among them:  How close to VOLTAIR’s solution will NIELSEN's improvements they intend to introduce this fall and will there be additional station expense? 

How will NIELSEN’s 'increased density of PPM codes' compare with results current VOLTAIR users are experiencing?"

Nielsen has three months to answer these questions and others.

At the Crossroads....or past it?

Have you heard of “Trajectories of Industry Change”.

Historically, all industries find themselves faced with gut-wrenching decisions related to remaining relevant.

Compare the lifecycle charts below for MySpace and broadcast radio.

The relevance clock for broadcast radio is nearing midnight which means little time remains for the industry to adapt to the times.

According to author and business strategist Anita McGahan, who observes all types of industries and companies, traditional radio may no longer be at a crossroads, but beyond it and should seriously heed the warning signs presented by new competitive media. She explains that broadcasters are misreading growth clues and may be arriving at false conclusions.

The most important thing to understand, she says, is that all business goes through lifecycles during which obsolescence becomes a real threat to the core of the business. New technologies shake up all industries and all companies at some time are faced with ‘defending their turf’.

So, what has really been going on with the broadcast industry?

Radio has been caught in an evolution as a result of Two Types of Threats of Obsolescence from digital media:

1. A threat to its core activities (those activities of attracting listeners with programming, technology and delivering consumers for advertisers), and

2. A threat to its core assets (durable resources such as talent and programming and intangibles such as programming knowledge and brand capital, that have historically made radio effective at delivering audiences).

Based on the nature of these threats, the broadcast industry has been on a growth curve with the following identities:

Phase 1 (1960-2000) – The Stable Trajectory when neither its core assets nor core activities are jeopardized. During this phase the industry was operating effectively and efficiently, it understood its strengths and weaknesses with no significant outside competitive threat(s).

There was a balance between investing in product and sales.

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Persons using radio 1980-2012. Click on image to enlarge.

However, this phase began to weaken after an extended period of wealth and profit-taking. The traditional radio industry had been on a Stable Trajectory until around 2000-2001 when a “perfect storm” of weakening economies coupled with the rise of new technologies began to threaten its core.

Phase 2 (2001-2007) - The Intermediary Trajectory – the period after successful times when the industry began to experience new competition generally aided by new technology when either its core activities or core assets started to become threatened – but not both. It was a time when a “tipping point” was approaching and there was still time to adjust and avoid significant damage to revenues, profits and consumers.

This phase is often characterized by short-term profit-taking as a reaction to this new threat while avoiding investment that could later prevent competitive inroads.

According to Dr. McGahan, the traditional radio industry at this point of the trajectory curve should've fended off attacks to either its core activities or core assets by reinvestment in those core strengths. Defensive strategies should've come from company marketing, product,  sales and technical innovations which would've refreshed perceived obsolescence.

Phase 3 (2008-Present - A Radical Trajectory, the most serious, occurs when core assets and core activities are both threatened with impending obsolescence. Often considered too late in the lifecyle to recover from severe competitive and technological inroads, industries in the radical phase may never be able to infuse enough funding back into the business to fend off the momentum of on-coming competitors. It is often too late for industries in this phase to offset the negative momentum of consumer attrition.

These three trajectories of industry change can be applied to most industries.  Read more here.

With this in mind what path remains for broadcast radio?

I'd be interested in your thoughts.

Your feedback is vital to our company's on-going success. As always, I look forward to hearing from you.

Sincerely,

Dave Van Dyke - President

Broadcast Streaming is at a Crossroads

Bridge Ratings has been conducting a study since January of this year to determine the interest in broadcast radio simulcast listening on the internet. You can read about these studies here and here.  Part of the study included reactions by a sample of 1500 persons to custom, personalized internet radio stations which would allow panel members to adjust various musical aspects of their favorite radio stations.

Initial results and follow-up data points to great interest by our sample of average radio listeners 12-49 years of age in broadcast radio offering customizable internet radio stations.

Studies done by other researchers support the idea that broadcast radio simulcast internet streams do not garner great usage. One estimate states that 7% of their sample listens to AM/FM content on a mobile device.

New additional data from the Bridge Ratings studies confirms this. But our study goes further.

Of the 3200 panel members in a new Bridge Ratings parallel study, 87% preferred mobile listening to desk-top listening of any streaming music. Only 9% indicated they have listened to AM/FM content in the last seven days.

Only 14% of the sample had a radio app on their mobile device.  Less than 65% of those with radio station apps on their mobile devices use them.

When asked if they would listen to customizable  content on an internet radio station app if it was offered by their favorite station and usage almost quadrupled to 34%.

And when the panel was asked if they would use a radio station app which offered additional personalized content, 41% indicated they would.

Based on this and other studies available, the writing is on the wall for broadcasters seeking a path to increased usage of their radio station apps.

Increase Usage

Current usage of broadcast radio internet simulcasts is less than 10% of the audience. Offering personalized internet radio stations would greatly multiple use and potential digital revenue.

In recent days we've seen increasing adoption to accept this Bridge Ratings data.

Q: But why aren't broadcasters taking this path?

A: Many programmers are not financially incentivized for the audiences generated by simulcast internet duplications of their AM/FM stations.

Many programmers are concerned that an internet radio station offering that can be personalized by its listeners may cannibalize listening from their AM/FM stations.

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Click on image to enlarge.

Extend the Brand

Our studies show that if done properly this would not be the case.

Inevitably, the broadcast radio industry must finally learn from years of trial and error by companies like Spotify, iHeart and Pandora. They learned early on that customized experiences generate use and loyalty.

Broadcast radio can develop digital solutions that offer personal, geo-located experiences for their listeners. The technology is available, but it seems as though the will is missing.

From these studies we see a non-future for growing listenership of simulcast AM/FM content.

Isn't it obvious yet?

We do see a vast landscape of opportunity as described here.

Are there any takers?

Dave Van Dyke
President
Bridge Ratings LLC