800.275.2840 MORE NEWS» insideradio.com THE MOST TRUSTED NEWS IN RADIO FRIDAY, JULY 31, 2015 Radio Too Strong To Be ‘Under-Monetized’—iHeart Exec. Recent Nielsen data showing radio surpassed TV in the first quarter as the nation’s top reach medium is likely to be a talking point during second-quarter earnings season. Rich Bressler, president, COO & CFO of iHeartMedia, used that finding during the company’s results call yesterday as evidence that radio is “under-monetized as a medium.” The new info, along with a Nielsen study from last year that showed radio delivered a 6-to-1 return on investment, was cited by Bressler as an important data point in demonstrating the medium’s power “as we continue to close the gap between radio’s consumer scale and engagement and its much lower share of advertising spend.” Nieslen data shows two-thirds of radio listening occurs out-of-home, while 66% of mobile media is consumed in-home, stats Bressler used to reinforce radio’s position as the “original mobile medium” at a time when marketers continue to shift dollars to mobile. Bressler also said the company is talking to advertisers about the power of sound. “Consumers are becoming increasingly mobile and we continue to take this message out to advertisers to help them understand why radio should become a bigger part of their media mix and why they should be asking themselves what is our company’s sound strategy?” Events Push iHeart Revenue Growth. Automotive, medical, healthcare and financial services were the biggest advertising growth categories for iHeartMedia in the second quarter as the division that includes the company’s 858 radio stations swung to 4% growth with revenues of $840.7 million. The company says both local and national billings grew, along with its broadcast traffic and weather business. Events continued to help drive revenue, president, COO & CFO Rick Bressler said yesterday—not as a standalone profit center but as an “important, embedded part of our sales strategy.” Big tentpole concerts like the iHeartRadio Country Festival, along with some 20,000 smaller annual events staged in local markets, are having a positive impact on relationships with advertisers, the company says. Events are providing “a significant differentiator from a sales, branding and promotion perspective,” Bressler said. Early indicators point to what would be a fifth-consecutive quarter of growth on the horizon. Third-quarter pacings are up 3.3% but the company will face strong headwinds from political advertising in this non-election year, compared to the same period last year when iHeart put $10 million in political revenue on the books. As it continues to emphasize integrated multiplatform sales, Bressler said iHeartMedia will no longer report core station pacings. “The lines are getting increasingly blurred between local, regional and national spending across all disciplines,” he said, including spot, network, events and digital sales. With local and national sales forces selling integrated packages for advertisers, Bressler said overall pacing numbers better represent the company’s performance and it will no longer provide core station pacings. Programmatic Could Elevate iHeart To Digital Gains. As it looks to extract a larger NEWS INSIDE >> piece of the advertising pie, iHeartMedia is making aggressive moves to build a programmatic ad exchange. Rich Bressler, iHeartMedia President, COO & CFO, said 5 QUESTIONS WITH... yesterday that the company’s alliance with marketing company Unified is part of a KRISTIN KOLODGE, larger effort to make the company more advertiser-friendly and data-driven. In June, J.D. POWER iHeart partnered with, and invested in, Unified to slice and dice the galaxy of audience [email protected] | 800.275.2840 PG 1 NEWS insideradio.com FRIDAY, JULY 31, 2015 data it collects to deliver richer insights to advertisers. Programmatic, or automated buying, where data plays a larger role than with traditional ad sales, has become an expected way of buying in the digital world. Bressler said the goal is to bring radio into the digital world at scale. “Data driven solutions are transforming the ways we deliver new value to our marketing partners, providing the ease, measurability and precision of digital marketing at the incredible scale of broadcast,” he said, adding that it could help put the company “on par with the major digital players” while freeing up sellers to focus more on solution-based sales. The company also reported solid growth for its iHeartRadio streaming platform. Registered users jumped 40% year-over-year to 71 million in the second quarter, while total listening hours jumped 23% during the same period. A majority of digital listening (60%) now occurs on mobile devices. Judge Denies Pandora Royalty Petition. A New York federal court judge, who has already deliberated for more than two years to determine