Posts

Robert Maccini

COUPON/DAILY DEAL IMPACT ON RADIO INDUSTRY

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There has been an explosion in Deal a Day companies led by Groupon and Living Social.  BIA/Kelsey estimates 2010 revenue for the industry at $873 Million and revenue continuing to grow in double digits.  Deal a Day sites continue to add markets and many are establishing a local sales force.  Coupons are attractive and can result in businesses attracting new visitors through the offer.  In addition, business owners can easily quantify and measure the quality of the response, e.g. did it lead to other product sales.  There has been criticism as to whether the bulk of coupon buyers are existing customers, while in part true, it also contributes to existing customer loyalty.

While some would argue that Deal a Day companies should be lumped in with Direct Mail, I believe Deal a Day companies do compete with radio for marketing dollars.  Their establishment of a local sales force is highly troubling to the radio industry already struggling to eek out positive revenue growth.  Many companies such as www.tencoupons.com, Deal Current, Second Street Media, Tippr, TownHog and others are aligning themselves with radio.  These radio aligned Deal a Day companies will help those more innovative radio companies obtain a share of this market and reduce the risk of revenue loss.

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

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

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.