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.