PPM – how to measure radio effectively

SEMPL 2008

Today’s agenda

• Some financial facts• From Average Quarter Hour to minute-by-minute Ratings• Changing the Price of Radio Advertising• Managing the Inventory• Future possibilities

Ad Spending

Newspapers36 %

Radio3 %

Cinema7 %

Internet9 %

Outdoor3 %

TV16 %

Catalogue3 % Magazines

3 %

Trade Magazines3 %

Insert Newspapers3 %

Free Newspapers1 %

Direct Marketing13 %

Share of Market Q2 2008

Source: IRM

”Radio had the largest growth

(23,9%) Year-On-Year”

In 2005 the CPT on radio was 52 NOK.In 2008 it is 108! TV is 200

2006 - 261 million NOK through media agencies2008 - 360 million NOK!

P4 breaks advertising-records

Mediegruppe

Denne måned i år

Samme måned i fjor

Økning/ Nedgang

Hittil i år Hittil ifjor Økning/ Nedgang

Medie- gruppens andel iår

Medie- gr. andel ifjor

Dagspresse 226 747 203 594 +11,4 % 1 743 887 1 713 796 +1,8 % 30,2 % 32,2 %

Ukepresse/magasiner 41 743 38 368 +8,8 % 282 410 289 631 -2,5 % 4,9 % 5,4 %

Fagpresse 11 133 9 036 +23,2 % 77 341 70 682 +9,4 % 1,3 % 1,3 %

TV 244 201 245 474 -0,5 % 1 766 495 1 695 324 +4,2 % 30,5 % 31,9 %

Radio 29 488 23 459 +25,7 % 266 597 218 299 +22,1 % 4,6 % 4,1 %

Internett 104 381 79 148 +31,9 % 709 804 558 878 +27,0 % 12,3 % 10,5 %

Kino 8 981 7 442 +20,7 % 53 279 52 720 +1,1 % 0,9 % 1,0 %

Utendørs/trafikkreklame 46 427 26 539 +74,9 % 282 518 216 881 +30,3 % 4,9 % 4,1 %

Direktereklame 41 391 42 191 -1,9 % 543 564 409 551 +32,7 % 9,4 % 7,7 %

Andre medier 15 181 20 930 -27,5 % 57 631 96 467 -40,3 % 1,0 % 1,8 %

TOTAL MEDIEOMSETNING 769 673 696 181 10,6 % 5 783 526 5 322 229 8,7 % 100,0 % 100,0 %

Radio is taking larger share from the advertisers

Radio is still optimistic for the future

http://ppm.arbitron.com/

The Portable People Meter system – PPM

Issues

• Editing rules

• Panel size– Small stations require larger panel– More detailed breakdowns require larger panel– Panelists must comply

• Software and reporting

Advantages with PPM

• Daily updated audience measurement

• More accurate method -> more confidence in radio

• Very similar method to TV (in Norway at least)

...but it is expensive...

National Radio

P155,6

P422,6

Radio 12,2

P23,7

P35,5

P4 Pluss0,8

Radio Norge

9,6

Commercial Radio

A Brief Overview

Source: TNS Gallup, National PPM Radio Survey

Market Share: Q3 2008 Market Share: Q3 2008

Radio 16,1

Radio Norge27,3

P464,2

P4 Pluss2,3

Average weekday 2007AQH PPM vs. AQH CATI

0

1

2

3

4

5

6

7

06:00 23:59

AQH PPM

AQH CATI

Higher Reach With Same Definition:

10:00 14:00 18:00

Average weekday 2007AQH PPM vs. AQH CATI

0

1

2

3

4

5

6

7

06:00 23:59

AQH PPM

GRP PPM

AQH CATI

Big Difference: 15 min. cume to 1 min. net:

10:00 14:00 18:00

How did we set the price of 1 GRP?

• Put 1 spot in every hour, every day, for a week = 162 spots

• Value with spot pricing: 1 200 000 NOK• PPM 1 min. definition 315 GRP*

• Result: CPT increased by 32%

1 200 000 NOK315 GRP = 3810 Cost Per Point

* Used April/May 2006 average

Challenges:• Estimating future ratings• Predicting inventory and sold-out ratio• Over- and Under-delivery• Most of the salesforce had little knowledge of the new rating currency

• Tighter control• Increase Traffic function• Handling a decline in ratings (shortage of inventory)• Changing the placement of a block

Solutions:

Detailed reports of a campaigns performance:

Simple overview

Planning & Split Analysis (3+)

Scenarios:1. 100% P42. 80% P4, 10% K24, 10% SBS3. 60% P4, 10% K24, 30% SBS

Single-Source Planning

0

10

20

30

40

50

60

1 2 3 4 5 6+

100% TV

Radio 50%, TV 50%

Radio 100%

Source: PPM Radio & TV test-data, TNS Gallup

Reach (%)

Frequency

To sum up...

• Radio has had an amazing growth in advertising turnover after the introduction of PPM as the currency

• Radio advertisement has become more precise– You can report and you radiodata in your trackingstudies

• Better utilization of inventory (resources)

• Reach goes slightly up, frequency down

• Single-Source Radio/TV-planning is next!