Comment from Peter Saxon. Nothing lasts forever. And in the business world today a supply contract with just one client would be lucky to last a decade. But the deal that Nielsen’s had with the radio industry to find out who and how many people listen, and when, had been in force for 66 years.

It’s fair to say that with a number of other suitors relentlessly pursuing the contract, worth at least 20 million over three years, it was inevitable that Nielsen would lose it sooner or later. But why now?

The word that kept cropping up on the street was ‘complacency.’ There was a sense that the company was no longer interested in Australia. Indeed, it had been closing down its radio operations in other markets – except in the U.S. where it has put in a bid to purchase its biggest competitor, Arbitron.

In the meantime it has been downsizing its radio team here with the highly regarded Megan Clarken being recalled to the U.S.

Peter Cornelius who headed up the radio division of Nielsen for 10 years, up until a year ago, when he too fell victim to downsizing, told radioinfo, “When you are owned by private equity and then you have new masters, all of a sudden decisions get made that you can’t control. That’s the reality of the business world we live in. There are lots of other media companies and marketing companies that are in the same boat hence a lot of those decision get made.”

In reality the pressure on Nielsen had been building for more than a decade and some industry sources say that they were lucky to survive the two previous tenders. Cornelius, who led both those tenders recalls, “When I joined the business in 2002, the first tender was well under way and Nielsen was subsequently successful. Which was against the odds, because there was certainly a move to appoint somebody else at that time. The second one was a bit more straightforward. I think in all sincerity, where you are a long term incumbent it has both advantages and disadvantages.”

Despite the disadvantages of incumbency and the many voices for change from both within the radio industry and media buyers, Nielsen survived the previous two tenders largely due to the powerful resistance to change from some of the leading stations of the day. They didn’t see much value in spending millions extra on people meters and such if there was a chance that a new survey methodology would yield different results to the diaries and upset the established order.

But times and technologies have changed and electronic people meters is no longer the Holy Grail of audience measurement. Indeed, while GfK, the firm that will take over from Nielsen from 2014, will feature new whizz-bang technology, electronic measurement will only be one component that will be cautiously phased in over a number of years.

CRA CEO Joan Warner who consistently emphasizes that any form of people metering will, in the foreseeable future, act as merely a supplement to diaries told us, “None of the people meters have proven to be the magic bullet of radio measurement. Radio’s strength is that it is everywhere and it is starting to appear in every device and people can listen through many different modes to their favourite radio stations and none of those meters measures all instances of listening.”

In the U.S. problems with Abitron’s Portable People Meters began to surface soon after their launch in 2006 which led to a number of law suits. Determined to avoid a similar debacle, Ms Warner relates, “There are a lot of issues that are being questioned by broadcasters and agencies alike in the U.S. You have people saying it has decimated listening to niche stations like urban stations because the panel size is so small that if one or two panel members drop out in the search category, no listening is recorded in that category. So, if you have young urban black males and there are two of them in a panel in New York  and one of them drops out, it impacts significantly on the listeners of that station.”

While capturing all listening to all stations on all devices remains a challenge, the bigger issue for the radio industry has been recruiting enough respondents in younger age groups. The issue came to a head in December 2011 when the day that the figures were to be released for the first Hobart survey in nine years, Nielsen abandoned the survey with Peter Cornelius telling radioinfo: “We decided not to release it because it was not sufficiently representative of the Hobart population.Those aged 55+ were over sampled and those under 40 were undersampled.”

Nielsen came under fire for the way they conducted the survey and their response to the outcome with one station manager, who did not wish to be named, telling us, “How come they didn’t check at a midpoint and let us know in advance what might happen.”   Another said, “A lot of money has been pissed up against a wall in promotions and visibility. Someone’s got to take responsibility.”

The issue of sampling younger demographics has dogged Nielsen over recent years and remained largely unresolved when tenders were called for this latest round.

However, regardless of this and other niggles, the time had come for Nielsen to go. Any remaining holdouts within the radio industry weren’t going to be enough to maintain the status quo while the advertising industry was demanding that change take place. Ms Warner told us, “The(radio) industry has been well aware for some time that there has been criticism about the rating methodology. And privately we have had comments made about being with the same  provider for such a long time.

“That didn’t mean that Nielsen was ruled out at all for pitching for this tender as obviously as the incumbent they are very reputable global company and they were a very serious contender and they were one of the last two companies left standing after we had quite an exhaustive process,” says Ms Warner.

Although the ABC is not influenced by the advertising industry, Ms Warner confirmed that, “It was a great proponent for change and for changing up the system.  I think what advertisers and agencies wanted to see was radio moving forward. Not just saying okay we are doing 100% paper diaries for the next three years. They wanted to see that we were not just stuck in a 66 year rut and that we would will look at moving to a different provider if they can provide us with a passion and excitement and dedication and excellent service.”

You’ll find more details on exactly what the new contractor, GfK, is providing here. 

To summarise, Ms Warner says, “I am really pleased that we have made the move to the new provider and that we are saving paper diaries. We are looking to phase electronic diaries in, and at the same time we are definitely saying that we are going to try and integrate some sort of electronic metering device by the end of year three.

“While Nielsen has got out of radio audience measurement in some markets, GFK is wanting to move into radio audience measurement. They also invested quite heavily in trials for the tender process, which to us, demonstrated a willingness to invest in radio research in this country,” says Joan Warner.

Peter Saxon