digital

Clear Channel touts digital growth on earnings call; iHeart customizable radio to remain ad-free for time-being

Wednesday, February 22, 2012 - 1:00pm

The manner in which Clear Channel dealt with its digital business on yesterday's earnings call should come as no surprise to anyone who's been listening to CEO Bob Pittman lately (see RAIN here). Radio-Info reports today that Clear Channel CFO Tom Casey began the call "by talking about iHeartRadio app and last September’s successful iHeartRadio Music Festival... Casey talked frequently about digital initiatives and investments, both around the radio platform and at Clear Channel Outdoor. (The hottest thing going in out-of-home advertising is digital displays.) And digital seems to be the growth engine, as you can see from the Fourth Quarter results..."

Casey told investors digital ad (streaming and display) revenue is “growing nicely,” Taylor reports. And this mirrors the industry overall (see yesterday's coverage of RAB's revenue report here). However, the customizable feature of the company's iHeartRadio service -- the company's answer to Pandora -- has been commercial-free since its launch, and will remain so for the foreseeable future. The apparent thinking is about building usage, and not jeopardizing early adoption with an overload of ads. 

"Casey said the company was getting great feedback from listeners, is not monetizing iHeartradio and has no plan to do so right now," Radio Ink writes today. Casey reported 48 million downloads of the iHeartradio app in 2011, and 37 million monthly uniques from all the company's digital products and brands.

Read more in Radio-Info here; more in Radio Ink here.

Revenue picture even brighter when all forms of radio included

Tuesday, February 21, 2012 - 11:00am

RABRadio's digital revenues for 2011 increased more than 15% over 2010, according to new data from the Radio Advertising Bureau (RAB).

That said, radio's digital revenues in 2011 ($709 million) accounted for just over 4% of total revenues. "While that number is growing, it’s not growing fast enough to replace ad dollars lost in the form of declining spot revenues," writes Jennifer Lane in Audio4Cast (here). Spot revenues reportedly dropped 1% from 2010.

Overall revenues for radio in 2011 increased about 0.6% from 2010. 

MoneyHowever, the industry's growth rate may actually be over 3 times higher if one includes revenue from Internet radio and satellite radio services!

If revenues from Pandora, other webcasters and SiriusXM were added to the totals from the RAB, the industry's revenue actually grew around 2% from 2010 (math below).

Moreover, including Internet radio revenue in the RAB's digital radio numbers would double the 15% annual growth to more than 30%.

Here's the math (all figures rounded): Radio's 2010 revenue, combined with Pandora (about $138 million), other webcasters (estimated at nearly $21 million) and SiriusXM ($2.82 billion) would be about $20.3 billion. In 2011, also including Pandora (projected to be $273-$277 million), SiriusXM ($3.01 billion) and webcasters (est. $41 million) would be about $20.7 billion.

Meanwhile, radio's 2010 digital revenue -- with web radio included -- would be around $773.4 million and 2011 digital revenue just over $1 billion.

You can find the RAB's data here-- MS, KH

RAIN Guest essay: Former TargetSpot CRO Lipset on AdWeek: The Song Remains the Same

Friday, January 13, 2012 - 12:25pm

Yesterday in RAIN (here) we covered a recent AdWeek article about pureplay Internet radio's plans to go after traditional radio ad dollars. In a guest column today, TargetSpot co-founder Andy Lipset shares his thoughts on what coverage like this means for ad sales growth.

This week, AdWeek ran an article entitled "Streaming Has A Big Problem—It’s a Huge Success." A headline like this — as well as a coverage in a publication with such influence in the Advertising, Media and Marketing communities — should be construed as a great thing for the business of online radio. I believe, however, many areas of focus in this article — and many similar ones in recent weeks — could actually have a negative impact on the advertising spend that marketers and their agencies designate to online radio.

Both “pureplay” properties such as Pandora, Slacker, and Spotify, as well as the broadcasters such as Clear Channel, CBS, and Cumulus, have a lot at stake in their online radio investments. From Clear Channel’s investment into the buildout and promotion of iHeartRadio to the royalties and costs that Pandora pays to the labels to provide music, there is a significant cost structure involved in the digital radio space. The fact is that both constituencies need to attract significant revenue to their online properties. But in order to do this, there needs to be an adjustment in the way we think about the medium and how it is positioned.

To start, there is a common theme that continues to be weaved in many of these articles: that pure play services should be “separated” from the online streams of their broadcast radio counterparts. Many in the broadcast radio business have said pure play properties “are not radio, and therefore should not be classified as such.”

While they may be technically correct in terms of how a broadcast tower versus an online radio stream works, the reality remains that consumers have changed some of their listening habits. And advertisers, wanting to find those listeners, have redefined the way they can reach them. In the past, when a marketing plan called for a way to reach someone engaged with music content through an audio message, the only way to “get” that listener was to utilize AM and FM stations, then defined as radio. Today, the options for “getting” to those listeners have changed. As such, the advertisers have changed that definition and it is no longer about “radio,” but instead about finding “music consumers,” which encompasses radio, and also many other properties as well. So today, an advertiser may see that the CBS Radio streams and Spotify together are both great ways to reach the music consumer.

