Marketing misconceptions about the shifting radio landscape

The explosion of digital music services like Pandora and Spotify has been characterized as the harbinger of radio's demise, but rumors of its death are greatly exaggerated. Radio penetration remains remarkably high -- over 90 percent of consumers aged 12 and older listen to the radio at least once a week. The scale of radio's reach is massive, paralleled only by television. By providing primarily local content, radio yields information and an emotional connection -- both of great value to the audience. In addition, radio's position as the original "social" media -- with audience call-ins and song requests -- still carries weight in today's environment.

Recently, these insights and others were discussed at New York Advertising Week during a session presented by TargetCast tcm, entitled, "Phoenix Rising: How Technology is Transforming Foundational Media." Featuring industry heavyweights from companies like Emmis NY, the Radio Advertising Bureau (RAB), Pandora, and Clear Channel, the session revealed some key takeaways for marketers regarding the relationship between online audio and radio. 

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Despite its continued growth, online audio is not cannibalizing its broadcast counterpart. However, the radio landscape is shifting to embrace new online content. Subscription to music services like Pandora and Spotify continues to grow as audiences are able to consume audio content in unique ways. However, a recent study by the RAB indicates that online audio is complementary to broadcast radio -- nearly 90 percent of online listeners are consuming over the air as well. Thus, although audiences are consuming more online audio content, overall listenership is increasing.

Online, Pandora is the hot-button service of today. Awareness is at an all-time high -- nearly one in four people are using Pandora -- and the service's ability to present music tailored to individual preferences provides hyper-customized audio content delivery. In addition, Pandora's users are on the move, as 70 percent of all listening is done through a mobile device. One of broadcast radio's strengths is its ability to reach the consumer right before making a purchase (e.g., driving to the local drug store). With the advent of technologies that put online music services in the palm of the customer's hand, people are not only reached on their way to the store, but in the store as well. As technology improves both on the publishers' side and on mobile devices, we will see a continual increase in mobile audio listening -- a pivotal trend to follow over the next year or two.

However, online-only music companies are not the lone players in this arena. Large radio holding companies are getting into the online game as well, exemplified by Clear Channel's recent re-launch of the iHeartRadio app, which delivers both a Pandora-like music discovery experience and the ability to stream Clear Channel-owned radio stations from around the country. The established players have recognized the opportunity that exists online, no longer treating the space as an afterthought. The increased time and resources devoted to these digital-product offerings may very well increase the pace at which online (and mobile) listenership grows.

An inherent strength of registration-based online audio is its ability to target on a user-by-user basis. User data for online music services allow marketers to refine their advertising messages to target a finite group and maximize overall relevance to a degree unachievable by broadcast.  However, it is important to realize that the appropriate metrics to measure successful advertising within this environment are still not proven. Furthermore, the audience scale is currently small, particularly in comparison to broadcast. Thus, if a marketer's goal is to cast a wide net around a specific demographic, broadcast radio is better suited for the task. On the other hand, if reaching a small number of ultra-relevant prospects is your objective, online may be the preferred method of communication.

Summary
In conclusion, marketers and advertisers considering, or currently communicating through, online audio channels should keep the following in mind:

  • Online listening appears to be complementing, rather than cannibalizing, broadcast listening.
  • Online audio listenership growth is strong and getting stronger due to advances in mobile technology as well as investment by large radio holding companies. However, the audience as a whole is still small, particularly in comparison to broadcast radio.
  • Online audio advertising is currently best utilized by those marketers measuring advertising success by reaching the most relevant audience rather than the largest one.
  • Advertisers should work to clearly define success metrics up front as the industry has yet to agree on how best to measure this type of content.

Steve Farella is the founder of TargetCast tcm.

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