Digital audio services are a sandbox full of great toys with a fast-growing audience of listeners. What brands need to know.
Listening to streaming radio stations via the Internet has become mainstream, thanks to wide broadband availability and an ever-growing smartphone population. There are more types of "radio" and more ways for consumers to listen to radio than ever before; indeed, music consumption is at an all-time high.
Popular Internet radio services like Pandora, Slacker, IHeartRadio, plus our company's service and others offer numerous choices for personalized listening experiences, 24/7, and for free.
Free Lunch for Some, but Not for All
While the adoption of subscription music services like Spotify (also offers a limited web-only version), MOG, Rdio, and Rhapsody is also on the rise, the vast majority of online-music listening occurs with free services.
In 2011, Arbitron and Edison Research reported there were approximately 89 million monthly Internet radio listeners in the United States. However, other published data suggests there were only about three million paying subscribers to streaming music services (excluding satellite radio). Clearly, a majority of consumers opts for free services.
Naturally, someone is paying for all the bandwidth and music-licensing fees, and that someone belongs to a growing number of brand advertisers that have embraced Internet radio as a well performing digital ad medium.
According to the Interactive Advertising Bureau's Digital Audio Advertising Overview, nine of the top 10 auto brands including Ford, Chevrolet, and Toyota were running online radio ads as of September 2011, and so were nine of the top 10 retail marketers like Target, Macy's, and Walmart. Nine of the top 10 restaurant marketers such as Wendy's, Taco Bell, and McDonald's; eight of the top 10 financial services marketers, including American Express, Bank of America, and Chase; and seven of the top 10 telecom marketers, including AT&T.
These numbers are good news for consumers and advertisers because as an advertising medium, Internet radio presents a rich, highly targetable platform for creative and effective multimedia advertising.
Bring on the AV Squad
Although it goes by the name "radio," most Internet-streaming platforms provide a true audiovisual experience, in which audio and video ads are easily synced to banners and animations. With many listeners turning to Internet radio for new-music discovery in browsers or mobile apps, there are frequent eyeballs on a "now playing" screen to check the artist and song, presenting ample opportunities for visual ads to complement an audio experience. Social radio services can add real-time chat and other video networking features to the mix that increase consumer engagement as well.
Bring on the Creatives
With a large panorama on the web and a tightly focused canvas on mobile apps, Internet radio has inspired many new and creative ad formats and campaigns. Pandora has offered cleverly curated/sponsored "mixtapes" from brands seeking to leverage music as a point of common engagement with customers.
Internet radio also offers format flexibility. While the early days saw the logical repurposing of traditional radio-ad formats (i.e., :15 and :30 audio spots), as the medium matures, more services and advertisers are experimenting with non-traditional formats and highly customized creative assets.
For launch advertiser Geico, our company's service is running 7-second audio ads as the popular insurance company has done for much of its Internet radio advertising. Spots featuring the voice of its admired spokes-Gecko are customized to make specific reference to the service playing the spot. Hearing a character in an ad acknowledges that the listener is hearing Pandora or our service, and helps draw the ad into the personalized listening experience, making it less of an interruption.
Cleverly sponsored music and custom-audio units are just the beginning. Ad-supported music services are driven to maximize web and mobile ad revenue, so companies will continue to innovate with their partners at agencies and brands to take full advantage of the unique interactive platform that is Internet radio.
Maintaining a satisfying listening experience is paramount. Being able to stream audio and video to a hyper-targeted and active audience means smart brands will recognize Internet radio as a sandbox full of great toys with a fast-growing audience of listeners willing to play along and share in order to get their music for free.
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