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Mike Dougherty
June 6, 2017
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What a difference a year makes. Last year at around this time, Jelli celebrated its fifth year in business by attracting its 1,000th station to its programmatic platform. Today, Jelli celebrates its expansion with the announcement of its 2,000th station. Yet the challenge remains -- not only to continue to spread the word about programmatic, but to illustrate its effectiveness against digital superpowers such as Facebook and Google. Here, CEO Mike Dougherty explains what's at stake for radio and its advertisers.
Congratulations on the tremendous growth of Jelli's business. You've added offices in New York and Boise and expanded your "team and operations." What kind of personnel additions are they and what will they devote their energies to?
Almost all of the additions will help support the growth of our customer base; some will have roles in teams working with different ad agencies. We also hired Eric Ronning, a longtime audio technologist and evangelist, who helped develop the original audio streaming ad market and now will help push forward to do the same with programmatic radio.
We'll also have new people in our tech operations, to support the increase in platform usage that doubled in the last 12 months to 2,200 stations, and advertisers who are rapidly scaling their usage of SpotPlan, our demand-side platform.
Are you surprised at Jelli's 266% platform growth in revenue and 254% growth rate in total advertisers, or were you expecting significant growth?
We've been expecting growth and we're certainly pleased with it. That's why you need a big team to handle all the potential customers and partners using our platform. We're also working with very large partners such as Katz Radio and iHeartMedia, who manage the two biggest ad marketplaces in the industry. They have their own teams that have added programmatic operations, so we're supporting their end work to grow the entire market.
Is streaming advertising the next great revenue field to mine?
We do think that audio streaming will be an important part of the overall "radio" market. Currently, it's still a smaller portion of the audio advertising market, but over the next 10 years, we expect it to grow into a large portion. We're building for the future, viewing this as a cross-platform opportunity spanning AM/FM listeners, mobile app users, listeners who stream and drive in connected cars and now on new devices like Amazon Echo. Since we think advertisers want to reach them across all platforms, Jelli needs to be prepared. We're currently just in the broadcast segment of the market, helping AM/FM stations sell to programmatic buyers. But in the near future, Jelli will be able to help in the streaming category as well.
Jelli is also an instrumental part of the new Expressway from Katz. How has that been going so far? Is the demand for premium content bigger than expected?
It's very exciting that it has been so well received. Expressway from Katz has signed with all the major broadcasters including Alpha Media, Beasley Media Group, CBS Radio, Cumulus | Westwood One, Emmis Communications, Entercom Communications, Radio One, Townsquare and others, who decided to participate in an industrywide initiative and pull together to allow an entire medium to be bought programmatically. Expressway from Katz is a connecting platform that enables advertisers to partner with radio and reach more people than TV. It's about making radio more modern in the digital era, to compete with not just radio stations, but advertisers going to places such as Google and Facebook. We're providing a digital platform for radio to stay relevant.
Do you feel that Facebook and Google are bigger competitors than radio's own peers and other media?
They're certainly more dangerous in some ways. Recent stats show Google and Facebook capturing 80-90% of all growth in digital over the last 12 months. That's not only a significant position; that's dominance! Every dollar advertisers spend on them comes out of marketing budgets that can go to radio. We've still got to get the word out that radio is very effective so not all of that money is spent on digital channels outside of radio. We've got to stop their momentum that is taking money away from our medium. Even local advertisers are being approached by these digital platforms, not just on a national scale.
Last year in our interview, you said audio receives about $1 for every $10 spent, with broadcast radio receiving about 90% of that allocation. How has programmatic impacted those numbers since then?
We are growing quickly, but there's still work to do. Radio deserves a bigger share of programmatic budgets, because of the effectiveness and ROI of the medium. We have to make sure programmatic buyers have an opportunity to see what we're doing with different partners so they can allocate more of their clients' budgets to us. That said, Jelli still grew almost 300% year-to-year, with partners driving significant revenues through the platform.
In terms of getting stations on board, it took about five years to get to 1,000 stations, but in the last 12 months, we added another 1,000 stations. That kind of traction is not something we expected. It is exciting because it reflects on the demand the advertising community truly has for radio - specifically, radio powered by modern technology.
