February 2, 2016
What a difference a little over a year can make. Back at the end of 2014, Jelli was in the process of transforming its business from a listener-driven programming platform to a digital ad platform. Today, hot off the heels of dramatic growth in terms of participating radio stations and advertisers, Jelli is advancing the state of the art in programmatic advertising. Here, Jelli CEO Michael Dougherty explains how programmatic serves both radio and advertiser needs, and what the future holds for Jelli and its users.
When you last talked to All Access in 2014, programmatic advertising was the next step in Jelli's evolution from what was originally a listener-driven music service to a digital ad platform. How has that developed since then?
It kind of exploded. Since 2014, we've seen a significant amount of growth in our business with Jelli technology being installed in about 1,280 stations. In the last year, we've tripled our coverage in the U.S. We added more partners so that we now work with the largest broadcasters such as iHeartRadio, CBS radio stations, Entercom, Townsquare and Emmis stations, among others. A lot of the radio stations are now using programmatic technology because it has proven to help sell ads.
In that time, have you found out certain things to best use programmatic, or are you still learning how to optimize the technology?
We're always learning, but we've seen broadcasters in the market optimize their approaches in three areas: 1) Being able to automate delivery in the buying and selling of ads, which provides value to both broadcasters and advertisers to do their jobs better; 2) Tapping into a big transition occurring around using enhanced data capabilities to buy and sell advertising - and not just for radio, but also for TV, digital, print ... pretty much the entire media landscape. It has led to an evolution where advertisers aren't using traditional core demo data as much as the primary thing. Instead, they're using enhanced data to figure out who the audience is -- stuff like what cars they own and what they want to buy next. Radio can now present this kind of audience targeting to the large advertisers; and, 3) Selling to digital buyers who have either never bought radio, or stopped using radio in their advertising budgets and are now coming back to radio, because we can now execute their buys using programmatic technology that makes broadcasting much closer to digital in many respects, while having the scale that only radio can deliver.
How does programmatic advertising dovetail with radio's local salespeople who develop personal relationships with advertisers? Is programmatic replacing local sellers, or is radio using it strictly for national buys to complement its local sales staff?
Programmatic is being used primarily for national buys. The way it works is that national advertisers still maintain close relationships with national reps. Programmatic streamlines and better monitors the buying, selling and airing of ads. It doesn't change the need for local sales staffs to be involved with the advertisers. It allows the reps to be more involved on a personal level and not on an operational one, and focus their valuable time on the strategic campaign goals and ROI of the client versus the repetitive mechanics of placing the order and running the ads, which is highly automated with programmatic. It gives sales teams the tools they need to compete in this digital age and frees up cycles to focus on new client prospecting and growth.
What are the main challenges programmatic faces today?
A lot of the initial challenges have been taken off the table. If anything, our challenges are growth-oriented, evolving into preparing for even greater scale as the industry sells increasing volumes programmatically. Now that we have 1,280 stations, I anticipate that sooner or later, every major radio station at some point will have our technology installed. On top of going to more radio groups and stations, the other thing we see happening in the future is branching out to global or international markets. A lot of broadcasters in other countries have contacted us and said they want to do this in their markets, too.
How prevalent do you feel this will be? Will it also be used on more digital platforms, including streaming and podcasting?
For sure. Digital audio streaming or podcast programming will also be a very important component of programmatic audio overall. Programmatic buying is already a huge part of online video, whether it's a pre-roll video ad or an ad in someone's video service. Online video programmatic has been one of the largest areas of growth for programmatic advertising, overall, over the last two years. It has been driven by the use of enhanced data to target the audience on these platforms. Advertisers are interested in data segments, such as a luxury car owner looking for a new model. This data being used by advertisers to buy online video and digital will also be used to buy online audio and broadcast radio.
Considering all the options advertisers have, how much of the total advertising revenue can radio expect to attract?
