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Indie Net Radio: The Next Ad Frontier

Dave Newmark
Indie Net Radio: The Next Ad Frontier Dave Newmark

Think every major advertising frontier has been explored? Think again.

While virtually every offline media marketplace has been organized, and oh-so-many online marketplaces as well, there's a channel with an audience 42 million strong just waiting to be tapped and monetized: independent internet radio.

With so much going on in media, it's easy to see how this channel -- however big -- could slip under the radar until now. Satellite radio, HD radio, podcasting, online video… and those are just the few at the top that are clouding the opportunity. Astute industry observers know that internet radio is not new: in fact, stations have been making waves (pardon the pun) by claiming a growing chunk of advertising budgets from big brands like Pfizer, Geico and Procter & Gamble, according to Mediaweek's Katy Bachman.

But for the most part, so far the biggest beneficiaries are the larger, connected players-- who provide online streams of existing terrestrial radio stations, or are the big aggregators like Yahoo Music/Launchcast, MSN Radio, and others. But the 42 million-pound elephant in the room is the collection of independent, online-only radio broadcasters.

There are some 25,000 independent broadcasters online, reaching an estimated 42 million listeners-- and so far no one's come along with a workable solution for buying and selling advertising in this space. The challenges are perhaps obvious-- there's no organized way to do business with this large and fragmented group of broadcasters. Due to its very nature -- independent -- it can be a tough group to corral.

Independent broadcasters are motivated by passion for their formats, rather than by profit. But make no mistake-- most would love to serve ads and make some money if they could find a way to make it work. And their faithful audiences are similarly motivated-- they want their radio stations to keep on streaming.

So while the media frenzy circulates around online video, YouTube, MySpace, Google, et al., online broadcasters and their listeners are looking for ways to make sure their beloved broadcasts survive. All parties realize that the best way to make that happen is to create a marketplace that will let advertisers into the mix.

But with so many other options, why should advertisers care? Because the audience is desirable and the format screams the words advertisers want to hear-- integration and accountability.

An affluent, tech-savvy audience
Internet radio's niche programming spans all possible music formats-- from acid jazz to world fusion, and everything in between. Listeners can find talk radio, religious stations, and streams targeting hobbyists who collect Lionel trains. The audiences can be extremely targeted.

That said, overall, online radio listeners tend to be affluent, male and tech savvy. They're loyal too-- they're there for the content, not to avoid ads.

According to a recent study conducted by Arbitron and Edison Media Research, The Infinite Dial: Radio's Digital Platforms, the weekly internet radio audience increased 50 percent over the past year. Twelve percent of the U.S. population age 12 and above listens to online radio in a week. And weekly usage of internet radio has nearly crossed the 20 percent threshold among young adults age 18-34-- a group that's often hard to reach.

This is good news for all of radio, even terrestrial, because the same report says those who listen to digital radio tune in to AM/FM radio for the same amount of time per day as the average listener.

Integrated, interactive ads-- and accurate audience measurement
Online radio is perfectly suited to combine audio, visual and interactive elements into one integrated advertising buy-- allowing advertises to engage listeners while they're on their computers.

The ads themselves run in the media player-- when the listeners launch the player, and periodically throughout the audio stream. Along with the usual audio component, online radio ads can incorporate visual and interactive elements -- banners and buttons --all able to link directly to an advertiser's website. So, for example, an airline might place an ad touting special online promotional fares, with links directly to a page on the company's website where listeners can purchase the tickets.

Perhaps an even bigger bonus for ad agencies facing increased demand for accountability is online radio's ability to provide precise audience measurement. Because internet broadcasts are streamed, and those streams must be accessed by the listeners from a server, actual usage is tracked -- rather than calculated by an extrapolation from a smaller sample size -- offering an accurate measurement of total time spent listening.

The audiences are online and the technology is here to begin to monetize one of the few untapped media frontiers-- and to create a lucrative marketplace where none currently exists.

Dave Newmark is founder and CEO of Bid4Spots. .


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