Robert Maccini

MOBILE WEB VS. APPS

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Not everyone needs an app.  Given the success of Apples App Store and now the launch of Google Chrome’s app store the buzz has created a feeling of needing an app in a mobile world.  There has been such a rush to keep up with the cool factor that many have lost site of a consumer’s more typical means of accessing your content – via the web.  Most are aware that if we try and access a regular website on a mobile device frustration inevitably is the outcome.  The font is so small it can’t be read or you have to scroll across or down repeatedly or images don’t render correctly (if the page will even load) leaving large gaping holes on the page.  I tried to access CBS’ KROQ-FM on my phone.  Here is a screen shot on my iPhone.

I clicked on the “Listen Live” button on their website accessed via my phone (can you even read it?).  Yes Apple does not support flash but this did not have to happen if a mobile web site was created note: even though the player stated I could access an older version it was still flash based and would not load.  Am I the only one who as ever tried doing this?  Do you think audience has been reduced due to these types of issues?  This problem can be resolved by developing a mobile web application that automatically redirects a user to the mobile site.

Apps are static and for the most part you need to return to the developer to make changes.  Apps are much more costly to develop especially considering the need for a different version for the three major operating systems.  They also involve approval in whatever store they are being listed in which takes time.

One of the reasons apps have been popular is that someone actually took time to think about how content would be rendered on a mobile platform.  Being mobile adds another dimension to what consumers need in a website.  Not every business needs an app and soon I am going to need an apps manager to manage all my apps.  There are a number of platforms that allow the user to create a mobile web site.  They are significantly more cost effective than developing an app and changes can easily be made and published immediately.  Creating a mobile website also involves thinking about the small screen size and important features someone in a mobile environment needs.

Angel Street Capital is currently considering an investment in one such company, MoFuse, Inc.  MoFuse is a DIY platform and is easy to use.  I will be covering MoFuse in more depth in a later post.

Robert Maccini

Angel Street Capital Invests in DijiPOP, LLC

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Today DiJiPOP announced that it has secured an additioanal round of equity financing in the amount of $1 Million.  Angel Street participated in this round which was led by a fellow angel investor William Cesare.  DiJiPOP is headquartered in Rhode Island and was launched out of the start up incubator program Betaspring in 2009.  Angel Street also had invested in Betaspring.   DiJiPOP helps e-commerce retailers better manage ad space on their site, by providing a highly targeted automated solution that easily embeds into the retailer’s site.  The new money raised will be used for sales and marketing expansion, technology development and creating of a client services division.

We were drawn to several positive aspects of DiJiPOP including its experienced management team and advertising technology platform that results in a recurring revenue model.  We are quite familiar with ad platforms having developed one for Internet radio while we owned Ando Media, LLC.

Robert Maccini

VIDEO – DAWN OF A NEW AGE

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As the Wall Street Journal reported today (11/22) for the first time since the dawn of Cable TV, the number of U.S. households paying for TV subscriptions is falling.  Between the first and third quarter of this year 335,000 subscribers were lost.  The debate whether people are “cutting the cord” will continue until a trend is established.  Cable TV advertising revenue has been fairly healthy especially when compared to other media sectors.

We are going to see a number of turbulent years as the video model is reinvented.  Consumers now have a number of options for consuming video via the internet.  From my own experience when our family wants to watch a movie we no longer rely on Cable (we still do subscribe) but access Netflix through my son’s Xbox.  Cox is the cable provider for the State of Rhode Island and the lack of movie  titles on demand is startling.  Although we have a DVR box I just don’t have the time to figure out when a movie may be scheduled on a channel and record it.  It is easy to see how cable is losing out to other providers.

There are a number of competing services such as Hulu, Google TV, Netflix and Boxee that allow users to watch movies and TV shows.  There has been press surrounding content creators not allowing Google TV to distribute its programming.  In the end the content providers control which service will win out.  The same thing happened to audio with Apple getting the rights to sell most music titles (and now the Beatles too).  Consumers have spoken and they want to access content when and where they want whether is through their TV, computer or mobile device.

We are in the dawn of a new video era, one that has previously been envisioned but is now actually occurring.

Robert Maccini

Evolution of Radio Ad Targeting

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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.

