Nielsen To Roll Out Updated PPM Encoders.

INSIDERADIO

October 6, 2015

After months of consternation and controversy, Nielsen is moving its updated PPM encoders from the lab to the market. The company on Oct. 12 will implement new Critical Band Encoding Technology (CBET) software in the Baltimore and Washington, DC markets, where it has been testing the technology, before expanding to all PPM markets in November. The enhancements are a set of algorithm updates that Nielsen says better hides its watermarks in a station’s audio signal, allowing it to make PPM codes stronger and more robust while keeping them inaudible. "These enhancements will improve the PPM device’s ability to detect encoded audio in challenging acoustic environments such as high background noise or low volume content," the company said Thursday in a memo to clients. Lab tests conducted in New York simulated a variety of audio environments and measured different types of programming such as music and talk. During a 30-minute session at the Radio Show, Nielsen chief engineer Arun Ramaswamy said the number of codes detected per minute more than doubled from one with the legacy encoders to 2.5 with the updated encoder. The enhanced encoder credited 100% of quarter hours in challenging acoustic conditions while the legacy encoders credited as few as 69% for some spoken word programming. In addition to lab testing, Nielsen field-tested the new CBET on 19 radio stations in various formats in Washington, DC and Baltimore. Nielsen used both the old and new encoders on the stations and compared the results. The new CBET had a positive impact on audience estimates. The test stations experienced an average 15% increase in AQH persons 6+ with the enhanced encoders, which didn’t impact currency ratings. With routine ratings rounding, about 40% of the station daypart/demo cases had a 0.1 point AQH rating gain but the lift in AQH ratings was higher among persons aged 35 and older in the 6am-7pm daypart.

Nielsen, Tuning Out Noise, Resets Audio Standard. While a 15% lift in AQH persons would suggest that Nielsen’s existing PPM encoders have been under-counting audiences, managing director of local media USA Matt O’Grady doesn’t see it that way. "PPM was designed for certain standards of listening with certain background noise and an acceptable level of transmission and recognition of those codes," he told Inside Radio after the company’s Radio Show presentation. The encoding update Nielsen just finished testing improves their detection for today’s more challenging acoustic environments. Stations involved in field tests of the enhanced encoders included both those using the Voltair audio processor and those that weren’t. O’Grady declined to comment on specific results of Voltair-equipped stations compared to those without it, other than to say they were "very similar." The company plans to do more testing of its new Critical Band Encoding Technology (CBET) "and we’ll have more to say on it," O’Grady said. Nielsen’s position on Voltair remains unchanged, O’Grady said, qualifying that it "doesn’t endorse the use of Voltair to impact our numbers." O’Grady said Nielsen has no plans at this point to require stations to stop using the audio processor. "We believe that our solution will not make it necessary to use that," he said. "Our watermark and our CBET are ours to maintain and support and to distribute to clients equally. When a market switches, they all get it on the same day at the same time so it is a level playing field." The company said it plans to share the new CBET rollout schedule and hold a client webinar during the week of Oct. 5 to review test results. Chief engineer Arun Ramaswamy told Radio Show attendees that the company worked closely with the Nielsen Audio Advisory Council’s technology subcommittee, which provided insights and feedback, and that it has shared results with the Media Rating Council throughout the process.

Home Depot Calls Radio Big Part Of 99% Awareness. Home Depot has an ongoing "Let’s Do This" attitude about radio. As one of the medium’s most consistent advertisers, the retailer and its ad agency reps discussed their ongoing affair with the airwaves at the Radio Show’s Thursday morning Advertising Breakfast. Among qualities Home Depot identified as radio’s strengths—pervasive reach, theater of the mind, flexibility and immediacy. insideradio.com PG 3

"Radio is a major part of the reason that Home Depot has 99% brand awareness. We wouldn’t continue to be so invested with radio if not for the success in reaching our customers," said Michael Hibbison, Home Depot’s VP of Integrated Media. "One of the things we love is that you’re in your car, backing out of your driveway, and we are engaging interest in the moment for your next home project." Diane Fannon, principal of The Richards Group, which has Home Depot’s creative business, added that radio’s results are also quantifiable—and provide a thumb’s up. "A year ago, we primarily looked at TV data, but now we look at radio and digital, and what we see from radio is always really strong. Out ads catch people’s attention, they stay with it, and the ads have a very favorable impression with consumers." Added Hibbison, "We need to make sure we’re relevant when the customer is in the middle of a project, and radio remains such a huge part of that to help us get our message out. It’s the one medium that has really stood the test of time."

