Broadcasters Go Beyond Simple Ad Targeting In Digital Streams.

With digital listening on the rise, online radio ad breaks are beginning to sound different. On their digital streams, some radio broadcasters are breaking from established advertising patterns, experimenting with new styles of messages and tweaking spot loads. It’s AM/FM’s ongoing charter of keeping on top of listener and brand needs.

Some stations are streaming fewer ads per hour or offering different ad formats, such as host-read spots or branded-content interstitials. Others are even serving up bonus digital-only content, including weather updates, artist profiles or extra songs. It is all with an eye for attracting more ears.

At a time when more listeners are tuning in via digital platforms—particularly mobile devices—radio managers say they need to innovate to keep up with habits and expectations. And among digital listeners’ demands: fewer commercials and more personalized messaging.

“Mobile has raised the bar for content creators. We now have the ability to connect with listeners throughout their day,” says Liz Mozian, senior VP/GM of Digital for CBS Radio. “They expect us to understand who they are, to respond to their behavior and to deliver a more customized experience in a way that we couldn’t do before.”

To accommodate both listeners and advertisers, some broadcasters are going beyond simple targeted ad insertion in their digital live streams, and offering new ad lengths and formats. Armed with big data, stations can target ads for location and demographics. In addition, many radio companies are expanding their digital-only content, where they’re free to run any types of ads.

“Digital gives you a different landscape to play. You can create a more direct response experience. You can create branded entertainment. You can do so many things with that airtime,” says Univision senior VP, Sales Operations & Development, Fernando Rodriguez. Univision, for instance, digitally replaces ads for its live station streams in both in-market and out-of-market. Univision is also adding digital exclusive content to its Uforia website and mobile app, creating opportunities for non-traditional advertising, such as branded content, sponsorships and host endorsements.

These new approaches come as significant ad dollars are beginning to flow to online radio. Digital audio generated $1.1 billion in ad sales last year, according to a new report on digital ad revenue by the Interactive Advertising Bureau and PWC, marking the first time digital audio accounted for enough spending to warrant its own reporting line. At the same time, digital listening is surging, with 61% of consumers saying they listened to online radio on a monthly basis, up from 20% a decade ago, according to Edison Research and Triton Digital’s latest study. And 53% of adults said they tune into online radio on a weekly basis, while an impressive 83% of 12-24-year-olds stream weekly.

“Broadcasters need to quickly understand they’re competing with the Pandoras and Spotifys of the world, not just within their local market anymore,” says Andrew Jones, director of Solutions Engineering for StreamGuys, which provides streaming services for about 400 radio stations. “Broadcasters should be flexible and willing to try ad models that are different than straight simulcast.”

Indeed, popular streaming services such as Pandora and Spotify have set the bar with their lighter commercial loads and targeted ads that can seem hand-selected for the listener. Users who want to avoid ads altogether can opt for commercial-free subscription plans. Radio listeners have long grumbled that stations air too many commercials, which can account for 12-14 minutes per hour, and, despite some experiments by a handful of stations, most broadcasters largely adhere to the established model on-air. Online, many stations have opted to feed a direct simulcast of their on-air broadcast, including commercials. But that means while pureplays run less than three minutes per hour of ads, a radio simulcast could have 12 minutes per hour.

“If a station just simulcasts what is on-air, there’s only minimal value,” says Tim Hall, Radio One’s senior director of digital sales and operations. “We need to be adding to the on-air content, producing new experiences that benefit first the listener and also our [advertising] partners.”

While digital ad insertion is not a new phenomenon, the technology and targeting capabilities have improved greatly. In recent years, many broadcasters, including Cumulus and Emmis, have inserted ads for out-of-market listeners, which generates incremental revenue and improves the listening experience for distant listeners. (An ad for the local pizza chain in Philadelphia doesn’t have much relevance for a listener in Seattle, but a national brand message could.)

Now, digital insertion in local markets is on the rise as well. Within the last year, digital executives say, more radio groups are opting for ad replacement in-market. By stripping away the set on-air commercial breaks and spots, stations can experiment with the ad model and, thanks to analytics, they can gauge listener engagement and response. Even if a station retains the on-air schedule and respects ad breaks, they could run fewer ads in each pod and replace some spots with promos, original content or host-read ads, or add a song.

Digital ad insertion requires some technological support, but audio technology companies say the support is widely available among vendors and relatively seamless to listeners. It also requires planning and tending by radio managers and sales reps, but broadcasters say the effort could pay off handsomely. “There is more opportunity separating,” says Radio One’s Hall. “Streaming ad insertion allows you to target segments of your audience that make sense for your clients.”

With digital, stations can target audience segments, including particular demographics, and also direct ads by location. Such targeting can help radio stations lift digital cost-per-thousands, or CPMs, which have lagged behind over-the-air CPMs, industry executives note. Thanks to targeting and creative options, CBS Radio, for instance, says it can charge a premium for in-demand digital inventory.

Scarcity is also pumping up pricing, notes John Rosso, president of Market Development for Triton Digital, who says some broadcasters are routinely selling out of their online avails. “There is not an unlimited supply of this inventory,” Rosso says. “The CPMs have trailed over-the-air radio, but that is rapidly changing.”

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