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For Traditional Radio, It's All About Harnessing The Power Of Digital

This article is more than 5 years old.

Triton Digital

Each traditional medium faces its own unique struggle to adjust to digital competition for audience and advertising dollars, and that's certainly true for radio, challenged by online services like Pandora and more recently Spotify. Radio's response has been to launch digital services of its own. And it's looking more and more like those services will be its growth engine, offsetting declines in over-the-air advertising.

Here to talk about the digital side of radio is John Rosso, president-market development for Triton Digital, which closely tracks online listening, measuring 5,000 streams from traditional AM/FM broadcasters in the U.S. It also tracks key trends in podcasting.

For some time, traditional radio saw digital as the enemy, and most of the growth was on the part of the pure-plays like Pandora. Are we now seeing more and more in traditional radio developing digital offerings to sell alongside over-the-air advertising. How widespread has that adoption become? 

Actually, traditional broadcast radio has been steadily adding digital capabilities, and that growth goes back a few years. While Pandora and Spotify have the largest online audiences, ranking No. 1 and No. 2, broadcast accounts for 17 of the top 20 streaming services.

Overall, streaming has seen enormous growth over the past eight years, from averaging 1 million concurrent listening sessions on weekdays in 2010 to just under 6 million at the start of 2018, with 2014 a major growth year, up 32 percent (see chart, below). Growth has slowed since, with most of it on the part of the pure-plays like Spotify. But broadcast can claim typically longer listening sessions.

In the end, the effect of digital music services like Pandora and Spotify has been positive, expanding the universe of listeners.

What digital advertising options are we seeing? Is it mostly banners on websites, or have we moved beyond? What are some of the more innovative offerings on the part of traditional radio groups?

Most radio stations offer a variety of digital advertising options beyond ads on their sites, such as in-stream audio ads. The benefit of streaming ads versus over-the-air ads is that they can be targeted to users on a range of criteria and their performance tracked. The advertisers know what messages work. 

Some station groups now offer one-stop digital marketing services, putting the client on the air but also in email campaigns, on the search engines and across social media with ads on Facebook and elsewhere. 

Is digital ad spending now compensating for declines in traditional spot spending?

Not yet, but I expect it will. Digital revenue is now growing at roughly $1 billion annually, and one recent forecast, from Magna, expects it to be up 10 percent this year. Future growth will come from digital in two forms: one, advertising on the digital side and, two, the use of digital data--big data--on the broadcast side to make over-the-air ads more targetable.

You mention big data. We’re hearing so much about it these days. How widespread is its use and how is it helping radio to better compete with digital?

The value of big data, simply put, is that it can tell us more about our audiences, and the more we know about audience, the better job we can do helping advertisers target their messages. In the old days, we knew very little about listeners, beyond age and gender. With big data we know tons—age, gender, education, taste in music, favorite brands, what sports they follow, and it goes on and on. Advertisers can use that data to craft their messages, with the end result of maximizing a campaign’s effectiveness.

Anyone who follows media knows podcasting is the hot thing. The question is whether growth in listenership has kept up with all the buzz. A couple years ago it was lagging. Is it now catching up?

There’s no question that the podcast audience is growing. According to Edison Research, an estimated 73 million of American’s age 12 and above listen to podcasts monthly, and 48 million report listening weekly. And both these listening frequencies continue to grow. In addition, the number of podcasts people listen to each week has increased from five to seven in just the past year.

What are the big trends you are seeing in podcasting?

Podcasting is finding its audience, which is clear from the research. The question in my mind is how quickly advertisers will follow the rapidly growing audience. Podcasting has proven to be a very effective medium for direct-response advertisers, and I believe it will also perform well for marketers who want to use it for branding and high-end marketing. 

This is anecdotal and based on my own experience, but I anticipate that we will see a huge increase in ad spending on podcasting when the Interactive Advertising Bureau releases its annual revenue report this month.

Locally, as we know, digital advertising now dominates, reaping the greatest share of marketers’ ad dollars. Has traditional radio been able to increase its bite into digital ad budgets, taking dollars away from Facebook and Google? Can it now compete against these giants?

Having strong digital components increases radio’s ability to compete for digital ad dollars. And while it may not currently have the technical bells and whistles that Google and Facebook can deliver, radio has something they do not, and that is its localness—its ties to listeners and their communities. It’s always been radio's great strength, and it is its singular strength in its battle with the digital giants for ad dollars. So, yes, they can compete, and they are competing.

There’s been much talk of all the different forms of audio—traditional over-the-air radio, digital services like Spotify, and podcasting— morphing into one medium under the title of audio. Are we now seeing that happening and is that an idea that appeals to marketers?

Most certainly. It’s also just common sense. All these are forms of audio. The only difference really is how you access them—and it’s a minor difference. It is all one medium, growing and evolving, and reaching ever- larger groups of consumers. Marketers are taking notice.

Triton Digital

Triton Digital

Triton Digital