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.