Egta Insight Online Audio Monetisation: STRATEGIES and TACTICS May 2018
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egta insight online audio monetisation: STRATEGIES AND TACTICS May 2018 www.egta.com Photo credit: Patrick Tomasso, Unsplash table of contents 05 Executive summary 06 Chapter 01: Challenges and strategies to monetise online audio Broadcast radio remains stable, but it is not growing. Radio has to accelerate its move online to future-proof its business. Online audio strategy for radio publishers. Key issues to address. The main priorities for radio to grow online audio revenues. Key takeaways and food for thought. 14 Chapter 02: Online radio and online audio product development Platforms Types of products Multiplatform product development strategies Mobile apps development Web platforms and their functionalities Smart speakers’ skills and products for audio systems Automated driving and radio - challenges for radio in cars Radio aggregators 39 Chapter 03: Monetisation and business models for online audio How audio fits into the modern online advertising ecosystem Radio publishers’ sales strategies for online audio assets Advertising formats Sales methods and team structures Ad tracking and attribution Synergies with broadcast radio 61 Chapter 04: GDPR, data strategies and addressable inventory GDPR Data for online audio publishers 69 References and acknowledgements LEGAL NOTICE This publication has been researched and produced by egta’s radio department, and it draws inspiration from the open sources, egta materials and databases, conversations with industry experts and literature from multiple sources. Whilst every effort has been made to ensure the accuracy of the information in publication, egta does not accept responsibility for possible errors or omissions. The opinions and analysis expressed in the publication are those of egta and do not necessarily reflect the views of the other parties. EXECUTIVE SUMMARY & Introduction Convergence between broadcast and online continues to transform the current media landscape. Radio’s big challenge is therefore to find its way forward in the new digital world. It is fair to say that radio advertising is experiencing a renaissance. As it progresses from radio to audio, the strengths of the medium are developing beyond the simply reliable, toward the innovative and progressive. Brands and agencies need to and are starting to fully recognise the importance of audio within a marketing strategy and all media plans. Indeed, improvements in technology and user experience, plus brand safety permanently being under the spotlight, has brought audio to the forefront of change. Both agencies and radio/audio sales houses are collaborating and investing heavily in future audio opportunities rather than maintaining the past. This is a fantastic opportunity for our industry even if it means that advertising professionals have to become true polymaths in order to excel in the increasingly complex ecosystem. egta’s role consists of leading the way through the collection, analysis and dissemination of know-how, innovation and best practice among member companies as well as with the input of related industries such as online media and advertising, internet technologies and ad tech. Online audio monetisation specifically is one of the main areas for radio broadcasters and their sales houses’ future business development. It is thus with the idea of bringing both inspiration and practical knowledge to all its members that egta set out to compile this report which provides an overview of the online audio landscape from the product development, monetisation, and data/addressability perspectives. In Chapter 1 we set out the key strategic challenges radio publishers need to consider to develop their online audio offers and revenues, as well as outline the main priorities in these areas. Chapter 2 examines online radio and online audio products in terms of development strategies, platforms and types of products. While in Chapter 3 we look into monetisation and business models for online audio. Finally, Chapter 4 revolves around GDPR, data and strategies to increase the share of radio publishers’ addressable inventory. The main objectives of this report are: (1) to pose key strategic questions which the radio industry needs to address in order to excel in the online audio domain, (2) to provide a helicopter view of the main tactics being deployed by radio publishers with regards to the monetisation of existing online assets, as well as (3) to outline potential directions for the future development of online radio products. We hope that our examination and analysis, combined with a plethora of cases and examples from various markets, will offer inspiration to the readers and support radio publishers in their online audio endeavours. The egta