Thanks for reading Audio4cast this year! We’ll be back after the New Year with more digital audio talk and analysis. In the meantime, I would like to wish everyone a holiday full of peace and promise.
A new study of “Digital Influencers” finds that radio plays a significant role in their online behavior. MS&L, a communications firm and part of Publicis Groupe, partnered with Ipsos to survey nearly 1000 people whose online behavior defined them as a Digital Influencer because they frequently researched and passed on information online. The study found that traditional media – newspapers and magazines, television and radio – played a “vital role in igniting the process that leads influencers to share information online”. 84% of those surveyed said they go online to learn more after hearing something on the radio or seeing it on television.
The study is interesting and valuable because it quantifies the connection between online and offline media. Online marketing has become a nearly essential element of most advertisers’ marketing strategies. Understanding that radio can play a critical role in online behavior opens up opportunities for cross platform blending of media for a successful ad strategy. “This research supports the need for influencer marketing campaigns to leverage both traditional and online tools to connect with consumers,” said Renee Wilson, deputy MD of MS&L New York and director of the agency’s IM MS&L practice.
Understanding the connection that radio can have with online behaviors also opens up a lot of new categories of advertisers that have not been traditional radio advertisers. Rather than driving in store traffic for an auto dealer or hardware store, sellers should also be thinking of ways to work with advertisers with specific online objectives.
As we approach the end of the year, several articles have appeared proclaiming 2008 as a big year for Internet radio. ReadWriteWeb’s recap of the year in Internet radio summarizes the various trends that happened over the year that either propelled or signified the maturing of Internet radio, mentioning some of Clear Channel’s online content, and crediting CBSRADIO with making the most significant gains in the space with the purchase of Last.fm (that was actually in 2007), and partnerships with AOL and Yahoo online radio platforms to extend their reach and network. They’re right, CBSRADIO has had a huge year in online radio — and online radio is getting a lot of buzz as a result of their big deals.
The same article goes on to credit some other popular online radio brands – such as Pandora, with part of the buzz and lots of new listeners – stating that according to comScore that site grew 89% from July 07 to July 08. Pandora definitely has cache with listeners – mention Internet radio in a casual conversation and Pandora is the site people know about most often. They’ve single-handedly brought lots of new passionate listeners to the medium.
AdWeek released a list of Top Media and Marketing Innovations of 2008 and put CBSRADIO’s streaming player on the short list. While I’ll be the last to complain about Internet radio making the list, the article reads as though CBSRADIO invented streaming radio, or at least reinvented it when they launched a new player last summer: “Reinventing streaming, the player offered all that consumers expect of the Web, setting a new standard for how the oldest electronic medium can migrate to the newest.”
To be clear, CBSRADIO has made some bold, significant moves into steaming radio this year. They did launch a new player, and they have integrated all of their stations into the AOL platform. However, they have not either invented or reinvented streaming. Clearly, the CBS name has attracted attention, and people and publications are taking note. As a result, AdWeek felt compelled to add streaming radio to its list of the biggest innovations of the year. The industry benefits from CBSRADIO’s big moves in the space.
Reuters’ article also credits iPhone with adding to awareness and buzz about Internet radio this year. Clear Channel, CBS/AOL, Pandora, and Flycast were some of the streaming radio apps that experienced lots of downloads in the iPhone apps store and brought lots of new buzz to streaming radio. Next year we’ll see mobile streaming apps expand to other devices like Blackberry and Nokia. Mobility is an exciting prospect for Internet radio, as we are seeing with iPhone.
2009 will be another exciting year for Internet radio as mobile access expands through more and more devices and apps, other major players take positions in the medium, listenership continues to increase and advertisers spend more.
According to a report in Mediaweek, Verizon Wireless has moved to sponsor a branded new music channel on 21 Clear Channel stations that will be offered as an HD2 side channel and streamed online. Curiously, the article positions Verizon New Music as a branded HD channel which will also be streamed, although trends and recent information on listening would certainly indicate that the streamed audience will be greater than the number of people listening to the over the air HD service. The article claims that Verizon Wireless is the first national advertiser to move into HD Radio, so perhaps that’s the reason for the emphasis.
Verizon Wireless will receive 2 20 second spots per hour on the branded station, as well as sponsorship promotion mention on the associated stations which include some of Clear Channels biggest stations like WHTZ-FM in New York, KIIS-FM in Los Angeles, WKSC-FM in Chicago, and WIHT-FM in Washington, D.C, and weekly listenership over 30 million.