Inside Story: Experts On Selling Radio’s Reach To Buyers (Part I). Let’s call it radio’s great reach misconception. Nielsen says the actual weekly reach of AM/FM is 93%. An Advertiser Perceptions study says ad execs put that figure at only 64%. In Part I of our Inside Radio roundtable series—which runs all week—we asked six industry experts to say very specifically how they’d close the gap. According to Steve Chessare, VP and Market Manager, Greater Media Detroit, the onus is on the industry to market the brand better. "For as long as I’ve been in radio, we have been talking about validating the outstanding weekly reach of AM/FM radio, yet there still remains a 30% gap" Chessare says. And the answer? "We have to educate advertisers one at a time, and meet their marketing needs by creating customized programs. It’s up to us to be evangelists of our still-powerful medium." Scott Herman, COO of CBS Radio, suggests a slightly different but equally proactive approach. "Numbers alone won’t change perception; seeing tangible evidence of the influence and relevance of a local radio station in its community will," he says. "Continuing to expose the ad community to our strengths in delivering a large and loyal audience, and strategically marketing to them can have tremendous effects on our long-term business." Each of our exec respondents stressed the need to keep the information fires burning. "At iHeartMedia, we stress radio’s reach with potential and current advertising partners in all our markets in every meeting," says Radha Subramanyam, president, insights, research and data analytics for iHeartMedia. "We’ve hosted events for advertisers and media with other radio companies for the sole purpose of educating them about those numbers." And Drew Horowitz, president and COO, Hubbard Radio, stresses the need to own the perception conversation. "We cannot allow the digital streamed products to call themselves radio and present themselves as an interchangeable alternative," he says.

Radio Reach Shift—A Four-Point Plan. There’s a whopping 30 percentage-point difference between Nielsen’s view of AM/ FM’s reach (93%) and the belief of ad executives (64%). To ford that gulf, Pierre Bouvard, CMO, Cumulus Media/Westwood One, part of Inside Radio’s six-person exec roundtable, offers a six-point plan to turn things around. Use our airwaves to tout radio’s powerful reach for advertisers. With clients and ad prospects among radio’s reach audience, stations have the opportunity to "use their funny and entertaining on-air talent to create engaging ads touting radio’s powerful reach," says Bouvard. Create a salesperson test of a "must know" set of facts. "In order to work in many professions, there is a basic body of knowledge you must master," he says. "RAB’s CRMC certification can ensure our salespeople know the powerful story of radio’s reach." Show up: Radio sales managers, GM’s and group executives need to attend advertiser and agency events. This is key, says Bouvard, who believes radio execs must work their schedules around ad shows so they can get the word out. "Most of America’s blue chip advertisers, their CMO and brands managers will be in Orlando, Oct. 14-17 for the ‘Masters of Marketing Conference’ put on by the Association of National Advertisers. Radio needs to be there to meet and tell our story. There are lots of advertiser/agency conferences, and radio needs to show up." We need to sell our medium first, before we sell our platform. "It’s too easy to lurch into selling your station or cluster. Sell the medium," Bouvard insists. "Check out Westwood One’s blog for examples of studies and insights that tell radio’s story. Nielsen is constantly churning out radio sales insights. In fact, Nielsen just put one of their top marketing analysts, Tony Hereau, into a position focused

Ad Execs Applaud Radio’s Many Strengths. Despite continuously changing consumer media behavior, radio has remained remarkably resilient, a group of ad agency execs said at last week’s NAB-RAB Radio Show. They also applauded radio’s connection to local audiences, calling it an effective medium for driving in-store traffic and building awareness and consideration. "TV ratings have gone off the cliff but we’re not seeing that in radio," said Jennifer Hungerbuhler, executive VP, managing director, local video and audio investment, Dentsu Aegis Network. "Radio is an unsung hero in all this fragmentation. It’s in a very good position compared to some of these other channels." With an abundance of audience data now available, advertisers increasingly want to measure return on their media investments. Nielsen’s latest radio ROI study "starts getting at exactly what agencies and clients want from radio," said Kevin Gallagher, executive VP, local activation, Starcom MediaVest Group. At the same time, marketers are looking for new ad models, presenting an opportunity for radio to serve up creative ideas. "Where radio fits in is its flexibility and speed," Gallagher said, along with the ability to weave messages directly into the fabric of the content. "Radio has always been native, that’s what DJ endorsements are," Gallagher said. But he and other agency execs cautioned that endorsing too many products could dilute their value. "It’s a valuable gem and we need to preserve its worth," Hungerbuhler said. The execs said they would like to see the industry transition to real-time audience measurement and urged radio to embrace streaming, which they said provides additional value due to its targeting capabilities.