a royalty rate Pandora must pay to BMI, on Wednesday succinctly turned down Pandora’s request to start the fight in his court again. The streaming music service asked for reconsideration of some aspects of the 2.5% rate U.S. District Court Judge Louis L. Stanton decreed earlier. Stanton answered the request in one short sentence: “Pandora’s motion to alter or amend the judgment dated June 29, 2015 [Dkt. No. 246] is denied.” Pandora wanted reconsideration because, while the court case to determine the BMI rate was going on, Pandora also was in the midst of purchasing KXMZ, Rapid City, SD (102.7) from Connoisseur Media. That purchase made it possible for the Internet music service to argue that it was now a broadcaster eligible for a lower radio rate of less than 2%, hammered out with BMI in 2012 by the Radio Music Licensing Committee, which represents radio broadcasters. With Stanton’s refusal to hear that argument it appears Pandora is headed for an appeals court. Some experts and court watchers said Wednesday’s decision was not a surprise, a sentiment echoed by a Pandora spokesman who said it was a “basic procedural step and we remain confident in our legal position.” Pandora is expected to take its case to an appeals court as it did earlier with a similar, but less tangled ASCAP royalty imbroglio. In the petition, Pandora’s attorneys argued that BMI itself had urged the court not to consider the KXMZ matter until after the station purchase had been completed, and then later said Pandora “did nothing but wait for the court’s judgment” to present its KXMZ claim. Amidst Report, Cumulus Anticipates Lift. Taking a few knocks from analysts yesterday while reporting an 8.8% second- quarter revenue decline, Cumulus Media CEO Lew Dickey characterized 2015 as an “important building year to set up for 2016 and beyond.” After focusing on recruitment and building out its proprietary platform, Dickey said the company is “now competing with our strongest team ever.” Dickey pointed to key executive hires, such as Pierre Bouvard as chief marketing officer and Tommy Page as senior VP of brand partnerships, and to scores of new market managers that are “learning the Cumulus playbook and recruiting sellers to the team.” Dickey himself has been spending three or more days a week in the field, he said, coaching, assessing and refining since assuming more of an operational role nine months ago. Amidst a challenging second quarter, Dickey pointed to bright spots: Revenue at the company’s Chicago cluster is up 16% year to date. In New York, hot AC WPLJ is delivering its highest ratings in a year while country “94.7 Nash FM” WNSH had its highest ever cume. Ratings for the Cumulus cluster in San Francisco are up 30% YOY, beating the market. And the “Nash” country format is racked up ratings gains in Des Moines, Nashville, Harrisburg and other markets. The steepest revenue decline for Cumulus was at its Westwood One network but conditions have improved considerably, Dickey said. Based on third-quarter pacings, Westwood’s revenue decline for the current quarter is almost two-thirds less than in the second quarter. The network’s sports business is pacing up double-digits in the second half of the year on the strength of its NFL primetime schedule and 24/7 sports products. Bright Spots: Find out the other reasons for Cumulus’ optimism at insideradio.com [email protected] | 800.275.2840 PG 2 NEWS insideradio.com FRIDAY, JULY 31, 2015 Proactiv Study Suggests Radio’s Role in Online Purchasing Power. A customer may be buying skin care products online, but that doesn’t mean online deserves all the credit for setting up the sale. This comes according to new analysis of skin care product line Proactiv by AdAge, which suggests radio and TV play an important role as an online purchase table setter. The numbers indicated that traditional media advertising is vital to online shopping. Proactiv, owned by Guthy-Renker, is a heavy direct marketer and uses online, TV and radio to promote its sales. With both direct marketing and traditional product advertising, conventional wisdom often says that the last medium to deliver an advertising message can drive a sale. That concept of recency has long been one of radio’s major selling points, particularly given its ability to reach listeners in their cars on their way to stores. In online advertising, the equivalent is clicking through on a search ad, or “last-click attribution,” which gets credit as the driving force for an online sale. Skeptics have long argued that online purchasing decisions are much more complicated, akin to the salesman who does all the work with one customer, only to see another salesman swoop in to get the final sales commission. A look at Proactiv’s online sales by Facebook’s Atlas ad serving and analytics unit, published in AdAge, suggests the theory isn’t quite so cut and dry.