Digital Radio: The Next Marketing Frontier
Date Posted: March 31, 2015 by Allison Losch
Over the past few years internet radio has been testing the traditional radio market. People are not only listening to music through a radio in their home or car, but instead they are streaming music through a web browser or app. Unlike traditional radio, we are now able to customize what we are listening to via internet radio sites such as Pandora, iHeartRadio, iRadioPhilly and Spotify. So how did we get here? And why should marketers be aware of the emerging market of internet radio?
When radio began it was a form of communication for news and entertainment. The invention of the television shook up the radio industry, and ever since, radio has become more of roadside companion. Now radio is facing competition once again. Internet radio began in 1996 with sonicwave.com. After the introduction of internet radio, the Digital Millennium Copy Right Act was enacted, forcing internet radio broadcast to pay additional royalty fees compared to traditional radio’s charges. Even with the additional royalties, internet radio companies have been flooding the market with great success.
Radio has many listeners, especially people commuting to and from work or school. The issue marketers tend to have with radio is that it is broadcasted to a wide audience that is not easy to track. However, internet radio listeners must have a registered account, so it is possible deploy messages based upon demographics and other audience specific metrics. What is helping to make these internet radio sites attractive to listeners is the ability to customize music stations. For example, Pandora’s Music Genome Project creates personalized playlists based on each listener’s unique tastes based on their choices, and subsequently linked with genres, artists and songs.
The share of time adults spend between media channels has been shifting throughout the past five years. EMarketer has shown that Pandora’s growth has doubled, while traditional radio dropped by 3%. By the end of 2014, Pandora reported 81.5 million active listeners, while Spotify and iHeartRadio, reported 60 million listeners, each. According to The Infinite Dial, just under 2/3 of 12-24 year olds listen to online radio weekly. Therefore, internet radio caters to a younger demographic, which have been more of a struggle to reach for most marketers.
Internet radio advertising has the advantage of targeting within their platform. For instance, most internet radio providers can target by age, gender, zip code, time, day, and device on which the ad is shown. Beyond that, internet radio companies offer the use of ad banners, takeovers, sponsored sessions, audio, video, custom playlist, and engagement functionalities within the site and app to provide advertisers a full brand experience. Beyond advertising as a junction in the listening experience, some listeners with opt in for ads to have longer period of time without them. As an example of such a tactic, Spotify now offers a sponsored session where listener receive 30 minutes of ad-free listening if they watch a video in its entirety.
So what does all of this mean for the future of the radio industry? Radio is still a large part of people’s lives and should not be overlooked, at least not yet. Internet radio is evolving and could soon be as integral of a part of the daily commute as traditional radio. Car are currently being built with Wi-Fi capabilities, which will make it easier to stream internet radio while driving. However, Android may be taking it a step farther with Android Auto, creating an platform for vehicles that would be optimized for driving with integration within the digital world – apps, music, and directions. All-in-all the future of radio is changing and marketers should embrace the new channels that are emerging as a way to better reach specific audiences, and tie back exact performance metrics.