Robert Maccini

Monetizing Internet Radio

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At a recent seminar I heard someone lament, “I have done everything they told me to do, I subscribe to Ando Media’s audience measurement and their ad insertion system, I have a mobile app, I signed up with Katz to sell nationally, how do I make any money”.  This comment was made by a smaller market broadcaster.  Unfortunately the resources that this person needs are not fully available.  While the tools exist, the right way to sell these digital assets is just being invented.  Many companies are trying various approaches to see what works.  I’m not sure if there is a “right way” to monetize Internet radio.  What works in a large market in many respects is not correct for smaller markets.  We are still in the trial and error stage.  The reality is that most small markets will take years to develop a significant on line audience to justify selling based on a CPM/CPC model so it would be better to sell on a sponsorship basis.  Even larger market stations have trouble selling on a CPM/CPC basis.  In an earlier blog I commented on how terrestrial radio streaming audience is not increasing while Internet only services such as Pandora are experiencing significant growth.  While there are some technological advances that will lead to higher audiences for terrestrial streaming stations (mobile and in car)  – stations need to adopt different programming for the internet (this includes adding certain customization options) and reduce the number of ad units.  I am not hopeful that this will occur especially in light of the recent NAB royalty proposal which would make it easier for stations to stream exactly what it being delivered over the air.

Companies like Katz and Target Spot are aggregating stations and are able to sell on a national basis effectively.  However, for the smaller stations and groups this may mean earning $26.75.  Nothing that will get anyone excited.  So you may ask – so why should I do it?  I’m a big believer that you cannot fight technology.  The internet and mobile phones have created a new distribution system for delivering audio.  This distribution channel is two way (interactive) and accordingly more accountable and efficient for advertisers.  Advertisers have embraced digital advertising while terrestrial radio revenue is declining.  Terrestrial radio still has a huge audience but this will erode over time.  I used to believe “where there is audience revenue will follow”.  My new mantra is “where there is audience revenue will follow unless there are more efficient and accountable options available”.

One of the advantages Internet radio has is targeting distinct audiences which I will deal with in a subsequent post.

Robert Maccini

In Car Radio

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Many have debated what the in car audio solution will be.  My vision is shaped by the device we all carry today that has so many functions.  It’s hard to think about creating a new system to manage our audio in car experience.  As a result my vote is for better integration with a car stereo system and display.  Several auto manufacturers have taken this approach including Ford’s Sync which connects via Blue tooth.   The way content is organized and displayed is the key.  In car listening represents approximately 40% of all radio listening.  Rather than the 20 choices you may have today (terrestrial radio) in your local market, with Internet radio you can now listen to thousands of different station or through services like Pandora, create your own station.  Obviously this is going to have a significant effect on terrestrial radio listening and why pay for satellite radio (except where there is exclusive content).  Terrestrial radio, given its fragmented nature (do most people know who Citadel or Saga is?) does not have a brand while Pandora has almost become the generic name for Internet radio.  So while terrestrial radio will certainly be present both over the air and through streaming there are going to be many more options.

Given the risk of distraction while driving there are some companies such as Radio Time that are trying to make the enormous world of choice in Internet radio listening more organized in an easy to use guide.  Radio Time has been working quietly behinds the scenes for many years to get their guide established in consumer devices.  They are now gaining some traction in-car as well.  Another company working to make the in-car audio experience better is Livio Radio.  Livio has built devices and mobile applications where the display is customized for this environment.  Livio has teamed with Pandora and Radio time to bring an enormous selection of Internet radio station including both Internet only and terrestrial stations that are streaming.

Within the next year we should see the future of in-car audio much more clearly.

Robert Maccini

Pandora

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Pandora is the leader in Internet radio.  They worked away in obscurity for many years.  Their early entrance combined with their  unique (many have copied now) approach to generating a customized listener playlist, gradually built a significant audience.  With listener registration data they have reached a scale where they can now geo target and sell local advertising in many markets.  Their recent deal with AdReady on the display front and positioning this as an ad opportunity for SMB’s is just one step in maximizing their advertising opportunities.  They have created music genres and I would not be surprised to see them expand to offer other types of content, news, weather, sports, etc although this gets them away from their music (genome) roots and this type of content creation would be more expensive.

Arbitron states that Sirius XM has 32 million weekly listeners.  Quantcast states Pandora reaches 8.4 million people on a weekly basis.  While Pandora’s audience is roughly one quarter of Sirius XM, Pandora is growing rapidly (Pandora audience increased 104% from 9/09 t0 6/10.  With Pandora pushing hard for in-car placement we believe Pandora will overtake Sirius XM’s audience within three years.  It blows one’s mind to think about the billions of dollars invested in Sirius XM to create their audience compared with the $100 MM (just a guess) that Pandora has raised to date.  Public offering for Pandora within one year is my bet.

