Alexa, Should Radio Go Programmatic? - Radio World

Alexa, Should Radio Go Programmatic?

Broadcast industry needs to keep up with this technology in order to survive
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The author is chief marketing officer for WideOrbit.

Media company executives are bombarded with requests from clients and consumers to explore “The New New Thing.” Programmatic advertising is one of the latest to confront radio businesses.

And as always, the New Thing brings up questions with significant business implications. How urgently do you need to move? What do you have to do to take the plunge? Solid answers are especially urgent for established media companies, as ad buyers look to target audiences move nimbly and whimsically between content platforms, many of which are competitive with their offerings.

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Credit: Google

To answer these for radio, let’s start by looking at programmatic’s progress in media formats where adoption is already under way: digital video and television. In these spaces, advertisers’ target audiences are no longer tied to consuming content on any particular platform. They are growing more accustomed every day to switching between devices, watching their preferred programs when they want and where they want.

Media companies need to be nimble and committed to aggregate these fast-moving audiences on behalf of advertisers. That’s why programmatic is already so important for video platforms. In less than seven years, programmatic digital video ads have gone from zero to more than two-thirds of transactions.

PROGRAMMATIC CHALLENGES FOR AUDIO

The audio media world is feeling the same pressure to allow advertisers to follow listeners. The growth of digital and mobile platforms is having an immense effect on how content is consumed and monetized. More than 5 percent of radio industry ad revenues will be digital this year. Companies like Univision and Entravision are thriving because they bet big and early on these platforms.

But digital and mobile are hardly the only audio platforms in town.

Now others like “smart speakers” are sneaking into view from the Internet of Things. VoiceLabs projects 24 million smart speakers like Amazon Echo, Google Home and Apple HomePod will be sold this year, with the installed base reaching 33 million units by the end of the year. Gartner predicts smart speakers will be in 75 percent of U.S. households by 2020.

These devices are producing major changes in the way that people engage with audio. According to an NPR-Edison Research study, 70 percent of smart-speaker owners say they listen to more audio at home since acquiring their device.

In the era of digital and mobile transformation, who would have guessed two years ago that some of the biggest changes in audio consumption would take place inside the home?

That’s only one example of where change is being forced on media companies by novel new platforms beyond the usual digital and mobile suspects. More are on the way. Car entertainment operating systems like Apple CarPlay and Android Auto could transform the automotive listening experience, while wearables are making radio and podcasts accessible in unexpected ways.

As all these new opportunities start to bloom, it’s apparent that the radio industry has not kept up, endangering its place in the media mix at the exact moment when it should be ascendant.

iHeart Radio CEO Bob Pittman said, “Radio is taking on a new importance to people, but the buying and selling of it doesn’t match the way advertisers want to do it today, which is they want it to be automated, they want it to be immediate, [and] they want data-infused buying more than just demographics.

“We definitely need automation and a programmatic exchange just for ease of buying,” said Diana Anderson, SVP, group director for Network Audio Activation at Carat USA Radio, at a 2015 conference. “If you’re not there, radio is going to fall off the radar.”

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Credit: Amazon

THE GOOD NEWS FOR RADIO

The great news for radio companies is that it has the right stuff to be well positioned on these new platforms to contribute to their existing businesses and build new ones.

Smart speakers, for example, need audio content to attract audiences — and audiences will think first of the radio content they know and love. Even deep into the era of mobile and digital disruption, radio remains media’s No. 1 reach vehicle with more than 90 percent of Americans listening to AM/FM radio every week. That’s more than TV, tablets, connected devices and phones — and it dwarfs the user base of insurgent streaming music services like Pandora or Spotify.

There are other technical factors that makes radio content desirable to new platforms. It’s relatively simple to serve in digital formats, it has high loyalty and audience recognition, and it can be enhanced easily with other media platforms (like using social media to enhance audience engagement).

Meanwhile, the line continues to dissolve between traditional over-the-air radio advertising and digital audio. Ad buyers have already accepted this as the New New reality. Earlier this year, WideOrbit surveyed 4,000 media buyers who use audio ads to reach consumers. Fify-eight percent of them told us that they were audio buyers, not just either radio or digital audio.

That’s a good position for audio content providers. What can you do to cash in and assure that this new technology wave won’t pass you by?

As it is in any marketplace, sellers will make reasonable business changes to accommodate buyer priorities and how they want to buy. Naturally, they will want to do it in a way that protects their existing sales channels.

This is why it’s so important for radio companies to get ahead of the curve on programmatic advertising. It brings the best of both worlds by letting sellers keep selling the way they’re accustomed to, while giving buyers opportunities to use data to use data to target audiences across multiple platforms and improve campaign efficiency.

It’s unlikely that programmatic will bring add substantial revenue to radio companies in the near term, but it will come. Analyst firm IDC projects that as much as $4 billion of radio’s current $14 billion in ad revenue will be sold through programmatic platforms by 2020.

Adopting programmatic now gives radio businesses a chance to understand the market, the technology, the workflow and advertisers’ expectations. Most platforms offer ways to test & learn new revenue models, meet today’s customer demands, and build the systems to support the next generation of radio.

“Alexa, let’s get started!”

Mickey Wilson is chief marketing officer at WideOrbit. Connect with her atmwilson@wideorbit.com, @mickey_wilson on Twitter or @mmw211 on Snapchat.

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