team say about broadcast media, radio isn’t dead, it isn’t CHAPTER 01: on life support, and isn’t even in the emergency Challenges and room. But radio might benefit from a sober self- assessment of its role in a digitally disrupted strategies to monetise media landscape.” Although it will not find itself online audio in danger over the next several years, radio will not do itself service by ignoring the decline of Broadcast radio remains stable, broadcast listening and the emergence of online but it is not growing. Radio has audio alternatives. to accelerate its move online to High and relatively stable reach (compared to the future-proof its business. steep fall of print or the decline of linear TV in many markets) is the radio industry’s main mantra. a. Listenership – A new approach to But the actual consumption of radio – time spent radio as a medium is needed to attract listening (TSL) is inevitably decreasing and it is new audiences. challenging to attract new audiences to broadcast As Pandora stated in its “The Definitive Guide to radio to compensate for this decline. The speed of Audio 20181: “Despite what some media pundits this change varies from country to country and is FIGURE 01: share of total listening time, by age Total 16-24 25-34 35-44 45-54 55-64 65+ Question: To the nearest 15 minutes, how is your music listening 17 time normally split between the following sources? 30 34 34 36 42 47 AM/FM Radio On-demand streaming Digital downloads/files 47 Other Internet Radio 26 33 25 CDs 19 16 Satellite Radio 12 (Sirius XM) AM/FM Radio Stations 7 Streamed Online 12 10 13 14 Vinyl 13 8 18 9 11 Source: Music Business 10 10 11 9 Association. (September 12, 14 6 6 9 6 2017). “Audiencenet/Loop 8 9 10 Study: Competing Platforms 6 4 4 6 2 and Services Jockeying to 6 4 2 4 4 4 3 2 Command Music Consumption” Page 6 influenced by unique local factors. Therefore, it is the Burrel study5 the share of digital revenue of important to base estimations for a given market radio stations is growing (by 13.4% in 2017) and on local market research. The estimations show “now makes up 7.5% of the average station’s ad that within the next decade radio will have less than revenues, an increase from 2016’s 6.3%”. 50% of listening share among the demographic 16- The radio industry needs to make sure that online 55 in Western Europe and North America. becomes the focus of its product, marketing and This trend is specifically challenging for music advertising departments in order to develop and radios which have to compete for listeners and sell products and services that compliment radio TSL with the booming offer of music streaming advertising campaigns, create an added value to its services. linear offer, and thus to further develop its digital revenues. Research on music consumption in the U.S.2 demonstrates that broadcast radio has 17% of listening time among 16 to 24-year-olds and 30% for 25 to 34-year-olds, while listening to music radio brands online accounts only for 2% to 4% of TSL across all demographics. On the other hand, streaming music services and internet only radios have more than a 50% of TSL share combined for the 16 to 34-year-old group. Those figures, together with similar available studies and Spotify users’ analysis from GlobalWebIndex3 show clearly that the decline is not related to the particular channel or delivering technology (AM/ FM/DAB or IP), it is more about the product (linear vs. interactive). Younger users prefer streaming services for music consumption; it is a growing trend all over the globe. b. Revenues – online advertising is growing, broadcast is flat. Radio has to pursue the online growth potential rather than play defensive. On average, the net broadcast radio advertising revenues are either flat or slightly decreasing across many European markets as well as in the U.S.4 Despite the fact that the 25th anniversary of the first online radio simulcast is approaching n 2019, the monetisation of online audio is a relatively new venture for many radio companies and thus online revenues tend to represent a one-digit share of their total revenues. According to RAB U.S. and © Copyright egta 2018. All rights reserved. Page 7 Online audio strategy for radio • How to deal with existing online radio publishers. Key issues to address. aggregators? • How to build online audio ad inventory? How to Radio executives should approach online audio maximise yield from existing streams on top of activities on their own merit rather than consider pre-rolls and display ads? them as radio though distributed online and on a smaller scale than FM. The solution is to evaluate • Addressable and known audience – how to it from an outsider’s perspective and assess how unlock data potential while staying GDPR to take advantage of synergies with the existing compliant? broadcast business,