New Project Apollo Case Study Shows that Price Sensitivity of Consumer Groups Can Be Affected by Media Exposure

Project Apollo pilot data indicates that marketers can identify consumer groups whose sensitivity to price depends on their exposure to advertising. This is the latest in a series of marketing case studies developed from Project Apollo, the pilot for a new single-source marketing research service under development by Arbitron, Inc. (NYSE:ARB) and The Nielsen Company. "Understanding how advertising contributes to sales and can reduce the need for price promotion is a new, actionable insight for marketers provided by Project Apollo. The case study just completed provides a compelling demonstration that Project Apollo’s combination of the Arbitron Portable People Meter with AC Nielsen Homescan technology in the pilot panel of 11,000 consumers provides insights not previously available through the conventional tool of marketing mix modeling,” said Dave Thomas, president, Media Client Services, The Nielsen Company. In the study, "Brand X” users were separately analyzed as heavy, medium and light category purchasers. These users were further analyzed by their exposure to TV advertising, resulting in three groups: no exposures, low exposures, and high exposures. The case study revealed that TV exposure has a substantial impact on price sensitivity of households that frequently shop the category. An analysis that segments brand users and media exposure is an approach not possible in the conventional marketing mix modeling, which must attempt to discern marketing effects by examining the total, undifferentiated marketplace for an advertiser’s product. The analysis found that exposure to advertising appears to decrease a consumer’s tendency to react to price changes. Pricing sensitivity is reduced even at low TV exposure levels compared to no exposures. Audiences with four or more exposures showed even less sensitivity, with behavior changes tapering off at between seven and eight exposures among viewers of "Brand X” advertising. The results of the study also indicated in the aggregate that advertising and price elasticity are inversely related. This relationship was observed across various levels of TV exposure. Purchasers of "Brand X” who had not been exposed to TV advertising were the most sensitive to price. Those with low exposure to TV ads were less sensitive to pricing. Audiences with high exposures showed the least sensitivity to price change. "The robustness of the Project Apollo data provides an unprecedented ability to do what is not possible with separate, unrelated data sources,” said Sharon Ameri, senior vice president, The Modeling Group, the division of The Nielsen Company that conducted the price elasticity analyses. "Before, we couldn’t segment out purchasing behaviors by type of consumers. Now we can not only track the purchasing behaviors by targeted segments, but tie changes to the amount of media exposures. While this study focuses on television, we envision follow-up work that includes the wide array of media being collected by Project Apollo and utilized by marketers. ” "The value of Project Apollo can also be realized by the encoding media,” said Linda Dupree, executive vice president, PPM New Product Development, Arbitron Inc. "With this and other studies that break out networks, dayparts and programs by target consumers by advertiser, the media can develop schedules, sponsorships and product placement opportunities in which marketers will want to participate.” The insights in this case study are the product of an extensive analysis of Project Apollo data by The Modeling Group, a division of The Nielsen Company located in Stamford, CT. The Price Elasticity case study is available along with other studies produced from Project Apollo data in the newly released Project Apollo Marketing Compendium available from Project Apollo representatives. Project Apollo pilot extended into the first quarter 2008 Arbitron and Nielsen have agreed, along with the seven members of the Project Apollo Steering Committee, to extend the pilot period for Project Apollo into the first quarter of 2008. The additional time will be used to conduct a number of specific efforts aimed at helping the members of the Project Apollo Steering Committee better understand the utility of the service and build the strongest possible business case for the commercialization of the proposed single-source marketing information service. The specific efforts include: further testing and analysis of the commercial detection capabilities of the Portable People Meter system; further evaluation of recent enhancements to the pilot’s multimedia capabilities, particularly those for print and Internet measures; additional development of the internal systems to make the data more easily accessible to the media, advertisers, and marketers – both directly and through their own software applications. About the Project Apollo Pilot Panel The Nielsen Company and Arbitron have deployed a national pilot panel of more than 11,000 persons in 5,000 households as a demonstration of the ‘Project Apollo’ national marketing research service. The pilot panel is delivering, to a select group of charter supporters, multi-media and purchase information from