A new BIAKelsey report is out titled "The Internet Radio Revolution Has Arrived." It was sponsored by XAPPmedia whose XAPP Ads are designed for voice interaction so that mobile listeners on the move can still engage. The report itself is a nice overview of the business of internet radio. With increasing user uptake advertisers are expected to follow. Given that more and more music is supported by advertising, this next stage is crucial not only to radio but to the near-term and possibly long-term sustainability of the music industry.
In Jacobs Media's recent Techsurvey10 report one of the points raised is that listener complaints about Pandora's advertising are on the rise even though they're still relatively limited.
According to the report, part of the problem may be due to limitations on Pandora's ad inventory leading to an inability to serve reasonably well-targeted ads to many listeners.
Advertisers Moving Beyond "Experimental Budgets"
Based on the latest from BIAKelsey this situation should be changing soon.
The report maintains that "In media industries, waves of change typically progress in this sequence:"
1. Fundamental breakthroughs in enabling technologies occur.
2. Entrepreneurs and their investors experiment with getting the right value proposition into the market.
3. Consumers find the winning technologies and begin to use them
4. Advertisers sensing a new opportunity for connecting with their consumers allocate 'experimental budget.'
5. Media companies and publishers take new platforms seriously. It is only when we reach this last phase that we really get a sense of how fundamentally a technology will impact us in the long run.
BIAKelsey maintains that radio has entered the 4th phase and is headed to phase 5.
At this point listeners have a wide range of easily accessible options across web platforms and devices. Businesses are getting closer to the right pricing and revenue models and users are responding by gradually increasing their internet radio listening time (pure play and broadcast radio on the web).
They describe "Advertiser Engagement" as a:
"key element of this revolution with digital radio growing to 20 percent of the overall radio advertising market in just a few years. Advertisers are moving beyond their “experimental” digital radio budgets and starting to commit to serious spending. This includes adopting new forms of creative messaging in their campaigns, e.g., the interactive voice unit."
This stage is very important. Both web radio and streaming music services like Spotify have been staying alive through investors' money. They need new and effective forms of advertising to generate revenue. At this stage it's unclear if any subscription-based streaming music services will be able to survive without having an ad-supported product as well.
"hands free, eyes free, voice activated ads that provide a new solution for monetizing the growing Internet radio and mobile audio audiences."
Such ads can lead to powerful outcomes and facilitate such highly desired actions as direct phone calls from listeners to advertisers. This approach opens up new possibilities which remain to be fully investigated but are clearly important to the future not only of radio but of music.
Note: RAIN News has a summary of other key points for a quick sense of the overall report.
- Jacobs Media's Techsurvey10 Finds Radio Occupying "Both Sides of the Digital Tipping Point"
- Broadcast Radio Is Digital’s Most Desired Partner
- Broadcast Radio Is Growing In The U.S., Especially Non-Commercial FM
Hypebot Senior Contributor Clyde Smith (@fluxresearch) posts music crowdfunding news @CrowdfundingM. To suggest topics about music tech, DIY music biz or music marketing for Hypebot, contact: clyde(at)fluxresearch(dot)com.