Digital Radio Goes Programmatic

It comes as no surprise to see digital radio (audio) numbers escalating. Nevertheless, all the bells and whistles to follow bring forth some interest.

eMarketer estimates that by 2017, “Digital Radio listenership will grow to 57.8% of the population”. Mutually, ad dollars being spent in the digital audio sector will also grow. However, those ad dollars might be spent in a slightly different way than usual.

The International Data Corporation (IDC) expects for one in five radio dollars (approximately $4 billion) to be booked programmatically by the year 2020. As defined by Prohaska Consulting programmatic buying is, “the process of executing media buys in an automated fashion through digital platforms such as exchanges, trading decks, and demand-side platforms (DSPs). This is an alternative to the traditional use of manual RFPs, negotiations and insertion orders to purchase digital and other platforms.”

So, why is digital making this switch into the programmatic world? Well, simply put, it’s easier and more detailed.

Easier – no longer do buyers have to ask for a proposal, negotiate for the best price, and send in an insertion order in order to make a buy. Now, buyers’ impressions (radio spots) are purchased automatically through a bidding format.

More detailed – Programmatic allows for layers upon layers of targeting with the use of app-login data, first-party registration data, and other third-party data.

So instead of just targeting a person who probably listens to alternative music during the hours of 6am – 8am, advertisers can now target that 28 year old male who loves alternative, drives to work between 6am – 8am and has also been eagerly searching for the perfect diamond ring, wedding venues, houses on the market, and all-inclusive resorts. That extra piece of information opens tons of doors to advertisers to specifically target the soon to be married male in contrast to a 28 year old male who loves alternative and lives in his parent’s basement. 

Internet Radio and the Price Increase Required for Advertising

The current Pandora station streaming music to my ears encompasses a total of 9 different artists influencing the songs that I hear. The current FM radio station set in my car encompasses a total of 9 different songs that I hear, over and over and over. Rain News estimates an increase of 42.7% of internet radio listeners over a three year period from 30 billion in 2014 to 43 billion in 2017. It is no surprise that listeners are shifting towards a more personalized experience on internet radio as opposed to the traditional radio alternative.

With this shift from traditional to internet, advertisers must shift their advertising platforms as well. It’s no surprise that research (by Rain News and XAPPmedia) has shown that spending on internet radio advertisements is expected to increase. According to the research, 77% of US music industry professionals expect ad-loads on internet radio to increase over the next two years.

The increase of ad-time is expected to rise nearly 15% over the next two years from an average of 2 minutes 41 seconds to 3 minutes per hour. However, with 3 minutes standing at the maximum amount of time for advertisements for the best user experience, the amount of advertisements cannot grow exponentially. Because of this, the cost will rise.

This is your standard supply and demand situation. With the demand (amount of ad minutes) from internet radio providers being limited to 3 minutes of advertisements, all the pressure is on the supply (advertisers wanting to advertise) side. This gives all the power to the internet radio providers allowing them to adjust the price of spots more freely.

According to the Rain News and XAPPmedia research, eight out of ten (79%) music industry professionals believe that internet radio ad rates will increase over the next three years.

Internet radio does have its perks that might make the price jump worth it. Internet radio can target a more specific audience that you’re trying to reach, as well as give more specific details of ad performance.

Advertisers can expect and prepare for this shift from traditional radio to internet radio as well as the pretty penny that it will cost. 

Teens listen to music more on online streaming than radio

How do US teenagers primarily listen to music? Radio? Streaming? Owned music? For advertisers, it can be extremely important in knowing how a target audience seeks out media and entertainment. eMarketer recently reported on a fall 2014 study conducted by Edison Research. The focus was discovering how teens listen to music.

The study considered teenagers to be people between the ages of 13 and 17. As of fall 2014, online streaming platforms like Spotify and Pandora are ranked with more time spent listening than terrestrial radio. Teens spend about 64 minutes per day listening to online streaming and spend about 53 minutes a day with radio. In most other age categories, radio outperforms online streaming. In addition, teens have access to music through downloaded/owned music, etc.

