The Nielsen Company just announced that they are exiting the radio audience measurement business in the U.S. You probably didn’t even know they were in the radio audience measurement business in the U.S., but in fact, for the past two years Nielsen has been competing with Arbitron (the dominant radio audience measurement firm) in 51 medium-sized radio markets.
What was Nielsen doing in the radio audience measurement business anyway? And why did they get out so quickly? The answers to these questions illustrate some defining elements of the process of audience evolution.
Looking at the first question, the answer begins with Arbitron’s ongoing and highly controversial efforts to introduce its Portable People Meter into local radio markets as a substitute for the company’s traditional paper diary system. The transition angered so many different stakeholders for so many different reasons (for all the details, have a look at this piece), that for awhile there, Arbitron was looking vulnerable.
And it’s very rare that a dominant audience measurement firm looks vulnerable. As I talk about in Audience Evolution, the extent to which such audience data serve as the currency in the audience marketplace means that there generally isn’t much room for competing services. Both the buyers and sellers of audiences have an innate preference for the clarity, simplicity, and efficiency that come with there only being one set of audience figures that everybody treats as the truth (even if, in reality, the numbers are tremendously flawed).
But given the radio industry’s negative reaction to the PPM, and the less than positive response that came from Congress, advocacy organizations, and a number state attorneys general across the U.S., Nielsen sensed blood in the water and a window of opportunity to make inroads into radio.
That window, however, closed fairly quickly. Radio stations eventually begrudgingly signed on to the PPM service. Settlements were reached with the state attorneys general; and Congress (as Congress often does) simply turned its attention elsewhere without taking any action.
Which brings us to the answer to the second question. Establishing competing currencies is an enormously challenging undertaking, given the huge benefits that the incumbent has in such a situation. A compelling case could probably be made that audience measurement is to some extent a natural monopoly. So even a firm with the size, experience, and resources of Nielsen couldn’t crack the hold that Arbitron had on the radio audience measurement business.
In the end, trying to offer a competing representation of the media audience is a very high risk venture, particularly when (as was the case here), all the competitor is offering is a different version of the same aspect of audience behavior that is being provided by the incumbent. That is, in this case, Nielsen simply offered an alternative measure of audiences’ radio exposure. There are other dimensions of audience behavior that can be measured and monetized, such as emerging concepts along the lines of engagement, recall, appreciation, etc.
As we’re seeing now (particularly within the contexts of the Web and TV), competitors can emerge and potentially thrive when they focus on providing genuinely alternative currencies derived from dimensions of audience behavior that are being neglected by the incumbent. It’s via these supplementary dimensions of audience behavior that competition can emerge in audience measurement — assuming, of course, that these alternative dimensions of audience behavior are to some extent embraced by the audience marketplace.