Media Decoder Blog: Arbitron Deal Extends Nielsen’s Reach Into Consumer Habits

With its $1.26 billion acquisition of Arbitron, announced on Tuesday, Nielsen is buying much more than the most widely followed radio ratings service. It is also extending its already substantial reach into the overlapping forms of media through which people consume their entertainment and news, and spend their money — information that is essential to advertisers.

Nielsen is best known for its television ratings, but its various branches also track an array of consumer product sales, like books and music, as well as consumers’ habits online and through their mobile devices. Just on Monday, for example, Nielsen announced a new system with Twitter to rank TV shows by their levels of social-media chatter.

Arbitron, meanwhile, has remained primarily focused on radio consumption, which has held surprisingly strong in the Internet age as people stay plugged in to their favorite radio stations, particularly while driving.

According to Arbitron’s most recent statistics, more than 241 million people in the United States, or about 92 percent of the population ages 12 and over, listen to the radio each week. And unlike television, the vast majority of the ads on broadcast radio are for local businesses.

Through the deal with Arbitron, Nielsen should be able to track even more of consumers’ media consumption and buying habits. In a presentation to investors and Wall Street analysts, Nielsen said that by adding Arbitron’s radio data to its portfolio, it would be able to increase the total amount of time in a given day it could track the listening and viewing habits of the average American to seven hours from the current five.

“That is a very big deal when your job is to measure how consumers ultimately form and change behaviors,” David L. Calhoun, Nielsen’s chief executive, said in a conference call. “And it’s that linkage of buy and watch that ultimately allows us to provide those insights.”

In early trading, Arbitron’s shares shot up by nearly 24 percent, reflecting the premium Nielsen will pay for the shares; Nielsen’s stock was up about 1.3 percent. Nielsen is active in more than 100 countries and last year had $5.5 billion in revenue. Arbitron is a much smaller company, but has substantial profit margins; last year it generated $53 million in net income on $422 million in revenue.

As some analysts see it, the challenges for the combined companies will include measuring the growth of online audio and linking Arbitron’s value for local advertising with Nielsen’s more extensive and national data.

For now, Internet radio services like Pandora are not measured by Arbitron in “apples to apples” terms alongside broadcast radio stations, which Pandora has complained puts them at a disadvantage with advertisers and media-buying agencies. But those measurements may become essential as online listening grows and is embraced by even the biggest radio broadcasters, like Clear Channel Communications.

Laura Martin, an entertainment and media analyst with Needham Company, said that Nielsen’s expertise and its aggressive push into online markets could be an advantage in exploiting Arbitron’s local radio data.

“It’s interesting that they will have the management I.Q. of Nielsen in charge of local advertising possibilities,” Ms. Martin said. “The Internet is moving at the speed of light, and the next big promise of advertising cash is sitting in local. In Nielsen’s hands those relationships may turn into something that Arbitron didn’t think of.”

Article source: http://mediadecoder.blogs.nytimes.com/2012/12/18/with-arbitron-deal-nielsen-extends-its-overview-of-consumer-habits/?partner=rss&emc=rss