With teenagers having a relatively easier access to computers, tablets, smartphones, and MP3 players that have Wi-Fi than traditional radios, it’s not surprising that there is a shift in listenership. Think about a bus commute, the time going to and from school on a bus could be new time spent listening to music.

It will be interesting to see if the gap between the time spent listening between radio and streaming will broaden over time as this age group matures out. The introduction of driving on a more regular basis where traditional radio is readily available may play a factor overall. 

Core radio listeners and digital media

Digital media has changed the landscape for advertisers over the last few years. While some media feared that digital meant the death of traditional forms, it really has not been substantiated. With the case of terrestrial radio, it’s allowed the medium to reach the core audience in more ways.

The Center for Media Research recently summarized the findings of a Jacobs Media study about core radio listeners. Some of the facts to note were:

The digital breakdown of a core radio listener

·        75% of those surveyed own a smartphone

·        51% have a tablet

·        55% stream audio at least once a week

·        67% watch online video content during the week

·        95% listen to traditional, broadcast radio per day

·        17% of broadcast radio listening occurs on digital platforms like computer or mobile streams, etc.

Another fact reported was that 30% of respondents favored radio stations that interacted with them. In fact, they would listen more. Interaction may include sharing online content through social media, the station’s website, email blasts, etc.

In addition, broadcast radio still holds the majority at 51% as the go-to source for new music. The report suggests that listeners feel that radio stations can be trusted.

The takeaway is that core radio listenership may dip at some point, but if the radio station can broaden its reach with the incorporation of digital media, the audience will continue to be loyal.

Options for reaching consumers through music

Amy Winehouse, James Morrison, Neon Trees, The Penguins, Ne-Yo, The Black Keys, Nat King Cole, Boyce Avenue, and Cyndi Lauper… what do these recording artists have in common? Other than being musicians and being on a 29-year-old female’s mp3 player, not a whole lot. If an advertiser intends to reach this potential consumer through music, what are some options?

Terrestrial radio is always a solid choice. There is a mass reach and has the closest time of purchase that many other media options lack. However, one of the down sides to mass reach is that there is a limiting factor to targeting. Research can help advertisers to find stations that pull well generally for a demographic like women 18-34. But what about the women in that age bracket that don’t listen to those high-ranking stations and listen to male dominated stations instead?

Today, advertisers can look to online streaming music as a highly targetable option. With vendors like Spotify and Pandora, advertisers are able to target messaging on very specific demographic and geographic criteria. The down side to this is that while membership is growing exponentially, it’s not the audience size that radio has.

For those of you who have a Spotify or Pandora account, do you remember signing up and giving your birthday and your gender as part of the process? This information allows advertisers to only put the message in front of potential consumers. It limits the amount of spill.

So if a 42-year-old man is listening to a Justin Timberlake station, which is primarily known for a big female audience, he will not be shown the advertiser’s ad. However, if a 29-year-old woman is listening to Alice in Chains, you can reach her.

For online streaming, it’s not about the genre of music, but rather, the person. For terrestrial radio, it’s about casting a wide net and reaching a lot of people. Depending on the campaign and the goal, either of these options or even both can work.

   

Online ad revenue grows for local radio

Local radio stations have been working to incorporate the digital platform into its arsenal of options for listeners and advertisers alike. Overall, online ad revenues have increased for local radio stations, but how does that compare to terrestrial radio revenues?

MediaPost reports that experts are suggesting a 14% increase from 2012 for online ad revenue for local radio stations. The Radio Advertising Bureau arranged the report, and Borrell Associates lead the study. In 2012, online ad revenues reached almost $371 million, and estimates place the end of 2013 seeing revenues of up to $420 million.

While traditional ad formats were decreasing in value for radio stations, there has been growth in other formats like social media, audio, video, and email. Approximately 20% of all digital revenue came in the form of streaming audio ads.

Digital continues to grow in radio; however, it is important to note that it remains a small portion of overall revenue. Local radio stations’ online ad revenue only contributes 2.5% of total earnings.

How do young consumers listen to music?

While streaming music online is growing more popular among consumers, it’s easy to forget that traditional radio still has a strong footprint in the media market. According to eMarketer, the research company The NPD Group conducted a survey over 4^th quarter 2012 on the music listening of US consumers between the ages of 13 and 35.

