CPM

Webcasters (including broadcasters regarding their online streaming) need to rid themselves of the CPM-driven advertising style of broadcast, and instead offer buyers the real-time insight into campaigns' performance that digital technology enables.

That's the point Ken Dardis makes in a recent Audio Graphics blog. He writes, "As long as advertising is sold the same way online as it's sold over-the-air, there is no business model for streaming."

Cumulus CEO Lew Dickey recently told BloombergTV, "We don't see a business model for streaming." Dardis says this is because most broadcasters are looking for "bulk" so they can sell CPM ("cost per thousand") campaigns.

But online radio doesn't have the massive listenership for this style of advertising. What online radio does have is the ability to monitor the effectiveness of campaigns in real time, and tailor messages "on the fly" to maximize effectiveness.

"What Google, MSN's Bing (which now includes Yahoo! Search), and any of the numerous ad serving platforms like Zedo, Adconion, ValueClick, etc, are presenting advertisers with is campaign metrics," Dardis writes. This style of advertising "allows savvy media buyers to dissect the numbers as their clients' needs require to improve campaign response. In many cases this campaign improvement can be done in the middle of the campaign."

Read more from Audio Graphics here.

"It's a buyer's market for many ad categories" when it comes to streaming ads, reports Inside Radio. The publication reports streaming CPMs are flat or marginally rising, probably due to an "abundance of inventory... advertiser demand has yet to catch up." Katz360 president Brian Benedik says CPMs range from $3-5 for national/network ads to as high as $15 for hyper-targeted ads.

Diana Anderson, VP of ad buyer Carat, tells Inside Radio, "There is duplication among the audio aggregators and we have found that we can use fewer partners and leverage our spending for better pricing."

Benedik recommends reducing the in-stream spotload to help increase CPMs (which would also improve the listening experience). Radio One digital VP Dan Shelley is considering doing just that, though the idea is only "in the contemplation phase."

You can subscribe to Inside Radio's daily newsletters here. Katz360's Brian Benedik will be a panelist in our discussion about digital advertising at RAIN Summit West 2012 (more info here).

SNL Kagan this week announced its new report, "The Economics of Internet Music and Radio," predicting continued growth for Internet radio ad revenue, outperforming traditional media, over the next decade.

"We expect radio station digital/online ad revenue to grow... from an estimated $713 million in 2011 to $1.55 billion in 2021," reads the report summary. "Based on our 10-year radio ad spending projections, radio station digital ad revenue is expected to rise from 1.5% of the total in 2007 to 7.0% by the end of 2021."

For "Internet-only" radio, Kagan forecasts a faster growth, from $293 million this year to over $1 billion by the end of 2021.

Certainly, as Internet radio's audience grows, it'll attract a greater number of advertisers. What's more, as Forbes reports, "SNL analyst Justin Nielson says that with Internet radio services migrating to mobile devices and in-car systems, companies will soon start pushing local and targeted ads." That should raise ad rates from current $5-7 CPMs to the $10-$20 range, Forbes says.

SNL Kagan publishes corporate, financial, and market news and analysis in the media and communications sector. SNL senior consultant Robin Flynn has spoken at the RAIN Summit and was a judge for the 2011 RAIN Internet Radio Awards.

The SNL Kagan report is available here (password required).

Internet radio network Live365 has introduced an ad revenue sharing program to reward operators of popular stations. The Pro Points rewards program pays station operators $1,000 for every 500,000 ad impressions served for network ads (that is, a $2 "CPM," or "cost per thousand" impressions). An impression is one listener hearing an ad once (ten listeners each hearing ten ads is 100 impressions).

Impression points carry over each month and don't reset until the operator has reached the 500,000 points needed for the $1,000 reward. Station operators can opt-in or opt-out of the system at any time.

Read more from Live365 here.