How Do Radio Ratings Work?

Arbitron is in the business of gathering and selling radio listening data. They provide data on who is listening to which station at what time of day. That's quantitative data. Abitron also provides qualitative data - exactly who are the people listening to radio? .... what are their ages, lifestyles, education, home ownership, automobile ownership and much more. They have been the major player in radio ratings for decades. There have been a few competitors, like Birch, but most of the competition has never lasted long. Can you say monopoly?

For years Arbitron has used a diary method to gather data - a sample of the population in a rated market keeps details of what stations they listen to over a period of several weeks. In the past Arbitron had spring surveys and fall surveys. Then in larger markets they added winter surveys and summer surveys. Some markets are in a ratings survey period year round. The big problem with diaries is that people aren't always meticulous about how they fill them out; and for any given area, a very few diaries are extrapolated to provide general audience trends. In recent years, Arbitron has been rolling out the Portable People Meter (or PPM) - an electronic device that records actual listening data for the person it's assigned to.

Over the years there have been stations that start a contest on a Thursday - and usually at 20 minutes past the hour. Why? Arbitron's ratings week starts on Thursday and stations get credit for listening broken down by quarter hour. In the Arbitron game, 20 past the hour gets a station credit in two quarter hours. That's why you'll hear things like the "Really Big Giveaway" starts Thursday at 7:20 on KABC. One extremely popular ratings gimmick has centered on 7:20 AM Thursdays - the Birthday Giveaway. "If your birthday is in this envelope when we open it at 7:20 this Thursday morning, you could win $10,000." In this example are the words "if" and "could" - meaning someone may or may not win $10,000. Under FCC regulations, stations are supposed to be completely honest with all of their contests - in most cases the FCC expects stations to have a list of rules and qualifications for any given contest available to listeners - so the unsuspecting listener can see "the fine print". If there are loopholes that get the station out of having to award the big prize in a contest, they'll be spelled out in the contest rules, or should be.

Geographically, survey areas are divided into metro survey areas (MSA) - larger cities and the county they're located in, and total survey areas - all of the counties that make up a particular radio market (TSA).

In Missouri, a county may have a population of several hundred thousand people, but Arbitron data is often comprised of the diaries from only 20 to 40 actual listeners. Larger metropolitan areas have a higher concentration of diary penetration, but it's still only fractional compared to the total population.

You're probably thinking all this data gathering and compiling is expensive and you're right. Who pays for all that data and technology? Radio stations and advertising agencies are Arbiton's paying customers. And how much does all of this data cost? By and large, radio stations would prefer that you not know who much the data is costing them. Why? It's very expensive. For a small market station that's rated in a TSA or MSA the annual cost of Arbitron ratings is often more than the annual salary of many of that station's employees. So they'd prefer you and their employees not know how much Arbitron data costs. Arbitron has a confidentiality clause in their contracts, so stations legally can't say how much they're paying.

I can only speak from experience. For a small market broadcaster in the 80's - Arbitron had a fairly economical package called the county by county ratings. The data was actually over a year old for each year's publication - so the spring 1987 ratings data would be published in the 1988 county by county book. The county by county book for Missouri in the 80's cost us around $1200 (per year). But that was only gravy for Arbitron at the time - the real paying customers were and are the subscribing stations in an MSA or TSA. Once a station shows up in a rated MSA market - they can no longer buy the county by county ratings - they have to pay for MSA and TSA data if they wish to use Arbitron data.

Arbitron data is based on an annual fee, and stations are given the option to pay that monthly for any given year. Arbitron has long had a built in annual price increase in their contract - so for example with a 5 year contract, year 1 is the least expensive and year 5 is the most expensive.

The station contract with Arbitron ended in the Spring of 2010. At that time, Arbitron data cost the station somewhere in the ballpark of $36,000 a year. And that's actually more than twice the amount of many employee's annual salary - so Arbitron cost is not something most stations want to talk about. Arbitron proposed a new 5 year contract for the station that would have seen that annual cost exceed $55,000 a year in the 5th year, and the only person in the station making that kind of money is the owner.

Stations use ratings data to increase ad sales - more listeners mean higher advertising rates - but there's a point where Arbitron can be just too expensive for the return on investment and Arbitron hit that point with my former station in 2010.

Advertising agencies - whose customers are retailers, companies and corporations - use ratings data to determine which station provides the best value for their customers.

Ratings data is expensive. Too expensive for many smaller stations. And those stations will usually point out the flaws in Arbitron's methodology - like the sparse number of actual diaries involved in ratings, or the ability to manipulate the numbers to show what somebody wants to show. Arbitron would likely argue the latter of those is a feature, not a flaw.

While usually only one station can be number 1 in terms of total listeners for a given time period, you can use a combination of quantitative and qualitative data to show a particular station's strengths. For example: number 1 among men, 18-34 years of age who are employed full time, make more than $45,000 a year, drive a pickup and live north of the Missouri River. And there really are advertisers who are interested in reaching the top station with those kind of demographics.

Ratings are one big, expensive game - played by Arbitron, radio stations, advertising agencies and the people listening (or not listening) to radio.

The overall number of people listening to radio continues to decline - as people turn to other sources for entertainment and information.

So it goes.