October 23, 2003

Progress Report to Clients:
Nielsen and Arbitron Continue to Test Portable People Meter (PPM)

Nielsen Media Research continues to make progress in working with Arbitron to better understand and improve the Portable People Meter (PPM) methodology.  As previously communicated to our clients, Nielsen and Arbitron have agreed that three categories of tests are needed before the marketplace can more intelligently evaluate the PPM system as a currency for audience measurement.  Initial results from our work together on improving response rates among panel members, for example, show positive results.  We need to make certain that such results can be sustained over a longer period of time.  

The categories of tests include:

• Response Rates – Our objective is to improve the quality of the recruiting and sample maintenance methodology and do so on a sustained basis.
• Dual Meters – We want to compare the data collection results from the PPM with Nielsen’s set-tuning meters in the same panel of homes.

• Meter Sensitivity – We need to better understand the potential impact of using an audio-based definition of viewing by evaluating how often unintended viewing is reported by the PPM in various sample environments.

Through much joint effort between Nielsen and Arbitron, there has been substantial progress on designing and agreeing to the parameters of these tests.

PPM Response Rate Tests

Nielsen and Arbitron have developed and are testing two separate methods that show promising results in successfully recruiting panel members into a PPM sample.  Initial results, based on two months of data, are consistent with what Nielsen would expect from recruitment of a Set-Meter panel, which is what both companies wanted to achieve.

For the response rate test currently underway in Philadelphia, Nielsen and Arbitron have recruited two panels using two different methodologies. The first methodology focuses on the use of Nielsen Membership Representatives who recruit potential participants.  This method mirrors Nielsen’s current approach for recruiting homes in its metered television panels.

 The second approach is a novel combination of telephone-based recruitment and Membership Representatives.  Key features of the modified test include:  

• Use of a brightly colored box for all mailings to potential homes
• Enhanced recruitment materials
• Increased incentives and use of promised incentives
• Reduced number of data variables collected at recruitment
• Streamlined equipment box
• Co-branded materials using both the Nielsen and Arbitron names

Though recruiting panels with the new methodology will cost more and take more time, the quality improvements may be well worth the effort.  However, we need to complete the test and make sure that the positive results continue beyond the first two months of preliminary data.  Having a better understanding of long-term turnover is important because, over time, households leave a research panel for natural reasons (e.g., household members tire of participating or the family moves out of the market), or they are asked to leave because of non-compliance.  Nielsen and Arbitron will continue the response rate tests for both panels into 2004 to evaluate the effect of turnover and confirm the initially positive results.

Dual Meter Test

The “dual meter” test has just begun.  It compares Set-Meters and PPMs in the same household.  The purpose of this test is to better understand how and why the two meters complement or conflict with one another.  Evaluating the two meters side by side is the most direct means of making a comparison.

Meter Sensitivity Test

We need to understand more about the audio sensitivity of a PPM under different conditions, including program type and household acoustic environments.  This test will also provide television clients with more information about how the PPM’s expanded definition of “television audience” may affect the data.  The industry-agreed standard definition of “television audience” is based on people in the sample reporting when they consider themselves to be “watching or listening” to television.  The Arbitron PPM reports when a person is in the audience based on detection of embedded codes in the program audio.  We need to understand the degree to which such detection can be affected by the set’s volume level, program audio, room acoustics, other background noise or normal conversations.  This audio sensitivity test will continue for six to eight months. 

Next Steps and Timing

Final results of all these tests are expected to be completed by the summer of 2004, and we intend to communicate more to our clients at that time.  

Both companies have also agreed, following the successful conclusion of the tests outlined above, to the possibility of moving ahead with a second test market and, thereafter, potentially deploying the PPM commercially in financially viable markets.  Unlike previous milestones presented to the marketplace, our current timetable is based on detailed project planning that both companies have carried out over the last six months.  While we cannot predict the final outcome, we know what needs to be done and how we will get that work done given other demands placed on both companies’ resources. 

After communicating the final results of the broader research program to our clients, Nielsen will rely on client feedback and other due diligence to make a decision on participating in a second PPM panel.  We anticipate making this decision in the fall of 2004.  We understand that Arbitron may begin the second market panel beforehand to address specific radio needs.  If Nielsen does decide to participate, Nielsen will then decide on whether to exercise the option to form a joint venture with Arbitron and deploy the PPM commercially, most likely nine to twelve months after results from the second market are ready.