When you look at all the advertising options - TV, digital, Facebook, mobile, outdoor and even print -- audio receives about $1 for every $10 spent, with broadcast radio receiving about 90% of that allocation. We expect programmatic can help this number grow. One reason for this is that audio is unique in its emotional connection to listeners, but also the key to reaching consumers in cars, an important time of day for marketers to reach customers. When consumers are driving around with a shopping list for a home project on a weekend, they may change their plans if they know that there is a sale at Lowe's or The Home Depot, for example. That's hard to do with TV, where the same consumer has to have recall of the ad, or on mobile, which is too dangerous to check out while driving. The other media platforms, even Google or Facebook, can't reach the consumer in the car as well as radio. We can now match the targeting and real-time execution of digital via programmatic radio.
So is Jelli concentrating more on station growth or constant innovation?
We look at that as two separate vectors. One, as you mentioned, is the constant need for innovation so radio can stay competitive with mobile. You look at the technology Facebook and Google have put into their platforms; that tells me all forms of audio need to stay up with their investment in innovation. On the station growth side, Jelli is focusing on increasing volume. Once you get that footprint through RadioSpot(tm) and our other services, the key is to generate a greater amount of volume through that footprint. Our goal is for all $16 billion of ad revenue in the U.S. to be programmatic in one way or another someday. That's our mission -- once a station gets a footprint, it should build its percentage of ad revenue that can be bought programmatically.
How does Jelli plan on helping stations grow their footprint - will it be through a better use of RadioSpot's current services, or will you create more products for them?
Two aspects are at work here. One is the existing platform, where you'll see new features roll out this year needed by our partners to capture more advertising dollars. Expect to see more press releases about those new capabilities. However, we have discovered that we're in the middle of an evolution into new areas of growth, coming from new product offerings that we'll launch later this year. Some big partners are lining up around them because a lot of innovation is needed on the agency and advertiser side.
Has the advertiser's perception of Jelli changed over the past year? Did they instantly take to you like you were the "shiny new toy," or was there some initial resistance?
Early on the attitude of both broadcasters and advertisers was primarily "convince me and educate me." As it should be, I might add. This was an education phase. Although some of the most innovative partners were attracted to the benefits of programmatic and Jelli immediately, there are also those in radio who don't like "shiny new toys" and are more cautious. It depends on the psychology of the person or company. There are some very traditional aspects of radio industry that are somewhat resistant to change, and it took us a while to convince them.
However, now we are seeing all sides of the market moving quickly. Fast forward to Q1 2016 and we've moved beyond education into execution. Now the challenge is how to take our scale in terms of our publishers and help them get more money from our technology.
Speaking of which, in our last interview you discussed how radio should overcome its ROI issues with digital. From your perspective, how has that progressed and what has Jelli done or can do to make it more ROI-worthy?
The industry has been doing a better job of calculating ROI and telling our story to advertisers. The ROI has always inherently been there, but now many players are presenting data to advertisers that proves how radio is a great place to spend their budgets. One thing that radio hasn't had is the ability to connect digital and real-time performance to campaigns, but that's all changing with programmatic. Our partners leverage data from the programmatic platform that helps align the goal of buying a targeted audience while measuring its delivery in real-time. This dramatically changes how advertisers can calculate ROI for their radio campaigns. This type of measurement will evolve down the road into advanced attribution techniques, as well.
Jelli abandoned programming to concentrate on its advertising platform potential. Now that you've generated so much success on the ad front, have you considered using what you now know to dip your toe back into the programming side?
We love the music programming side. As you noted, that's where we started; that's where our roots came from. And granted, there's a ton of innovation that's inevitably going to happen around music programming. But we, at this point, are focused on advertising. There's simply too much to do there to take anything else on. That doesn't mean we don't love music programming or won't ever do it again. There's just so much to do on the advertising side.
Final thoughts: Is the future for Jelli and radio still as bright as you believed a year ago, and what more do you see happening?
We are as excited about radio and audio as we ever have been. Audio is a daily habit for many and reaches billions globally. We are all serving an audience who is emotionally attached to music and their favorite audio programming. This is an audience that is highly mobile, in their cars, at a time of day that does not have other media distractions. And, this is an audience that, for the most part, prefers listening to audio for free. The opportunity for audio in the future depends on effectively dealing with technological change and continuing to create very compelling content. With compelling content, and innovation in advertising, we can continue to earn one in 10 advertising dollars, and perhaps even grow our share with advertisers. That's a rosy picture for the whole industry going forward.