by INSIDERADIO, May 8, 2017

Digital streaming used to be an afterthought; now it’s important enough that radio stations are increasingly looking for how best to monetize those streams. And there’s no better way to do that, industry execs say, than digitally inserting ads into your stream.

Simply put, stations can no longer just set it and forget it with digital and, if they do, they stand to lose out on significant revenue opportunities. New technology is making the digital advertising game increasingly exciting and high stakes.

Don Albert, North American president of ad tech company AdsWizz says his radio partners replace some or all of their on-air ads with digitally targeted spots. He says radio broadcasters are tailoring ads to digital “both to ensure a great listener experience, and to optimize their revenue opportunity.” AdsWizz’s options include targeting ads based on a listener’s location, known as geo-targeting, and also delivering ads for gender and age preferences, as well as behavioral segments. Most digital advertising solutions offer similar features for broadcasters, broadening advertising capabilities.

Along with fewer ads, Univision’s senior VP, Sales Operations & Development, Fernando Rodriguez, says digital-exclusive content can be more valuable to advertisers because it is highly targeted and capable of delivering niche, hard-to-reach audience segments. That, in turn, can help raise CPMs and generate more revenue for broadcasters, who are eager to monetize their digital efforts and defray high streaming costs.

Looking to maximize ratings, keep digital operations manageable and ensure a seamless sound, many stations have opted to directly simulcast their on-air broadcast for digital, including commercials. If a subscribing station adheres to that, Nielsen allows them to roll up streaming listening into terrestrial ratings, potentially creating a larger audience to show to advertisers. However, as digital has grown, many stations’ streams have grown large enough to show significant traffic to advertisers in their own right.

Digital represents a small, but fast-growing segment of the radio business. In 2016, ad revenue from radio’s online assets, including apps, websites and social media, hit $811 million, according to BIA/Kelsey. That accounts for 6% of all radio revenue and, while it is a fraction of overall dollars, digital is solidly growing while over-the-air revenue is relatively flat. Last year, terrestrial radio ad sales inched up 0.9% to about $14.1 billion, but that followed three years of slight declines as BIA/Kelsey also offered.

Industry analysts say it is essential that broadcasters revamp their digital ad strategy—and fast. “We’ve taken the radio model and crammed that into the digital space,” says Paul Jacobs, president of Jacobs Media. “So many people look at the internet as a distribution source for their stream, but there is so much more opportunity that that.”

For example, Jacobs says stations can create branded content for spot breaks or use snippets of podcasts to drive listeners to on-demand content. “The audience is gravitating to streaming. You can’t stop that. So let’s do a different model.”

Digital is gaining acceptance with advertisers. According to a Bridge Ratings study, 46% of agencies consider streaming digital audio as a regular part of their strategy. Two-thirds of the agencies participating in the study plan to use broadcasting and streaming audio together.

Advanced targeting and data analytics have strengthened stations’ position on digital with advertisers, sweetening the digital pitch. When users register for mobile apps or station streams, radio stations can collect even more data to be used for promotions and advertising. Another way that broadcasters can gather more intelligence is by collecting device IDs, information on the actual device being used to stream their station, which can then be used to deliver even more precise ads based on the user’s behavior, preferences and location.

When listening reaches a significant level, stations could even consider bundling their feeds into a package for advertisers to buy, says Triton Digital’s John Rosso. In his scenario, a radio company with a cluster of six stations would aggregate their digital listening and sell it as a package. “It could be a whole seventh radio station,” Rosso says. “Then stations can package it and bring it to market in a way that is separate.” That could include selling different types of ads and courting advertisers who might not buy over-the-air commercials.

New ad technology is also transforming the type of digital ads stations can serve up—and how listeners can interact with them. With voice-activated technology, stations can run ads instructing listeners to engage—and even place orders—by responding audibly, without taking their phones out. Triton Digital’s Rosso says a few publishers are tinkering with personalized ads that identify a user by name or serve up ads with similar music to a song that just played.

At CBS Radio, “We have begun to explore different spot lengths and native placements where we target the user based on the content leading up to the break,” senior VP/GM of Digital Liz Mozian says.

Such experiments will help drive radio broadcasters forward, industry observers say. Notes AdsWizz’s Albert, “Broadcasters can indeed create more relevant and engaging digital listening experiences through such creative use of ad technology to deliver targeted, relevant, and highly engaging content and advertising.”

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Liz Estrella
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