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Radio in the Age of Pandora

  |  August 15, 2011   |  Comments

New technologies enable interactivity between listener and station. Is it the end of radio as we know it?

You may not realize it but we are fast approaching an important anniversary for those of us who make our living in the advertising trade. On Aug. 18, 1922 listeners to New York City's WEAF were treated to the very first radio commercial (it was more of an infomercial, really; a 15-minute presentation for a real estate development in Queens). The decision by the station's owner, AT&T, to sell air time set the stage for entire electronic media industry.

Eighty-nine years later radio now faces a seemingly uncertain future given the increasing "threats" from the digital world. Perhaps this anniversary gives good reason to consider the future for the original electronic medium and give some thought to how 21st century marketers might take advantage of this nearly century old business.

Consider Pandora's recent IPO and U.S. launch of Spotify. Do these developments represent the end of radio as we know it?

Yes, but radio is not dead. These digital services, along with satellite, podcasts, and HD radio represent the public's insatiable demand for audio content as a whole.

Unlike the inflexible newspaper industry, the radio industry has a history of adapting to new technology. And it's doing so again. Over the decades, there have been more than few instances where radio proved its resilience.

Back in the late 1940s, many thought TV would replace radio. The success of TV led to a refocused and reprogrammed radio. Gone were scripted radio dramas and variety shows, replaced by the broad-based pop music formats and the announcers who connected us to that music. Announcers like Alan Freed and Wolfman Jack.

The post-TV radio industry during the '50s and '60s exploded.

radio-revenueIn many ways, Pandora, Sirius, and Spotify represent an extension of the fragmentation that started in the 1960s and 1970s with the launch of FM radio.

In the 1960s, the total number radio stations in the U.S. doubled from 1960 to 1980 to over 8,000 stations, according to the Federal Communications Commission. Radio responded to the rapid audience fragmentation by creating ever more narrow formats. Album oriented rock, contemporary hits radio, urban contemporary, and even talk radio are all results of the rapid growth in the '60s and '70s.

And during that same time total stations doubled and total radio revenues increased five times!

Today demand for traditional radio continues to increase. In March Arbitron reported a year-over-year increase of 2.1 million weekly listeners. Each week 93.1 percent of Americans listen to radio. The total radio audience is at an all time high of over 241 million listeners!

At its heart, radio is an intimate, personal, and local media. Fifty percent of radio listening happens in the car when most people are alone. Digital media has proven its ability to connect people and to be local. Pandora, Spotify, and the others point to a future for radio that requires the integration and embrace of digital.

And in fact, radio's present is very much tied to this integration. Recently, Clear Channel Radio's iHeartRadio app already had over 11.5 million downloads. New technologies like LDR Take Over and Jelli enable greater interactivity between listener and station (including controlling the play list using IM, email, SMS, etc.).

These new technologies enable interactivity between listener and station but will also allow for better measurement and tracking of radio advertising performance. They also serve to expand the advertising opportunities in the audio content space. Much like in the early 2000s when online display inventory expanded faster than advertiser demand, unique and different approaches to sell that inventory arose.

For the savvy marketer radio's digital future and its present is bright.

What do you think?

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Gavin Ballas

Gavin Ballas is vice president of business development for MDC Partner's Integrated Media Solutions, an integrated direct response media agency. He has nearly 15 years of experience building direct response campaigns throughout online and offline media channels.

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