a common sample of consumers. Seven advertisers are members of the Project Apollo Steering Committee, a group of marketers who have signed agreements for the Project Apollo pilot panel data. In aggregate, these seven advertisers spend more than $6.8 billion for advertising on measured media. The pilot panel is intended to show advertisers how Project Apollo enables a better understanding of the link between consumer exposure to advertising on multiple media and their shopping/purchase behavior. The pilot also showcases the enhanced ability of the ‘single-source’ marketing research service to measure the return on investment for marketing efforts. How the Project Apollo Pilot Panel Works The panel members are being given incentives to voluntarily carry Arbitron’s Portable People Meter, a small, cell phone-sized device that collects the volunteers’ exposure to electronic media sources: broadcast television networks, cable networks, and network radio as well as audio-based commercials broadcast on these outlets and on additional media. Consumer exposure to other media such as newspapers, magazines and circulars is being collected through additional survey instruments. Data on consumer preference and purchases for a wide range of services and products are also being collected from panelists via ACNielsen’s Homescan technology, which tracks packaged goods purchases, and by means of additional surveys. Data are being collected in aggregate form to provide a holistic understanding of participants’ media interactions and their resulting shopping and purchase behavior. About The Nielsen Company The Nielsen Company is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media information (Nielsen Media Research), business publications (Billboard, The Hollywood Reporter, Computing, Intermediair) and trade shows. The privately held company has more than 42,000 employees, is active in more than 100 countries, and has headquarters in Haarlem, the Netherlands, and New York, USA. About Arbitron Arbitron Inc. (NYSE: ARB) is an international media and marketing research firm serving the media – radio, television, cable, online radio and out-of-home – as well as advertisers and advertising agencies in the United States and Europe. Arbitron’s core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data. The company has developed the Portable People MeterTM, a new technology for media and marketing research. Arbitron’s marketing and business units are supported by a world-renowned research and technology organization located in Columbia, Maryland. Arbitron has approximately 1,900 employees; its executive offices are located in New York City. Through its Scarborough Research joint venture with The Nielsen Company, Arbitron provides additional media and marketing research services to the broadcast television, newspaper and online industries. Portable People MeterTM and PPMTM are marks of Arbitron Inc. Arbitron Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding Arbitron Inc. and its subsidiaries ("we," "our," "Arbitron" or the "Company") in this document that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes," or "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which Arbitron has derived from information currently available to it. These forward-looking statements involve known and unknown risks and uncertainties that may cause our results to be materially different from results implied in such forward-looking statements. These risks and uncertainties include, in no particular order, whether we will be able to: successfully implement the rollout of the Portable People Meter system renew contracts with large customers as they expire; successfully execute our business strategies including entering into potential acquisition, joint-venture or other material third-party agreements; effectively manage the impact of any further consolidation in the radio and advertising agency industries; keep up with rapidly changing technological needs of our customer base, including creating new proprietary software systems and new customer products and services that meet these needs in a timely manner; successfully manage the impact on our business of any economic downturn generally and in the advertising market in particular; successfully manage the impact on costs of data collection due to lower respondent cooperation in surveys, privacy concerns, consumer trends, technology changes and/or government regulations; successfully develop and implement technology solutions to measure multi-media and advertising in an increasingly competitive environment; and successfully obtain and/or maintain Media Rating Council accreditation for our audience measurement services. Additional important factors known to Arbitron that could cause actual results to differ materially from our forward-looking statements are identified and discussed from time to time in Arbitron's filings with the Securities and Exchange Commission, including, in particular, the risk factors discussed under the caption "ITEM 1A. RISK FACTORS" in Arbitron's Annual Report on Form 10-K for the year ended December 31, 2006. The forward-looking statements contained in this document speak only as of the date hereof, and Arbitron undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.