SEATTLE — What if you knew how much an average listener contributed in daily, monthly, or even annual revenue to your station? And what if you could use that data to help drive decisions in what promotions make sense for existing listeners and which marketing channels are best for new listeners? You can, and here’s how to do it.
The ratings data used in the example below is standard for all Arbitron subscribers. The revenue figures are fictional.
We know Arbitron uses daily (not weekly) cume and time spent listening (TSL) as the foundation for radio station ratings, and within the TSL metric is one of the most important numbers for a station; the number of times listeners tune in, also known as occasions. The first step in figuring out listener value is to understand how many tune-in instances happen in a day. A tune-in instance is when someone turns on the radio long enough to capture a quarter hour. Getting to this number is pretty simple: take daily cume, multiply it by daily occasions, and you’re there.
Here’s an example of what this looks like for KIRO-AM in Seattle (P6+, Full Week) in January 2013.
Daily Tune Ins on KIRO-AM, January 2013, P6+, Full Week
Now we need to solve how many times this happens in a month. Why? Because one of the pieces in our Listener Value formula is monthly spot revenue. Since there are 28 days in an Arbitron survey, we’ll take our Avg. Daily Tune Ins (652,000) and multiply that by 28. At this point we know that in January 2013, there were 18,270,000 instances of someone turning on the radio for at least 5 minutes (the minimum threshold for a quarter hour) on KIRO-AM.
Monthly Tune Ins on KIRO-AM, January 2013, P6+, Full Week
Now let’s say there was $700,000 of spot revenue in that same month. We can then divide the monthly revenue by the monthly occasions to get the value of someone turning on the radio long enough to earn a quarter hour. Because we know that each listener turns on the radio 4.5 times each day for this particular month, we can also figure out their daily value.
Now how much is a listener worth over the course of a year? Considering the audience data we pulled was Full Week, we should multiply the Avg. Daily Listener Contribution of $.17 by the total number days in a year, 365. (You’d want to use 260 as your multiplier if you were working with Monday-Friday data as opposed to Full Week)
And there you have it: $62.07
Before you start diving into your own station, I want to make some important points.
- When doing this for your station, use the data that’s specific to your targeted demographic. For example, if you’re a sports station, chances are you’re targeting Men 25-54 and you really only focus on ratings during Monday-Friday, 6a-7p. When you narrow in on your specific demographic, you’ll find that generally your listener value will be higher.
- Gather the data for at least 12-18 months to get a better idea of what the average listener value is for your station. Using just one month of data will not provide a clear picture.
- This formula does not account for profitability of a listener – only revenue against each listener.
For those of you who are interested, here’s the spreadsheet with formulas included to figure out listener value for your station. I’ve highlighted the cells in yellow that need information plugged in. On this sheet, you can either compute listener value for P6+, Full Week or any audience segment in Prime (I’m using Men 25-54 on this spreadsheet – but you can use whichever Prime audience segment you’d like).