Dialed in

Published 5:00 am Sunday, August 28, 2005

SISTERS – It’s been a good year for Eastlan Resources, the nation’s second-largest radio ratings service: Revenues are expected to rise 19 percent, the company signed deals to research markets for Major League Baseball radio networks and began measuring audiences in a top-100 radio market for the first time.

It’s a lot of success for the company, whose president and CEO goes to the office barefoot and stands at his desk.

Mike Gould says that working from his Sisters-area home while wearing torn jeans and a Nike turtleneck reflects the company mission: While small, try to be smarter than the industry leader.

The $300-million-a-year radio ratings business is dominated by Arbitron Inc., which has an ironclad hold on the country’s lucrative top 50 radio markets. But Gould’s Eastlan Resources is carving out a profitable niche by estimating radio audiences in small- to medium-sized markets across the country.

”Nobody was paying any attention to Coos Bay, (Ore.), Wenatchee, (Wash.), Maui, Hawaii,” Gould said. ”We take the stuff that’s left behind.”

Eastlan’s estimates of radio stations’ audience sizes are said to be accurate within 4 percent. The estimates, which are certified as being generated independent of the stations, are used by stations to set their advertising rates and determine which programs are successful and which aren’t.

In highly competitive markets like New York or Los Angeles, ratings can make or break the bottom line because advertisers seek out the highest-rated programs. Advertising rates are more dependent on ratings in large markets.

But in smaller markets like Bend, the difference in audience size between a top- or bottom-rated program or station is small enough that ratings become less important. Ratings, though, do help small-market advertisers determine the size of the audience their message is reaching.

”Do we live and die by the ratings? No,” said Keith Shipman, the president and CEO of Bend-based Horizon Broadcasting Group. ”What we attempt to do is marry the products we have with the client’s target customer.”

Gould and two partners founded Eastlan in 1999 after a new company purchased the radio station he managed in Wenatchee.

”I decided I wanted to live where I wanted to live instead of living where the job was,” said Gould, who also serves on the Sisters School Board.

Gould, who had managed and owned small radio stations his entire career, suspected that small stations would jump at an alternative to the expensive and unwieldy Arbitron ratings.

The company is technically based in Wenatchee, but there’s just one employee in that office.

The rest of Eastlan’s 10 permanent employees work from home or small offices scattered across the United States and Canada. Its largest installation is a call center in Issaquah, Wash., owned by Eastlan founding partner and research guru Bert Hambleton.

When the company started, Gould knew Willhight Radio Research in Seattle was already conducting limited market surveys in smaller markets, but he decided to take the idea nationwide.

”I knew we could do what they did better,” Gould said.

One year later, Eastlan bought Willhight and became the second-largest radio ratings service in the nation.

Now 6 years old, Eastlan tracks radio audiences in 80 markets and recently signed deals with a handful of pro sports radio networks, including the Seattle Mariners and New York Yankees, to conduct in-depth market analyses of their radio audiences, Gould said.

This year, Eastlan began estimating audiences in Gainesville, Fla., the company’s first foray into one of the country’s 100 largest radio markets, Gould said.

That doesn’t worry Arbitron, said Arbitron’s Vice President of Communications, Thom Mocarsky.

”We’ve got great coverage in terms of clients in the top 100,” he said. ”We tend to be the ratings service of choice for those advertisers.”

Arbitron’s survey, in which residents fill out a daily ”diary” of their radio listening, gives stations a better picture of what people are listening to than Eastlan, Mocarsky said.

”It’s a more reliable picture than what you’d get with a phone survey,” Mocarsky said.

Eastlan estimates the size of radio audiences by conducting phone surveys in small markets.

Respondents are asked a number of questions, including which stations they listen to, what hours and for how long. The system is about as accurate as Arbitron’s survey method and much less expensive to do, Gould said.

”The diary may be better,” Gould said. ”Neither one of them is tremendously more accurate than the other. The flaw of both is they’re dependent on how seriously people take the exercise.”

For a market like Bend, Eastlan charges stations about $25,000 per year for two annual surveys, he said.

New devices that track consumers’ listening habits via electronic monitoring will be more accurate than current survey methods, but could cost more, Gould said.

Arbitron is currently touting the devices, dubbed ”personal people meters” in news releases and recently annouced a major people meter test-run in the Houston area. But Gould believes the company’s focus on the new devices could open a larger market of stations who can’t afford Arbitron’s services, Gould added.

Price was one of the factors that led Shipman to choose Eastlan, Shipman said. Horizon owns five radio stations in Central Oregon.

”It’s significantly less (than Arbitron) and a better value,” Shipman said, of Eastlan’s surveys. ”Eastlan (cost) about 50 percent less than what Arbitron was and in addition to that, we were more satisfied.”

That was partly because Eastlan’s phone surveys sample more people, more often, than Arbitron’s diary system, Shipman said.

Gould predicts his company will realize double-digit growth for the next five years as it continues to expand into small markets across the country. Eastlan still makes less than 1 percent of the revenue of its nearest rival, but that’s OK with Gould.

”We think there’s opportunity in just kind of hanging out, doing the things that nobody else wants to do,” Gould said.

Keith Chu can be reached at 541-383-0348 or at kchu@bendbulletin.com.