Target

Analyst Mark Ramsey offers an interesting model for broadcast radio today in his blog: Target. He points out that, like radio, Target is combating online rivals. But it's Target's solutions that grab Ramsey's interest.

Target is reportedly looking to develop "exclusive merchandise" and wants to match "rivals' online prices."

Translated into radio terms, that means creating original, "one of a kind" content, says Ramsey. And for non-exclusive content, radio must "match rivals' online prices." Meaning, "make the experience that surrounds it just as good as any other experience consumers can get from anybody else," writes Ramsey.

"So think like Target: Increase your 'exclusives' and match the value proposition of your alternatives."

You can find his blog post here.

To cover its quickly-growing royalty costs, Pandora needs to better monetize its listening audience, especially those listening via mobile devices (for which it's only making two cents an hour; see more on Pandora's finances in RAIN here).

But as it grows (Pandora's share of total U.S. radio listener was 5.79% in March; read more on Pandora's usage growth here), Pandora (and industry analysts) are betting on the more lucrative local advertising market, especially given the added benefits of targeting by age, sex, and ZIP code Pandora is able to offer.

Pandora has run more than 400 local ad campaigns across the country this year. The New York Times spoke with one advertisers, a NJ Honda dealership. "Attracted by Pandora’s ZIP-code targeting, he spent $10,000 to advertise on the service in January," the paper reports. "IPhone traffic to his Web site — which he attributes to the ads — more than quadrupled, (Planet Honda president William) Feinstein said, and so he increased his spending to $15,000, then $20,000." He told the paper, "We don’t need to buy five radio stations. We can buy one."

The Interactive Advertising Bureau (IAB) this week released a study predicting strong growth for mobile, and local, online advertising. Its press release (here) quotes PwC U.S. Partner David Silverman, "By combining some of the best features of the internet, along with portability and location-based technology, mobile advertising is enabling marketers to deliver timely, targeted, relevant, and local advertisements in a manner that was not previously possible. It is for these reasons that we expect strong growth to continue with mobile advertising."

Will this affect local broadcasters? "At the end of the day, the client budget isn’t growing; in some cases it’s shrinking," Dave Marsey, SVP at Digitas, told The Times. "You’re seeing dollars move from out of terrestrial and into more accountable, targetable channels." Broadcasters, however, maintain that Pandora's lack of true local content (news, traffic, weather, community issues) make it something other than "local media."

One aspect in which broadcasters definitively have the upper hand is sales force manpower. CBS Radio sales president Michael Weiss told The Times his company has a sales staff of 1,200. Pandora has fewer than half as many total employees. "The boots on the ground gets you the local advertiser," said Razorfish ad exec Jeff Lanctot.

Read more from The New York Times here.

A company called Geo-Broadcast Solutions says it has created technology that would allow radio broadcasters to divide their coverage area into geographic zones, and broadcast different content to each zone.

The system, called "ZoneCasting," uses GPS, mobile broadband, and high-powered radio boosters to enable a station to slice its service area into up to seven different segments. Listeners could travel and be seamlessly "handed off" from zone to zone, much like cellular/digital mobile works.

Geo-Broadcast CEO Peter Handy told Inside Radio that the system has been successfully tested in Salt Lake City in March 2010 and in Sebring, FL in July of last year. Geo-Broadcast is now requesting that the FCC open a rulemaking to allow FM booster stations to originate programming.

An obvious application for such a technology would allow radio to hyper-target advertising to subsets of a station's coverage area, in the way cable television and digital (like some Internet radio) do. Handy told Inside Radio, "Post-deregulation radio became a reach medium and to some degree local retailers got priced out," he says. "We think we can bring the local advertiser back to the medium by giving them a more affordable commercial option."

Other uses for ZoneCasting could include targeted delivery of severe weather alerts, Amber Alerts, or PSAs. Or, a single station could cover two or more simultaneous live events (e.g. different high school football games) simultaneously.

There's more in Inside Radio (subscription necessary, here).