Internet radio is experiencing rising use, cost per thousands and monetization.
That’s the view of John Blackledge and Aaron Chew, analysts at J.P. Morgan, who think the Internet radio ad market was roughly $500 million in 2006, “or about 2.5% of $20 billion traditional radio advertising market.” They believe $100 million to $150 million of that comes from traditional audio ads (30s and 60s), while the rest is from a bundling of terrestrial radio and Internet radio ads, as well as banner ads on the Web sites.
The analysts wrote: “Given the rising Internet radio audience over the past several years and solid return on investment benefits due to accurate measurement and efficient delivery of audience to advertisers, Internet radio CPMs and monetization have grown substantially over the past several years.”
They said since December 2005, the Internet radio audience has grown at a 1.6% monthly compounded rate and that its return on investment “has helped the medium monetize increasing audience trends, given that Internet radio’s measurement is efficient, effective and more accurate than terrestrial radio.
“We believe Internet radio CPMs have grown from about $1 in 2003 to about $5-6 (on average) in 2006 vs. about $3-7 CPMs for terrestrial radio networks and $10-12 for terrestrial spots.”