Radio may be one of the oldest social mediums, 120 years old this year in fact, however it is still capable of holding its own against the online onslaught. Sales of radio boxes have declined steadily in recent years and we’re generations away from the days of families gathering around the wireless to hear the latest news. Yet, in today’s multichannel, digital world, radio is still flourishing. Over the decades, the overall concept of radio has remained the same but the biggest change has been the way the output is being consumed by listeners.
Audiences now reach for their favourite digital devices to consume radio and, rather than the simple radio box, a variety of other channels from TV screens to computers, tablets or smartphones are rapidly taking over. The penetration of mobiles shows no signs of slowing down, and the market for digital devices has grown exponentially. This will continue to have a dramatic impact on radio consumption. Statistically, online radio listening is increasing each year. The biggest percentage of listeners are the so called digital natives - the 12-24 years of age bracket who expect everything to be available through their mobiles.
This revolution in mobile usage has had a major influence on one key area - advertising. Advertising spend on digital devices is growing 15-20 per cent year on year, and mobile advertising is doubling year on year, but radio has not truly benefitted from the spend growth rates on these other platforms. Consumers are increasingly listening to the radio on their mobiles, so the potential is there, yet advertising is obviously falling short of the mark.
So why are listening figures up, but spending not keeping in line?
The proliferation of mobile use could be the biggest culprit. If we take the US as an example, 2014 was the year when mobile advertising spend took over radio advertising spend for the first time. The trend is definitely moving more towards mobile advertising, and radio seems unable to tap into that new market.
The potential for advertising revenues can be demonstrated by looking at the trends in music streaming services. The biggest proportion of online radio listeners are those that tend to use the same devices for pure play services, and brands such as Spotify, Pandora and Deezer have all experienced significant growth. For example, Pandora’s mobile advertising has grown steadily in line with the increase in the number of listeners. There is a very clear correlation between the two, when the listening figures rise, the mobile advertising revenue grows proportionately.
The traditional radio industry has not been able to harness all of the benefits of going mobile or online and gain the true value of advertising on those mediums. Radio broadcasters can’t drive the same premiums that publishers in the other online mediums are able to command, simply because they don’t advertise in the same way by making use of the latest technology.
The pure play music providers know who their ads are being delivered to, they can measure their messages and tailor them based on key details such as profile and geographical location. They also provide opportunities for the audience to be able to act on those advertisements when they hear them. It is a far more effective way of reaching the target market, meeting the expectations of the digital users who relish the personalisation and immediacy of this advertising method.
Traditional radio spot advertising has historically been devoid of any differentiation, based on both the individual listener and the method of access used by the audience. So, the online and mobile audience hear the same radio commercials as those people listening to the box radio receiver. A few radio stations have already started airing different ads to their online listeners. This has involved the stations having to install and integrate servers and software to their playout systems. However, the adoption has been slow, as these so called ‘on-premise’ solutions are expensive and require effort and new expertise for the station staff.
Now technology has evolved and radio has the capability to provide advertisers with the same benefits as the other platforms through much simpler solutions that do not require this extensive integration. The ‘on-premise’ solutions can be replaced with new ‘on-device’ technology, with mechanisms that enable all of the interaction to be delivered and acted upon on within the powerful digital device that listeners use.
This type of technology is now available and should appeal to radio stations as it is far more cost effective. There is less investment for the broadcaster, and the technology is client-side as opposed to server-based, which means ad insertion is carried out on the user’s mobile device instead of being done at the broadcaster’s server. Not only does this eliminate the potentially expensive equipment and integration effort, but it also provides a much more scalable, reliable and targetable solution. All of the online advertising is currently on-device, so why should radio be any different?
In simple terms, the technology works by targeting audio advertisements directly at individual mobile listeners in real-time. As we’ve seen from marketing techniques on other platforms, the technology can help broadcasters to build and boost revenue from their online and mobile audiences, and also improve listener engagement, interaction, targeting and measurement.
If we hear the digital generation say they “heard an advertisement on a wireless”, we can now presume they mean a mobile device as opposed to the old wartime radio box. Times may have changed, however the radio revolution can bring many benefits to broadcasters and advertisers. The listeners are there, it just takes the right technology to target and tap into this lucrative revenue stream.
By Shankar Meembat, CEO of Exaget.
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