Internet Radio Advertising

Some 30 percent of all Internet users have listened to Internet radio within the last three months. Does this foretell a revolution in advertising, a seismic shift that we should track breathlessly? Well, no. Right now, Internet radio advertising is not a major issue, but it is making a ripple, and it is an interesting case study in media convergence.

Who’s Tuned-In?

For its Internet User Trends: Mid-Year 1999 study, The Strategis Group asked 338 U.S. web-using adults about their participation in a variety of online activities. A remarkable 30 percent responded that they had, indeed, listened to Internet radio within this period.

Demographically, males (35 percent) listen more than females (24 percent). The 18-34 crowd is the most tuned-in age group, while only 14 percent of web users 55 and older have tuned in. Education seems to make little difference in listenership.

Listenership Measurement

The numbers have gotten big enough that some of the top measurement firms are beginning to take notice. On December 8, Arbitron released its first Webcast rating report, which seeks to bring broadcast-style audience measurement to the streaming media industry.

What did Arbitron learn from its first survey? For one thing, said Arbitron official Joan FitzGerald, “Small market broadcast stations are getting a big boost in audience, thanks to streaming their programming on the Internet.” The top radio station in terms of cumulative listeners from the survey was Texas Rebel Radio, a Johnson City, Texas broadcaster with about 84,000 online listeners.

Yep, looks like the web has the potential to democratize radio. You can have a 10-watt transmitter – or no transmitter at all – and still get a good audience, depending on how you get word out.

Room For Growth

Not that the newbie, Internet-only broadcasters are dominant. Arbitron’s research indicates otherwise.

BRS Media recently released figures indicating that while 1,296 U.S. broadcasters and 1,071 international operators now have a streaming broadcast operation, there are only 196 Internet-only broadcasters. The Internet-only operators are mostly starting without a strong local base and current cash flow.

Besides, only about one in four broadcasters currently has a streaming broadcast operation, so clearly there is great room for growth among the “old-fashioned” broadcasters.

Internet-Only Crowd Vs. Locals

The Internet-only guys have some weapons in their arsenal that can help them prosper, however. Many of them provide customized content, which lets listeners “promote” and “demote” genres of music and artists. One of my favorites, Radio Sonicnet, allows you to do this – and exposes you to a banner ad every time you hit the “skip” button on, let’s say, “Sitting on the Dock of the Bay.” The station can be personalized to know your tastes, which may bring you back again and again.

Another advantage for the Internet-only broadcasters is the fact that they can make their advertising more effective by combining voice ads with banner ads. This also gives them a kind of flexibility that the local guys lack.

The Internet-only crowd can easily focus on national brands and national contracts, and they can carefully tailor their offerings along psychographic lines. For local broadcasters, it’s a different world. An ad for a New Orleans disco, for example, hardly benefits the local advertiser when N’awlins expats hear the broadcast in Minnesota.

It’s Booming, But…

There is no question that webcasting is booming and that tens of millions of Americans are tuning in. However, a number of factors are harming its revenue potential. National broadcasts of local ads, low bandwidth, the fact that for many it’s just a change of appliance, and other factors are preventing streaming radio from becoming a giant factor in the U.S. ad industry. This new phenomenon does, however, bear some watching and can present good opportunities for those in the know.

Now, if you’ll excuse me, there’s a Doobie Brothers tune that I need to zap.

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