Results showed that the terrestrial radio still lead as the primary method, by a small margin, to listen to music.

24% listened to radio primarily

23% listened to internet radio primarily

15% listened to digital files primarily

CDs and Satellite radio both had less than 10% of responders, 9% and 5% respectively, chose it as a primary method of listening to music.

Another find was that the car is still the main place where the majority of those surveyed listen to most music. A good reason is that listeners are able to use multiple devices in the car like the radio, smartphones, mp3 players, and in-car infotainment systems.

How does this affect advertisers? Consumers want music, and they want it their way. Whether it’s from their preferred radio station, favorite playlist, new CD, or online streaming, people are going to access the music. Therefore, advertisers will need to really understand their customer and be able to reach them on various music platforms at the same time. There is no need to pull money out of traditional radio; listeners are still listening. Instead, online streaming vendors may need to be evaluated as a radio station and included in the overall buy in order to reach the desired audience.

Do people multi-task when listening to internet radio?

If someone logs into an internet radio station, will he/she multi-task while listening? Or will his/her attention solely be on radio? Parks Associates on behalf of TargetSpot recently conducted a study to see how internet radio listeners spend his/her time when he/she is tuned in.

According to MediaPost, the vast majority of listeners are multi-tasking. Of those listening, he/she tends to do the following at the same time:

§       57% make a purchase online

§       56% research products/services for future purchases

§       60% are on social media networks

An interesting aspect of the results shows listeners views on advertising:

§       59% like to get coupons and offers from advertisers

§       55% don’t mind listening to ads in order to keep the station free

What can advertisers take from this? If moving forward with an online radio station, make sure the product/service website is prevalent. That way, it can help encourage listeners to research and possibly make a purchase. Also, it may be helpful to include a promotional offer vs. a straight branding initiative. 

Online radio now has live concert sponsors

The online radio station Pandora is branching out from online streaming to include live concert series in hopes of creating new streams of advertising revenue. According to MediaPost, one of the more recent sponsors has been Budweiser.

Budweiser sponsored a free concert by the California-based band Dawes on December 13th. The alcohol company will use the footage of the event in a microsite online. The microsite will include extras like behind-the-scenes content and news on upcoming live Pandora concerts.

What does this mean for advertisers? It’s another platform to reach an engaged audience. The trick now is to figure out how to utilize it to best meet your needs. Choosing a concert where the music genre best complements your target consumers is a good first step. For example, would a fine antiques store expect an uptick in business if they sponsored a live concert for a heavy metal band? Probably not…

Be sure to visit Ruth Burke & Associates’ blog to find the latest in media news and receive helpful tips to make your advertising campaign successful...

Which online radio station reaches the masses?

As more traditional radio stations join the ranks with online streaming, it is important to understand where people are tuning in and how long they are staying online.

Online streaming has become an established form of media consumption in the last few years. Ando Media, a media management company, has been following online radio and rating the medium with a variety of measurements like average active sessions and average time spent listening.

MediaPost recently released the frontrunner for both October and November 2010 was the website Pandora. In regards to average active sessions, Pandora beat out fellow competitors like CBS Radio, Clear Channel and the Katz Online Network with an average of 556,359 active sessions in October and 585,558 sessions November. In comparison, none of the other competitors reached 300,000 active sessions in either month.

While Pandora dominated in the sheer number of sessions, it did not rank first in the average time spent listening. Each month, it had an average of 49.8 minutes of listening. CBS Radio properties, which include AOL Radio and Yahoo LaunchCast, had 64.2 minutes in October and 63.6 minutes in November. The Katz Online Network seemed to have the most time spent listening with 82.2 minutes in October and 84 minutes in November.

As more traditional radio stations join the ranks with online streaming, it is important to understand where people are tuning in and how long they are staying online. If you want to reach the masses, Pandora or a product like it seems to be a great tool; however, if you want to reach people for a longer length of time, then a more localized station may be a better choice.

Be sure to visit Ruth Burke & Associates’ blog to find the latest in media news and receive helpful tips to make your advertising campaign successful...