INTERNET RADIO AD INSERTION
There appears to be a growing movement questioning the cost of ad insertion for terrestrial radio stations that are streaming. Saga Communications recently decided not to insert different ads into their streams but to let the same programming going out over the air to be distributed on their streams as well. This movement if successful will sound the death knell for terrestrial stations that are streaming. Given the other Internet radio listening options consumers will not choose to listen to a stream that is running 10-14 ad units an hour complete with some 60 second spots.
I understand that many stations are not making money from their streaming operations. What I suggest is that rather than inserting PSA’s and other filler content that music stations insert songs. The technology exists to do this and there should not be a charge for this type of non revenue producing insertion. Some stations are doing this and there are no audio quality issues. Ad insertion fees are not significant when compared to bandwidth and music royalty fees.
The course that is chosen will have considerable influence on the upcoming battle for in car listening. Stopping ad insertion may save a few shekels in the short run but long term it will have more significant costs.
If running 100% of a radio station’s on air programming on its respective stream is a death knell, then certainly the PSA’s, poorly produced injected commercials, and haphazard selection of inserted music is an even bigger death knell. There is no reason to cover on air commercials with artificial filler material. Stopping ad insertion is not to save a few shekels, but rather to attract a bigger audience. In the long run, a broadcaster will make more money by selling a simulcast than can be made through ad injection. The short sided view is to inject filler and cheap ads…it is a take the money and run approach.
Running the normal over the air spot load will lead to consumers accessing other streaming options in the long run.
Robert, it is my understanding that if you do a 100% simulcast on your stream then any listening via the stream can and will count towards your Arbitron ratings. In the current environment of ad insertion, the internet stream is treated as a separate station and therefore must meet the minimum reporting requirements to show up in the ratings independently. While I agree with your statement that if we compare our streams directly with services like Pandora, broadcasters should be filling commercial breaks with music on the streaming side. Ideally, however, the listener has tuned to the radio station stream because they like the content of the station. If they listen terrestrially they understand that it takes commercials to bring them that content for free. The question then should be whether it is more valuable to have your streaming audience contribute to your Arbitron ratings and possibly increase your ranking by a slot or 2 thus (hopefully) translating into a bigger increase in ad revenue vs what you would have earned with the combination of ad insertion and extra songs on the stream.