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CUMULUS MEDIA/Westwood One Chief Insights Officer Pierre Bouvard: "Daily time spent with AM/FM radio dwarfs digital audio."
February 7, 2019
Have an opinion? Add your comment below. The audience share of AM/FM radio is 8 times bigger than Pandora and Spotify combined.
Radio Rally Point was created by DMR/Interactive and All Access to shine a spotlight on the power of AM/FM radio. In this edition, DMR/Interactive Pres Andrew Curran catches up with Pierre Bouvard, Chief Insights Officer, CUMULUS MEDIA and Westwood One.
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You recently presented some powerful insights from the Q3 2018 Edison Research Share of Ear Report. What did you find?
Pierre: The Q3 2018 edition demonstrates the large gap between advertiser perception and reality of audio time spent, as well as how AM/FM radio stacks up against streaming services.
Safe to say that advertisers and agencies might have a misconception when it comes to the size of the Pandora and Spotify audiences?
Pierre: Studies reveal that media planners, buyers, and brands do not always know how Americans spend their media time. One reason is that media decision makers have very different media habits than the average American as they often live in major metropolitan cities. As a result, media planners and their clients incorrectly project their media habits to all consumers, and underestimate time spent with mass reach platforms like television and AM/FM radio, while they overestimate time spent with small digital players.
In May 2018, Advertiser Perceptions, the "Nielsen of advertiser sentiment," conducted a study of 300 brands and media agencies. A simple question was asked: "Please estimate the audience share of Pandora, Spotify, and AM/FM radio." The perceptions? Spotify has a 23% share, Pandora has a 21% share, and AM/FM radio has a 36% share.
The truth according to Q3 2018 "Share of Ear"? AM/FM radio has a 47% share, ad-supported Pandora has a 4% share, and Spotify ad-supported streams have a 2% share. AM/FM radio is 11X bigger than Pandora and 24X larger than Spotify.
Obviously those impressive stats aren’t a surprise to readers of Radio Rally Point, what else should we know about Americans spending substantially more time daily with AM/FM radio than Spotify and Pandora?
Pierre: While agencies and advertisers are completely misinformed about the strength of AM/FM radio, Spotify’s CEO is not. On a recent Spotify earnings call Daniel Ek observed, "When you look at the landscape overall, and you think about something like radio, the truth is that the vast majority of the minutes that that are being spent on radio today haven’t yet moved online."
AM/FM radio remains dominant with nearly two hours of daily time spent among persons 18+. Pandora’s daily time spent is 12 minutes while Spotify is slightly less at 10 minutes daily.
Listening to music at home used to mean albums and CDs. Today, that has shifted to Spotify and Pandora. Now listening to music at home means audio streaming is playing softly in the other room. According to a MARU/VisionCritical study, only 54% of Pandora and Spotify listeners actually pay attention to the ads. Background music like this was never meant for advertising.
Advertising works best in the foreground context of AM/FM radio, where news and entertaining personalities keep listeners engaged and paying attention. Listeners are also hearing the ads. On average, 84% of the AM/FM radio audience hears the ads when they listen to AM/FM radio at home, at work, or traveling in the car, according to MARU/VisionCritical.
Those are powerful insights about background and foreground listening. How does radio compare to other ad-supported platforms?
Pierre: According to a Nielsen analysis of 500 ROI studies, the media factor most responsible for sales lift is reach. In fact, reach trumps targeting 2.5 to one in sales lift. When it comes to reach, AM/FM radio dominates all other audio platforms. AM/FM radio’s daily reach is 7X ad-supported Pandora and 18X ad-supported Spotify and ad-supported SiriusXM.
There’s lots of buzz about Spotify and certainly anyone with a teenager or young adult in their life knows how popular it is. What’s the data show?
Pierre: Spotify’s ad-supported audience has not grown in over two years: all of Spotify’s growth comes from their commercial-free subscription service. Spotify’s audience growth over the last three years has been completely driven by its ad-free subscription service. The growth of subscription streaming services comes at the expense of the time consumers used to spend with music they purchased.
So what are the key takeaways from all this information and insights?
Pierre: I’d say the following:
- Advertisers and agencies incorrectly perceive the audience size of Pandora and Spotify as much larger than they are.
- Americans spend substantially more time daily with AM/FM radio than Spotify and Pandora.
- AM/FM radio outreaches all other ad-supported platforms.
- Spotify's ad-supported audience has not grown in over two years. All of Spotify's growth comes from their commercial-free subscription service.
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Thanks for reading and working each day to drive radio forward.
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