Investigation: Advertising in Online Radio

     Ever since I got my first iPod and was able to drive, CDs and the radio sort of just went by the wayside. I went and bought myself an auxiliary cord, plugged my iPod in and listened to what I wanted. With Pandora radio I can get my "radio fix" while still listening to more or less what I want. It doesn't take long, though, before a pesky ad interrupts my station for a good 15 to 30 seconds. This assignment has got me thinking about how these ads are changing online radio as well broadcast radio and the impact these changes will have on consumers and producers.

     After a little research I have found a common and unsurprisingly obvious theme: radio advertisers want to target as wide an audience as possible. The best method at doing so is through online (internet) radio. Perhaps the most appealing attribute of online radio is the vast size of its audience. Linda Mackenzie of HealthyLife Radio Network argues that this audience is largest during the working hours of 8a.m. to 5p.m. because workers typically aren't allowed to surf the internet, but they are allowed to listen to online radio in the background. To get a sense of these numbers, Radio Active Media reports that recent studies have shown that online radio has an estimated 70 million listeners per month that are exposed to about 300 million hours of advertising. They also cite that the Radio Advertising Bureau (RAB) found that online radio advertising increases web traffic by a significant 52% and could grow even more with other forms of online advertising. This is very good news for companies wanting to market their brand. 

     Joshua Sinason of The Stairwell writes about the software company, Carbonite, that really made a name for itself by utilizing online radio advertising. Carbonite began marketing its name on the online radio show hosted by Chris Hardwick's company Nerdlist. This particular radio show's targeted demographic are those that use social media like Facebook and Twitter, so it was a quick way for Carbonite to get its name out and develop their brand. The blog goes on to say that there isn't much of a difference between online radio and broadcast radio because in the end they're both about 30 seconds of audio for producers to get their message across. 

     However, blogger Chris Pirillo argues that the differences between online and broadcast radio are actually greater than the fact that they are both audio. The greatest difference, he argues, is that broadcast radio is limited to certain frequency bands, but with online radio, one's internet connection is the antenna to his or her radio. Therefore, when companies are airing their ads, with broadcasting they have to capture their audience in the live moment that their ad is aired. But with internet radio, the only limit is the companies' creativity to capture their audiences' attention.

     Now capturing the audience's attention is perhaps the most essential part to reaching the largest audience possible. Therefore, companies' would be interested in seeing what demographics are listening. Rob Favre of Triton Digital argues that with broadcast radio, advertisers are getting hit and miss results because they don't know exactly who is listening. However, with online radio such as Pandora, users are required to give demographic information such as age, sex, location, etc. Advertisers can use this information to market locally as well as specifically to certain demographics. 

     So, even though I'd rather do without ads, I now have a better understanding of why I am being exposed to the ads that I am. Through this research, I believe that online radio will soon begin to dominate over broadcast radio in terms of music, talk shows, and in sending general information to the public. With growing numbers of listeners, there is beginning to be more of a push for advertisers to take advantage of online radio and the numerous demographics it can reach. Current technology allows producers to monitor and track who is hearing their ads, so there is incentive in that fact alone. While there is no indicator that broadcast radio is going anywhere anytime soon, it will be interesting to see how online radio will change the function of broadcast radio with more advances in technology. 

     

Digging Deeper music from the clouds

OK first off I chose to do Pandora considering I use it in my daily life and its one of the fastest growing Internet radio providers besides Spotify. First a little background information on Pandora.” Pandora's Music Genome Project powers the personalization of Internet radio by using musicological "DNA" and constant listener feedback to craft personalized stations.”  In a simpler term you can put in any of your favorite song or artist and it will play that typical song or artist with other music that is closely related to it. First off I like to say that this is one of the greatest ideas in the past ten years to handle music online. I also feel like this helps with the issue of lost revenues, considering that it lets the users experience new music that they might not have listened to in the first place. This is an interesting advantage of Pandora, considering you get to hear artists that you may not have heard on the actual radio which is so commercially controlled and only plays certain popular songs. Internet radio sites like Pandora also pay royalties to record companies to stream this music, which means profits for the record companies, thus helps them regain some of those profits they lost because of this new digital age. Currently Pandora and Spotify have had to pay a higher rate of royalties than cable and satellite radio, with Pandora paying up to nearly 50 percent of its revenues in sound recording royalties. But now there is currently an "Internet Radio Fairness Act" being introduced to congress to help lower the royalty fees paid by Internet music-streaming services, to those paid by other digital and satellite radio stations. Now that most of the back-story has been told this definitely helps the issue of lost revenue but on the flip-side it can hurt them too. Now you might find yourself saying, but wait, if we already download the popular radio music wouldn’t you just download the new music you hear on Pandora. While yes this could be a possibility and would kill my argument I have one thing to refute that point. And that Pandora reported for the second quarter of fiscal 2013, total revenue was $101.3 million, a 51 percent year-over-year increase. Thus case in point I stick by my side that online radio stations like Pandora is a great solution to lost profits and while yes you can argue the other point numbers don’t lie.

Thanks for reading.

you can see the links here and here