Last month the Wall Street Journal published an article that questioned the future of HD Radio and pointed out that Internet radio may well be the bright spot for all the broadcasters who are developing additional channels of programming for HD, because they can easily also stream those additional channels and amass streaming audience, which is growing at a much faster rate. See my post about it here.
Regardless of the reason for the HD spin, Verizon Wireless has made a significant move into digital audio with Clear Channel’s New Music channels. This is an excellent example of leveraging cross platform technologies to attract an advertiser like Verizon Wireless. The channel’s 18-34 audience is a perfect match for the advertiser and the exposure across alternative audio platforms creates a new media package that positions Verizon Wireless as a savvy hip brand.
Internet radio advertising network Targetspot announced that they have added independant Internet radio brand Slacker to their network, making the largest Internet radio network even bigger. In October, Targetspot announced the purchase of RL Radio, an Internet radio advertising network that represented CBS/AOL and Yahoo Launchcast (read about that here). Since then, CBS RADIO has announced that they will now sell the ads for Yahoo’s Launchcast. CBS RADIO has some undefined investor role in Targetspot as well.
Slacker is an interactive Internet radio service that offers listeners the choice of programmed channels of music or the ability to design music streams to their own liking. Originally a subscriber only service, Slacker has more recently opened up some of their services to free listening, and were exploring ad based revenue models. They were the first service to market mobility – they have a handheld personal player that plays only their service – but more recently they announced a partnership with Blackberry (covered, here) which promises to add significant audience.
Targetspot’s partnership with Slacker will enable them to target ads to listeners based on demographic or geographic criteria. The ability to target audio ads to listeners based on their age, gender, or geographic location is a unique service to Targetspot.
“Slacker has developed a ground breaking product to ensure that the listener gets the music they want to hear – whether it’s in the car, on the street or at work. Similarly, TargetSpot’s unique hypertargeting platform and cost effective and easy to use ad creation technology is focused on having the advertiser reach that enables the advertiser to follow the listener – the right listener – whether it is by geography, demographic or any other category,” said TargetSpot CEO Doug Perlson.
This is a significant win for Targetspot, not surprising given the strength that their network has gained in recent months. It also adds some nice diversity to their network by adding a significant independant Internet radio brand following last week’s announcement that CBS would “power” Yahoo’s Launchcast in the same way they do AOL. Although, given the close association between CBS and Targetspot, one does wonder whether CBS has set its sights on Slacker as well…
In an article in today’s Radio Business Report, Kevin Conroy, Executive Vice President at AOL, says that their association with CBS RADIO, which began in March, has been very successful. Conroy elaborates on the elements of the relationship that made it so, and has some words of advice for the industry.
With the partnership, AOL gained the benefits of CBS Radio’s core competency in radio, while CBS gained the benefits of AOL’s successful online platform with more than 10 million unique visitors per month. Together, they developed some platform extensions which improve the listener experience and will further expand the listener base. Those include a media player with increased functionality and listener choices, widgets and tool bars that expand access to social network sites, and what Conroy refers to as a breakthrough app for the iphone.
It’s been a groundbreaking year for both companies and for online radio, according to Conroy, who says the lesson to take away from their success this year is ” that by carefully watching market trends, being willing to rethink your business, focusing on your core competencies, and delivering what consumers want most, you can achieve a remarkable turnaround against seemingly insurmountable odds.”
It’s an excellent message. AOL and CBS did indeed put aside what could have been perceived as head to head competition, and instead created a partnership that focused on building a better listener experience. That’s made AOL and Kevin Conroy happy, and I suspect it’s made CBS happy as well…
More people discover new music by listening to radio than any other way, according to Jupiter Research and published by Inside Radio. That’s why some Radio Executives were pretty fired up at the Grammy Nominations show which presented the Internet as music discovery’s new vehicle, according to RAIN, here.
There is no doubt that the Internet has changed music discovery, and who can blame the Grammys for wanting to acknowledge that? Whereas there used to be just one way to get new music – radio – now there are alternatives online. They’d be foolish to ignore the clout of MySpace in new music discovery, for example. MySpace streamed a billion songs in a few days after their launch, and musicians all use it to promote their music.
A recent article in the New York Times about college radio notes that college stations used to be a main source of new music and “courted attentively by major record labels.” That’s not so true today, as college age kids spend less time with radio. “Hard numbers about ratings for campus radio are scarce, but trends show that the college-age audience pays less attention to radio every year. From 1998 to 2007 the amount of time 18- to 24-year-olds spend listening dropped 18 percent, while for people 35 to 64 it slipped 9 percent, according to the Arbitron ratings service.” To reach new audiences, many college stations are streaming online, blogging about new music, and cultivating web sites, and their audiences are expanding beyond the campus.