Programmatic Seen As ‘Our Opportunity.’ If there was one thing that provoked more Radio Show discussion last week than the surprise ouster of Lew Dickey and his brother John Dickey from Cumulus Media, it was programmatic ad sales. Not only did it get its own 90-minute session, but the topic came up repeatedly in panels devoted to sales and marketing. Lured by its promise to free up time to work on marketing strategies instead of fussing over make-goods and clearances, Dentsu Aegis Network’s Jennifer Hungerbuhler said her agency is "spending a lot of time on programmatic." While she expects radio’s programmatic adoption to be a "slow process," she predicted that it is "our opportunity to create our future." Starcom’s Kevin Gallagher said it’s essential for radio to jump on board the programmatic train. "We’re making great strides in the automation part," he said. "The important part will be layering in the data." That’s especially true as more Millennials raised on digital move into key media planning roles at agencies, he said. Gallagher used a hypothetical situation of a planner with a $1 million audio budget to target moms who have cooked from recipes and have visited the client’s recipe website in the past week. If they’re not able to use audio to target that group, they may reallocate the money to digital instead, he said. "Audio can be real-time and flexible but we need to be able to add the data in for the targeting," he said. Christine Travaglini, president, Christal Radio/KRG Partnerships, said radio continues to speak about demos while agencies have moved to behavioral targeting. "If radio can show the value of its audience, think of the money you can get," added Hungerbuhler. "We’re leaving a lot of money on the table by not having that information."

Radio vs. Digital—Telling the Story Better. In part II of our four-part roundtable look at how radio can better monetize its huge reach number and sell itself to advertisers, we asked our six industry experts about how radio can tell its story better compared to the media world’s Next Big Thing—digital. Our panel, while acknowledging the perception of digital’s place, felt it was up to the industry to better talk up its own advantages. "People love cool new things and there is nothing cooler and sexier than NextRadio," says Pierre Bouvard, CMO, Cumulus Media/ Westwood One of the technology that wakes up FM receivers on your smartphone and enables new interactivity with content and advertising. "Every time I tell an advertiser, an agency or Wall Street analysts about NextRadio…they are blown away." "‘Mobile’ is the biggest buzzword in advertising today—and the fact is that radio is more mobile than what people think of as mobile, namely the smartphone," adds Radha Subramanyam, president, insights, research and data analytics for iHeartMedia. "Radio is the best way for advertisers to reach consumers outside of the home, when they’re on the go." Drew Horowitz, president and COO, Hubbard Radio, is convinced that the answer lies in overcoming the perception issue. "We have to dim the glare of digital by showing the strength and beauty of radio through ideation, execution and creative promotion using our platform," he says. "The digital platform is fun and is the shiny new platform, [but] radio is the original mobile marketing medium." "The same old story is rarely exciting," admits Bill McElveen, executive VP, Southern region, Alpha Media. "But the story is about delivering results and we need to tell it more effectively."

Radio vs. Digital Should Be Radio + Digital. To tell its story better vs. the media world’s giant hydra that is digital, radio needs to stop making it "either/or" and start stressing the advantage of making it "one-plus-one" in a smart, collective strategy. That’s the consensus from six industry experts in part II of our four-part radio reach roundtable. "The success of radio has always been, and always will be, about touching people on a daily basis," says Steve Chessare, VP and market manager, Greater Media Detroit. "As a medium, radio is unsurpassed at meeting marketing objectives for our clients. Digital is a piece of that strategy as one of our many ways to engage people…Digital alone cannot achieve results equal to a plan that is a combination of all we have: on-air, online and on-site." "Radio can make digital more effective," adds Bill McElveen, executive VP, Southern region, Alpha Media. "It is to our advantage to provide conclusive evidence that the use of radio makes an advertiser’s digital spend more effective, moving the discussion away from ‘let’s use radio if there’s any money left over’ to ‘let’s use radio to make our digital spend more effective.’ We need to passionately position our medium to not only our advertisers but our staffs as well—and the word ‘passionately’ is key." New statistics seem to provide more and more ammunition for the effort—Nielsen recently reported that the actual weekly reach of AM/FM is 93%—and if it all comes down to simple results, the panel believes radio has a boast-worthy story to tell. Says Scott Herman, COO of CBS Radio, "Clients who use broadcast radio to promote a product, drive customers into their store or deliver a brand message will tell you the medium is an effective form of advertising."