How do you convince the holdout advertisers? Is getting more programmatic business a marketing challenge or a perceptual one?
It's definitely a marketing and evangelism challenge. This is such a large industry that many agencies are still buying radio the traditional way. We need to talk to them, and that's underway. We're working with larger ad agencies to educate them on how to best use programmatic tools with radio, and get them going. It's just a very large industry, and it takes time to get the word out so all participants can understand all of the benefits. It's going to be a huge opportunity for us, but also a challenge. We're still a pretty small team. The good news is that our marketplace partners -- iHeartMedia and Katz Radio with Expressway - are also educating all these different buyers and ad agencies.
Do you feel you can maintain that kind of near-exponential growth?
The growth rate will continue for another two to three years because the industry is so big. Most of the industry will move to some type of programmatic and as that happens, more and more folks will be using Jelli's technology to power the activity.
You mentioned the challenge of taking your scale in terms of your publishers and helping them get more money from the technology. How has that progressed?
This is still a new process for broadcasters; they're navigating questions about how to manage pricing and make sure to sell premium inventory at fair rates. We have to educate their sales teams on how to use the platform to maximize their opportunity. We're in a phase right now where radio advertisers are in the process of moving from the traditional model to a newer digital-infused model.
You also said, "The opportunity for audio in the future depends on effectively dealing with technological change and continuing to create very compelling content." Are you satisfied that there's enough "compelling content" on the air to attract radio -- and are you doing anything to provide more of it?
In general, I'm very pleased to see that radio has actually grown in reach and TSL this year. That means there is great content, and the value of radio as a trusted companion has risen. It's still a very strong, huge medium that reaches more people than TV. Someone's doing something right on the advertising side, with radio delivering a high ROI of five or six-to-one ratios. The story of radio has been somewhat overshadowed by digital competitors, and we all can evangelize further the effectiveness and engagement of the medium.
Work can always be done with making advertising content more relevant as well. We haven't been able to tackle that problem fully yet, but we've launched some new things to accommodate advertiser demands. One example was to develop technology to adjust in real-time the ad content based on the current weather conditions to make the advertising more relevant.
The thing is, radio has long had unparalleled reach, yet advertisers still seem to be attracted by the "shiny new toy" that is digital. Is it getting frustrating to convince ad agencies and advertisers of the value of radio?
Sure, it can be a little frustrating. As iHeartMedia executives point out, U.S. radio is under-monetized. New digital platforms like Jelli can enable radio to offer similar benefits to digital advertising. This can be done with real-time reporting, delivery, as well as planning and buying via targeted audience data segments as is routinely done on Facebook and Google. Now it's possible for advertisers to use self-service dashboards to buy ads from radio stations. That turns radio into that "shiny new object." We will continue to deliver effectiveness and keep hammering the point that radio now has more modern programmatic platforms through which clients can engage.
Will programmatic be used in podcasting?
There are two ways to advertise on podcasts. You have advertising integrated in the podcasting content, where advertisers leverage the value of the producers reading the ads. There also are standard audio ads that are either inserted in part of the broadcast or at the pre-roll. That's where programmatic ads can be used initially.
Unlike Jelli's success, Radio overall had a soft Q1. Why do you think that is and can Jelli make more a difference?
As you mentioned, we grew very quickly in Q1 2017, where we had more transactions than all of 2016. By using Jelli technology, our partners can solve some of radio's problems by providing real-time reporting access to advertisers to make radio more effective. I believe programmatic will not only be a big part of radio's future, but our growth can be a solution to the current stagnation.
And what of the future? With such huge, quick growth, can you afford to set up a five-year plan, or is it more prudent to focus on the here-and-now?
You have to look at both. We have to focus on the here and now because we're extremely busy, and we can't take our eyes off the ball in terms of the technological transformation going on. Combine that with lots of evangelism and the education required, and we really have to focus on making sure we don't stumble as we grow the market. However, we also want to keep an eye on the broader trends. We believe audio is an important part of the consumers' daily media experience - and it'll be that way for decades to come. We're going to focus on innovating as technology shifts even more in the next five years, and make sure we help our partners manage that shift.
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