The Coming Online Radio Ad Boom
March 6, 2008 at 5:37 AM (PT)
TARGETSPOT CEO DOUG PERLSON writes in FORBES that for over half a century, radio has been derided as a collapsing medium, soon to be merely an exhibit in the information museum as it gives way to better, more visual technologies. Radio has continued to prove all its critics wrong. Nowhere is the continued vitality of radio more apparent than online.
According to a J.P. MORGAN survey, Internet radio's listener base has grown 27% annually since 2000. Online radio now has upwards of 80 million listeners in the U.S. alone. The only problem for broadcasters has been how to make streaming the product online pay. There have been a lot of false starts and wrong turns. But, looking at the history of the monetization of the Internet, the direction in which online radio must go is clear.
All signs indicate that online radio is ready to take off, leading our oldest broadcast mass medium to a new heyday.
Because broadcasters have split off terrestrial and online radio sales; there is an abundance of available ad inventory in online radio. For a variety of reasons, broadcasters typically have a harder time selling their streaming advertising than other traditional media companies have selling online ads. Yet, ironically, this is exactly the type of high-quality online inventory that advertisers are asking for -- it is associated with major media companies with respected brands in their own right (unlike, for example, the unpredictable user-generated video sites that seem to be garnering all the headlines these days).
What Does The Future Hold?
Over the next few years, we will see the results of precise targeting and quick, low-cost internet radio ad-creation technology. For example, restaurants will now be able to immediately advertise specials on rainy evenings when they know their business needs a boost, targeting their sales pitch to an audience in specific zip codes. Or a local political campaign, which had previously relied solely on expensive mass mailings and phone calls, can react to breaking news almost instantaneously, with ad buys laser-focused on its constituents.
Internet radio also has big implications for the music industry. As the record industry adjusts to the lower consumption of highly profitable CDs, it will need to generate new revenue streams, as well as find a more efficient medium with which to promote their artists. With the availability of tens of thousands of both niche and broad-based stations available to anyone who can access the Web, the efficiency of promoting music via ad-supported Internet radio is just what the music industry needs.
Though radio has been seen by some as a decrepit medium, all signs indicate that online radio is ready to take off, leading our oldest broadcast mass medium to a new heyday.