When you look at the space like this, the argument for separation of it makes little sense. It would be like the owner of a steakhouse saying that “the Japanese restaurant down the street isn’t really a restaurant because they do not serve prime rib.” The Steakhouse and the Japanese restaurant are still competing for people who want to eat out and they do not have to be mutually exclusive. Sometimes you want a porterhouse, other times you want sushi. The same goes for reaching the music consumer. The pure play properties, which have attributes such as personalization, and the broadcast stations, which have different attributes such as personalities, are not used exclusively by many listeners. In fact, research shows that depending on mood, most listeners will “eat at both restaurants” and at some times seek out broadcast properties, and other times pure play properties.

What concerns me is that by separating this universe, we actually create confusion and lack of clarity about the medium of online radio. We know that when clients are confused, they are likely to stall rather than spend in the medium. For the broadcast streams and pure play properties that are depending on this revenue, this is not how you grow an advertising marketplace.

Further confusion  and potential inertia  can be created when there is a lack of clarity of who buys the medium at the agency level. Does it fall under the traditional or digital buyer at the agency? When I co-founded Ronning Lipset Radio with Eric Ronning in 2004 and later at TargetSpot, online radio was only being bought by the radio community. That has changed in the past year or so, with more digital agencies expressing interest in the medium and purchasing it. It would be hard to argue against a point of view that Pandora and its sales force generated most of the interest from the digital teams, and that broadcast radio has been happy to see the doors opened here. I think we have to acknowledge that in 2012, both sides of the agency have the interest and budgets to utilize the medium should they chose to. Further, sometimes within a single agency, dollar flow into the medium by department will vary client to client.

Having more parties at the agency level showing interest in the medium should not be positioned as an obstacle, but actually as a positive for the medium. It means that budgets have an opportunity to increase from areas that typically haven’t spent in the medium before. It means that broadcast streams can see money from digital agencies. It means pure play properties can see money from the radio marketplace.

The article goes on to say the lack of standardized measurement is a problem in the medium. This is a very accurate statement — especially to tap into budgets that can vary at the agency level case by case. Traditional advertisers for years have been asking for a unified on air/online measurement of broadcast, and one that shows the pure play side by side the streaming audience of those broadcast stations. And despite some quotes in the article, the methodology between digital and broadcast buying is not all that different. One is bought off impressions and CPM; the other is bought off GRPs and CPP. They are all interrelated by simple math.

Having a standardized service that can speak to both sides of the buying community will only send more dollars into the medium. Unfortunately, it now looks like some of the momentum that started earlier this year is not going to happen the way the advertising community may have hoped. So, we will have to wait and see what develops — but ultimately market demand will dictate the right answer.

The bad news is this: when we pioneered the online radio sales space in 2004, there were many articles that sounded much like this one AdWeek ran this week. By doing a simple Google search, you will be pointed to articles around measurement and buying decisions in the medium from 8 years ago (although, I admit that the issue of separating pure play and broadcast is a new one.)

In order for this medium to grow, there cannot be another 8 years of articles like this. The industry — both broadcasters and pure play properties — need to come together and change the paradigm and their thinking. If advertisers continue to see articles about conflicts and obstacles, revenue in the medium is going to come much slower than anyone wants.

Pureplay and broadcast radio streams need to come together, as the advertising marketplace is increasingly looking at this not as radio, but as reaching music consumers. The space needs to recognize that advertising budgets are fluid and sometimes will flow between the radio side of the agency and the digital one. Finally, standardized, credible measurement of all properties, and one that can speak the language of radio and digital together, needs to be created, embraced and executed in the space. These three things will change the advertising flow into the marketplace and medium quickly.

So the challenge is, while the song remains the same today, are we as an industry ready to change our tune?

We appreciate Andy sharing his thoughts with RAIN readers. We invite you to share yours -- please use the feedback form below (you may need to click the "Add a comment" link below). Thanks!

12/15: WTOP, nation's top-billing station, makes digital a priority

Friday, December 23, 2011 - 11:00am

Hubbard Radio's WTOP (Washington D.C., 103.5 FM) has restructuerd and expanded its workforce to "unify digital and broadcast staff." The station says its aiming to "redefine the news workflow. Instead of the traditional model which takes broadcast content and tries to fit it into a digital hole, WTOP’s strategy will focus on the creation of news stories at the beginning of a process. A story’s execution will be determined at its origin. It will then be optimized for all the distribution platforms WTOP offers: radio, web, Facebook, Twitter and mobile." (read more here)

10/3: Pittman named new Clear Channel CEO

Friday, December 23, 2011 - 11:00am

Bob Pittman has been named CEO of CC Media Holdings -- Clear Channel's parent company -- effective immediately. The company told RAIN the appointment is an endorsement of Pittman's digital initiatives, including building out web radio platform iHeartRadio. (read more here)

NPR receives $1.5 million grant to expand Internet efforts

Thursday, December 15, 2011 - 1:10pm

NPR's websiteNPR has received a $1.5 million grant from the John S. and James L. Knight Foundation to further develop its digital expansion. "We want to support their embrace of the Internet," said Foundation president Alberto Ibargüen.

A $1 million portion of the grant will be devoted to providing web skills training at local NPR member stations. The grant will also provide "digital coaches" for NPR journalists.

"Our expectation is that NPR will not just continue to provide quality journalism, but that it will become a model for nimbleness in the digital age, and that it will bring some stations along with it," said the Foundation's John Bracken.

The John S. and James L. Knight Foundation previously donated $1.5 million to NPR for web training in 2007.

You can find more coverage from Radio-Info here.

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