Robert Maccini

Mobile

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Yes mobile is hot.  It is hard to read any publication without coverage or prognostication on where the industry is headed.  For the radio industry mobile currently means streaming their audio content to a mobile device.  The primary way of doing this is to create an application for each major platform; iphone, android, blackberry.  Some early entrants in this field built a portal where client stations could be listed.  While some adopted this strategy Radio Time listed all stations in a guide format even though they had no business relationship with the stations.  This mobile strategy was not attractive to radio stations as their brands were lost and as a result mobile companies such as AirKast began building applications for stations.  The mobile handset also created opportunities to interact with listeners including album information, lyrics, station playlist, concert information, song purchase, music video or share station with friends.  Some mobile apps are not superior to many audio players on the market.

There are a preponderance of app developers but only a few which specialize in the radio vertical.  Like the early days of the web companies such as JacApps produce apps that are static and if a station wants to make a change they must go back to the creator of the app or start over again.  AirKast has built more of a mobile CMS platform which can be customized by the station and its service runs on its AirBridge platform (specially developed server architecture).   We see this more as the future of mobile.

While its cool to have a mobile app most stations will want to generate revenue.  Just like internet radio there are numerous advertising opportunities including video preroll, in-stream audio and display.  Typically when referring to a mobile network such as AdMob or Quattro Wireless this means display advertising.  The CPM or now mostly CPC campaign are not attractively priced as ads are not targeted or contextual but just fit to a mobile device.  I believe a listener/viewer is more engaged on a mobile device and thus CPM/CPC’s should be higher, witness what Apple is doing with iAd.  The problem is most ad campaigns are not designed for mobile and the creative is poor.  If we factor in geo advertising mobile ad rates should be significantly higher.  Stations need to participate both in a national mobile ad network (one that can sell video/audio/display) as well as sell it locally.  Currently mobile audiences are small but will grow significantly over time.  In car applications and better device tethering will propel mobile audience growth.

The question you should be asking your mobile provider is whether they can measure your mobile audience (something that Ando has not fully implemented) as well as insert the various forms of advertising and of course measure impressions created. We are in the first inning but this channel is going to develop quickly.

Robert Maccini

We need innovation

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Radio stations are content to take their over the air content and just stream this content online. While this may allow their P1’s another way to listen it misses the significant opportunity to create more engaging content that is customized for the way people are consuming this new media. As discussed in a previous blog, one of the largest impediments to building an audience is the high commercial load carried by terrestrial stations. No longer is a station compared to a limited number of other stations in any market but to a much larger universe. A social element definitely needs to be included. While it is more difficult to compete for audience in this new world one cannot deny its existence as many radio groups are doing. Let’s stop paying lip service to Internet radio and put some thought and resources behind it.

My wife recently asked me to read “Who Moved my Cheese” by Spencer Johnson, M.D.  He uses cheese as a metaphor for what you want to have in life and the characters in the story are faced with unexpected change.  Some of his tenets which I list below are quite applicable:

– Change Happens – they keep monving the cheese

– Anticipate Change – get ready for the cheese to move

– Monitor Change – smell the cheese often so you know when is it getting old

– Adapt to Change Quickly – The quicker you let go of old cheese, the sooner you can enjoy new cheese

– Change – Move with the cheese

– Enjoy Change! – savor the adventure and enjoy the taste of new cheese!

– Be ready to change quickly and enjoy it again & again – They keep moving the cheese

 

Robert Maccini

Back from NAB in Washington, D.C.

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We just returned from the Fall National Association of Broadcasters convention in Washington, D.C.   The mood was significantly more upbeat given the positive growth in radio revenue this year.  One of the key themes of the convention was developing a digital strategy.  Of course there are those who don’t want to acknowledge that the world has changed.  Advertisers now have a way to measure results and be more efficient in their advertising expenditures.  This structural shift in advertising has taken a heavy toll on traditional media including the radio industry.  Lay a recession on top and well 2009 was a year the industry would like to forget.  However, increasing revenue in 2010 has caused some to believe that “radio is back” and that digital is not important.

The radio industry is confused as there are so many different strategies and groups hawking digital initiatives and tools including social, web site, mobile, couponing, etc.  Some of these products have a “cool” factor but I question the ability for a station to generate revenue given what little resources are being devoted.  Just having a tool does not lead to revenue generation.  In one of the panels a gentlemen lamented that he had done everything recommended, he had a non-station centric website, he was streaming, using Ando, but had no clue as to how to effectively monetize it all. Someone needs to bring some order and research to this chaos.  In future blogs we plan on addressing each of the silos in a station’s digital media arsenal.