Kurt Hanson: The Voltair Controversy

kurt hanson aboutConsultant Randy Kabrich is one of radio’s industry’s sharpest minds, and a guy with whom I had the opportunity to work on a few market research projects in the ’90s, back in the glory days when radio broadcasters actually spent money on such items as market research, ad campaigns, and consultants.

(Remember when you could drive down a freeway in a major city and see competing billboard campaigns for radio stations? Or watch TV and sometimes see commercials for two different radio stations in a single spot break? Those were the days! As a result, radio was at its peak in terms of audience size (in terms of hours of listening per consumer per week).)

In the news today, Kabrich is getting press for a provocative and well-researched blog piece he’s written regarding the Voltair controversy titled “Are You Smarter Than a 5th Grader?” (Read his original blog piece here.)

(Just in case you’re not following news of the broadcast radio industry: Radio ratings produced by Nielsen Audio (formerly Arbitron) in the 48 largest U.S. markets are produced using virtually inaudible tones in a radio station’s audio that are picked up by “Personal People Meters” (PPMs) — pager-size devices carried by a couple of thousand randomly selected respondents. Voltair is an audio processing unit (which sells for about $15,000) that claims to increase the audibility of those tones to the PPMs, purportedly resulting in ratings increases.)

In Kabrich’s blog piece, he looks at the P25-54 AQH ratings of all 1,239 FM stations (957 of which Kabrich defines as “competitive”) in all 48 PPM markets — a smart, impressive piece of research — and looks at whether in the past year, since clients have begun using Voltair, those stations’ audience sizes, on the whole, changed.

He uses, correctly, “AQH rating” as the statistic he looks at, because “AQH persons” can go up when the population goes up, “cume persons” can go up and yet stations can have no meaningful increase in listenership, and “AQH share” always by its definition adds up to 100.0 (and thus would never change even if usage of the medium grew or declined).

What Kabrich finds is that the AQH rating of the stations involved averaged, nationally, a .2% increase — in other words, he says “statistically flat.” Thus, with over 600 Voltair units sold in the U.S., he concludes that the Voltairs have no measurable overall positive effect on audience size, and cannot have the ~10% positive impact that its promonents [sic proponents] claim.

It’s a very compelling argument — except for one thing.

What I believe this analysis is forgetting is that radio’s AQH rating has been declining every year for the past couple of decades — at about 1% per year during the ‘90s and ‘00s, and with the decline increasing to about 5% per year, I believe, in this decade. (The exact percentage is hard to know; Arbitron used to publish quarterly numbers on their website that allowed one to track this statistic, but they quit publishing those numbers several years ago.)

If AM/FM radio has indeed been on a trend of 5% per year declines lately — this trend due primarily to existing data seems to suggest, to consumers transitioning to other forms of radio like satellite radio, Internet radio, and podcasts — and if in the year of Voltair there was no decline, that suggests that Voltair devices may in fact have had a 5% positive effect on AQH ratings!

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One Comment

  1. 7/28/2015 UPDATE

    Kurt Hanson Proves He is Smarter than a 5th Grader

    In response to Kurt Hanson’s RAIN response to this blog post here, I really do not have any disagreement with what Kurt has posted.

    There are several points I would like to make, though.

    1) I did try to make a reference to declining numbers in the statement “Yes, better than some of the recent decreases we have seen, but certainly no one can point to this as a success (except perhaps Telos at $15k per unit)..” Quite frankly, when I first read the RAIN article I searched for the line, could not find it and *assumed* I made an edit and somehow cut it out. But then an eagle eyed friend pointed out that it WAS in the article. As I even missed when looking for it, so it is not surprising that Kurt also missed my reference to it. No harm, no foul.

    2) I am hoping that Radio has found a floor in the declines and to me, it does not appear that Voltair would be adding this drop back in because of the item near the end of the post which was glossed over by the trades:

    A final thinking point if you made it down this far…..

    Why are the majority of up markets (and biggest gains in the markets) in markets 26-52 and not 1-25?

    If you were a Major Group and could not afford to put a $15k Voltair in all markets, would you not first put a Voltair in NYC, Chicago or Dallas – instead of San Antonio, Cleveland or West Palm Beach?

    Is a Rating Point not much more valuable in New York than in Memphis?

    3) As I reported in the numbers, the Standard Deviation is 5.4%

    4) If this is actually a 5% decrease year to year, the Voltair would need around a 8% increase with roughly ~60% Voltairs in the sample (not the 5% reported).

    5) A 5% or even an 8% increase will really not add additional GRP to the station.

    .1 AQH Rating to .2 AQH Rating increase requires a 100% increase.

    .2 AQH Rating to .3 AQH Rating increase requires a 50% increase

    .3 AQH Rating to .4 AQH Rating increase requires a 33% increase

    .4 AQH Rating to .5 AQH Rating increase requires a 25% increase

    .5 AQH Rating to .6 AQH Rating increase requires a 20% increase

    Again, highest respect to Kurt and I thank him for reading and understanding what I was trying to get across, as well as his input.

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