Arbitron and Nielsen in Trouble

Forbes reports that broadcasters are displeased with Arbitron’s falling response rate as people filter out unsolicited calls and telemarketers. Arbitron still relies on a diary system, filled out by hand by members of the public, who are paid $2 a week for the pleasure. And they wonder why the response rate is falling?

radio broadcasters are furious with Arbitron, the New York City-based radio ratings service whose research determines the fate of much of the $20 billion that is spent on radio advertising.

After randomly selecting thousands of households in a radio market and sending written notification, Arbitron (nyse: ARB – news – people ), then calls each house to get consent before sending out diaries for each person over the age of 12. Presuming they agree, the diary keepers spend a week recording the radio stations they listen to and at what times.

But fewer and fewer people are picking up the phone when Arbitron calls. That, in turn, means fewer diaries are filled out. Since peaking at 42.7% in 1995, response rates have fallen to 34.5% as of last fall. With fewer diaries backing up the ratings, the radio broadcasters who live or die on the ratings are wondering how good they are in the first place.

….Arbitron acknowledges that the response rates are a problem and that it’s working on several possible solutions. Among them, “promised incentive,” which is research-speak for paying folks more money once they complete their diaries instead of at the beginning. As it is, the money is already pretty chintzy: $2 per person, in crisp one dollar bills, with the unpaid promise that you’re helping to program radio stations in your area. The new back-end incentive pays $10, but not until you finish the diary and send it in.

The primary beneficiaries of the new sweetened incentive, however, are black and Hispanic listeners, a huge demographic category that is notoriously unresponsive to Arbitron’s calls, and one reason why overall response rates are falling.

Of course, technology is on the way:

One costly technological solution long touted by Arbitron as the ultimate answer to the inexact science of handwritten diaries is still a work in progress. Under development since 1992, Arbitron’s Portable People Meter is a pager-like contraption that can tell what radio or television stations someone is tuned in to by tracking inaudible audio codes. At the end of the day, the user puts the device into a base station, which sends the data overnight to Arbitron. Presuming that the user is diligent about carrying the thing around and charging its battery–and doesn’t mind the Orwellian thought that someone is eavesdropping on his or her every waking moment–the People Meter could provide broadcasters with more precise ratings data than ever before.