As we reminisce back to the infancy of internet radio; at one time, we actually attempted to measure a streaming radio station's performance based on the same metrics outlined by traditional radio. This left us all dazed and confused when attempting to explain a station's performance to an ad agency (good thing they didn't know either).
Those of us radio veterans, recall radio station owners' "call to action" to get in the game and to start streaming traditional radio. Once that was done, we exhaled (at least for a little while)! We really thought we were doing something by giving away the dreaded, "added value" banner ads along with extra spots to stream, in an attempt to meet a client's cpp and to increase and/or to simply maintain our market-share. It was a mess....
Then ad agencies started to become educated on internet radio metrics, leaving traditional radio stations behind and asking, "what on earth is going on?" "Where is our market share going?" Why are budgets and revenues down?" Well, it appeared that traditional radio was losing market share and market spending to internet radio stations who understood how to speak the language of the internet and they shared this new technology with major ad agencies who, thus; in return began to split their radio ad budgets with internet radio stations such as, Pandora, CBS Radio and even satellite radio stations like XM Radio.
Major advances in technology left traditional radio stations at a disadvantage. Streaming their radio stations, giving away banner ads and online spots was not enough to pay the bills and make up for their loses. Radio station owners began to, "demand out of the box ideas on how to generate ad revenue online in order to get a piece of the internet ad spending pie!" Many of them are still struggling to stay in the game. Many are still producing extremely high cpm rates, low ROI reports along with websites that are not user-friendly (which is not a recipe for retaining listeners, viewers nor advertisers). Well, let's hope they are able to compete in the world with "the internet radio station" which continues to gain market share and ad dollars across the board.
EMI Insight reported that, 54% of streaming music users are male and 46% are female globally, with more users in Norway, Spain, Sweden and France than anywhere else. On average, 32% of the population streams music, which is exactly the penetration of usage in the US. While streaming music reaches close to 50% of 16 to 24 year olds, it also reaches 33% of 35 to 54 year olds and 23% of 55 to 64 year olds.
According to the research firm eMarketer, ad revenue for online radio is expected to soar 67 percent, from $900 million this year to $1.5 billion in 2016. But over the same period, traditional radio’s take will advance only around 4 percent.
Many internet radio leaders are presently developing and executing local ad campaigns in various markets, in an attempt to gain more local dollars! They are incorporating geo, content and behavioral targeting. These methods are drawing "major ad agency dollars" because they are able to produce the numbers and metrics to back up their rates and performance goals.
Traditional radio stations will have to become more competitive and pay closer attention to improving their performance reports in order to get on more of these buys, for their stations. Aggressive ad campaigns, promotions and more non-traditional revenue concepts are needed to encourage their listeners to listen longer, on-line, in order to justify their high internet rates for starters. Let's keep an eye on how this goes. Stay posted for more on this subject....