Ad targeting in Internet radio does not deliver for advertisers at the local level.  No it is not rooted in a problem with technology.  As recent announcements from Triton Digital and Abacast make clear, the technology exists.  However, since most station’s audiences are small and a significant amount is out of market listening (often over 40%) targeting will not yield impressions needed to generate significant revenue.  As a result targeting at the station level makes little sense other than possibly to guarantee to an advertiser an ad won’t be heard out of the metro.  Targeting is useful on a national basis as a combination of stations on a network can deliver results as long as the target is not too narrowly defined.  Pandora is probably the only service that can target locally without aggregation due to the size of its network.

Most radio stations do not collect listener data for their streams so the only targeting that can be done is geographic based off of an IP address.  Listeners will give up this data for something they value if it cannot be obtained from other sources, e.g. Facebook.  Some targeting is done based on station format, e.g. an AC station’s audience is primarily 25-54.  This is not always accurate.  IP addresses are not always correct as well which can result in lack of delivery of the campaign.

Mobile targeting is perhaps the holy grail as you can reach consumers closer to the point of purchase.  As with targeting to desktops the problem of scale is even a greater issue in mobile.  We have heard that Pandora is having difficulty monetizing its mobile audience which is 70% of  their total audience.  I don’t quite understand this as I would argue that engagement is greater with a mobile phone than on a desktop (you may leave your desk but typically you don’t leave your phone).  I believe that longer term we will see premium CPM’s for mobile.  Effective ad creative and proper delivery  will help.

Evolution of Radio Ad Targeting

With terrestrial radio we had studies by Arbitron and others that broke down the composition of a format’s demographic audience (20% 18-34, Soft AC skewed more female, etc.).  This information was based on data collected from the people who filled out a diary.  Location based advertising was somewhat easier because a station’s over the air signal only covered a specific area and in many cases a defined Arbitron metro. Advertisers targeted audience based on format and market.  Other qualitative information for the most part was missing or again was based on format.

With Internet radio we have the ability to know the exact number of listeners, where they are located, demographic and other qualitative information.  Let’s discuss each of them:

  • Location – at the very least based on IP address we can with about 80% accuracy know where a listener is located.  Total accuracy can come from requiring audience registration (many station are reluctant to do this as they feel listeners will just click away to another station) or from the use of a cookie.
  • Demographic – While format can still be utilized information could be obtained with listener registration information
  • Qualitative – This can be obtained with the use of a cookie and tracking where a listener goes on the internet

As a result Internet radio has the ability to better target advertiser messages.  In a mobile context, a 19 year old male could be served up an ad for a free slice of pizza when walking by House of Pizza at 4:30 pm.  Targeting makes ads more efficient.  However there is also a down side.  When you start slicing segments of an audience you often have difficulty in generating enough impressions.  This problem will be mitigated as Internet radio audience continues to grow.

From a technology standpoint Ando Media, the largest Internet radio ad insertion company has a server side targeting system.  Many companies such as Target Spot utilize a player based system.  Player based systems have limitations as there are many ways of consuming Internet audio where a player does not exist (mobile and audio devices such as Sonos).

Ad agencies are striving to be more efficient investing their client funds.  Even if targeting did not exist with Internet radio you know that an ad was actually heard and where it was heard as compared with terrestrial radio’s estimate that it was heard – I believe this to be very powerful.