The Grammys were right – it’s a new digital world that has changed everything about the music industry. Radio is not the only channel for new music discovery. Understanding rather than ignoring that will be radio’s key to success as our new media world evolves.
Faced with the recession and falling revenues, the radio industry has begun to sell online assets with some success. According to the Radio Advertising Bureau, in the first three quarters of this year the radio industry has grown off-air revenues, which mainly include online and promotional dollars, at a rate of 9%. During the same period, local and national revenues dropped at the same rate of 9% (against a much larger number). You can read more in business publication Seeking Alpha.
This trend is good news none to soon given that radio revenue projections for 2009 are bleak. According to Mark Fratrik, VP, BIA Industry Services, “the industry will weather the storm providing it strategically invests in its online presence, which will prove to be its rescue as ad budgets continue to shift to more measurable online media.”
The words “measurable online media” are key to the future development of online sales for the radio industry. The advertising industry is shifting dollars toward measured results and away from generic “branding” – and the ongoing recession is accelerating that trend.
Online Recession will be mild
This week eMarketer pulled back on an earlier projection of 14.5% for interactive revenue growth to a more modest 8.9% for 2009. According to an article in The Economist, the recession for online advertising will be a mild one due to the fact that online advertising blends branding with “below the line” advertising because it can be measured and tracked to consumer purchases. The article cites an example from Randall Rothenberg of the IAB (Interactive Advertising Bureau) of a “rich-media ad for Kraft, … in which a yummy image raises brand awareness, a click reveals a recipe that increases consideration, another click provides coupons and yet another click initiates a game that can be shared with friends.”
There’s an enormous opportunity for radio to develop creative cross platform opportunities that can drive traffic and provide measureable results for advertisers. The win is that once you provide those measurable results, you become a far more essential, recession-proof element of the ad budget.
Today’s announcement that CBS RADIO has entered into an agreement to “power” Yahoo’s Launchcast Internet radio portal in a deal similar to the one they announced with AOL Radio earlier this year definitely takes the cake. As David Goodman, President of Digital Media at CBS RADIO states in the press release, “this announcement along with our relationship with Last.fm, and other distribution partnerships, reinforces our Company’s position as the No.1 internet radio company in the world”. No doubt about that.
CBS RADIO has made significant investments in Internet radio. In the past year they aquired Last FM, and added AOL Radio and Yahoo’s Launchcast listeners to their group through agreements to manage their sales while putting CBS RADIO stations as channels on their platforms. Prior to deals with CBS RADIO, Yahoo Launchcast and AOL Radio ranked first and second independantly on Arbitron’s monthly survey. In recent surveys, with Last FM and AOL Radio already incorporated into their numbers, CBS RADIO had more than 2.2 million for a weekly cume, and Yahoo Launchcast had over a million weekly listeners. Their combined weekly cume should climb to over 3 million.
As they become the major player, CBS RADIO will have significant clout to impact and influence some of the as yet undefined issues in the space, such as audience measurement. CBS RADIO has a partnership with Ando Media and uses their audience measurement tool along with many of their other ad related technologies. They also subscribe to Arbitron’s comScore audience measurement surveys. It remains to be seen whether they will they see the value in supporting two separate measurement products for the industry or look to create a standard measurement tool.
This announcement does more than just reinforce CBS RADIO’s position in the space. It demonstrates that they mean business. A very big media company is making very big investments in the space – that’s meaningful to investors as well as advertisers, and good for the industry.
So says Music Industry Veteran Danny Goldberg in this video. In it he’s speaking about his newly published book Bumping into Geniuses, which is a tell-all about the music industry from his personal perspective. Among other things, he was manager of Nirvana.
According to Goldberg, “Internet radio is the silver lining of the deterioration of commercial radio.” He says that commercial radio is all about ratings and reaching the most people, and that is not what is best for record labels. They really just want to reach the passionate active core audience, who get turned off by generic programming. That audience isn’t listening to commercial radio anymore, says Goldberg. But they are listening to Internet radio.
Goldberg is right on – Internet radio’s enormous diversity of programming allows for the kind of personal choice that attracts an active listener. Which he says, is the kind of listener that record companies want to reach because they buy records. By the way, they also buy other things – which makes them a very attractive audience for all kinds of advertisers.
Goldberg’s comments are also interesting as they pertain to the royalty issue – in which the record companies argue that Internet radio does not offer value to the artists who therefore should be otherwise compensated by the stations for playing their music. In fact, Mr. Goldberg’s states that Internet radio is a solution for artists who are trying to find an audience for their music and that this new technology is liberating for artists. Um, that sure sounds like meaningful promotional value to me.