800.275.2840 MORE NEWS» insideradio.com THE MOST TRUSTED NEWS IN RADIO TUESDAY, APRIL 28, 2015 Programmatic: it’s all about the data. Technology that combines rich audience data and computer algorithms to make smarter advertising decisions is coming to a radio dial near you. Broadcasters and agencies are laying the foundation for a programmatic system where audience behavioral data would flow into a data management platform to enable targeting beyond old school age and gender demos. Pulled by advertisers accustomed to digital buying practices, agencies say clients want to apply programmatic across more of their media buys. “Clients are starting to say, ‘Who can do programmatic, where can I get the insights,’” says OMD U.S. director Natalie Swed Stone. “If radio can’t do it soon enough, some of that money will go to the digital audio piece.” A new private ad exchange is expected from iHeartMedia in the coming months, followed in 2016 by Katz Media Group’s programmatic Expressway initiative for all of its industry clients. Both are being built on an infrastructure developed by tech company Jelli, which has already attracted Entercom, Emmis, Townsquare Media and Digity Media to its automated buying platform. “We’re going to get there in stages,” Swed Stone says. “You start with the software and the system to transact and then start layering in the targeting and insights so you can segment it out to serve the right ad to the right person at the right moment.” Programmatic could help elevate radio and level the media playing field, agencies say. Enhanced targeting, takes radio from a “cheap frequency medium” or an “add-on” to a primary media type, on par with video in the planning process, says Magna Global EVP of buying analytics Janice Finkel-Greene. How data and machines will change radio sales. The laborious task of buying radio one market at a time is likely to be upended by the arrival of programmatic technology. Using a single data management platform, buyers could look across all markets to pinpoint their largest pockets of target density by market, station, format, daypart or other variables. It could show an advertiser is better off with morning drive in some markets and afternoons in others. “It’s fewer buyers, less time and more target for the money,” says Magna Global EVP of buying analytics Janice Finkel-Greene. The goal is to move beyond traditional demos to more sophisticated segmenting based on consumer behavior, psychographics and characteristics like income, ZIP code or proximity to a retail location. “We’re sort of limited and a little bit retro with the current systems,” says Finkel-Greene. “Audio has been neglected and this is a real opportunity to bring it back into focus.” Broadcasters and agencies are determining what targeting data will best meet client needs. “If we can put in characteristics that the advertiser needs and are important to their product, what’s going to spurt out is the best inventory for them at the best price,” iHeartMedia CEO Bob Pittman said at the NAB Radio Show. Data inputs could include research from Nielsen, Scarborough and other third party data providers. Buyers [email protected] | 800.275.2840 PG 1 NEWS insideradio.com TUESDAY, APRIL 28, 2015 and sellers predict it will expand the use of trigger-based campaigns, beyond weather activations to spots that capitalize on what’s trending culturally. Letting the machine pull the trigger will allow advertising to seize the moment in real time, they say, whether it’s storm, or exuberance around a sports event. Seller’s role expected to evolve under new buying paradigm. A common concern about programmatic is that it will lessen the importance of media sellers, with man being replaced by machine. But humans are still required to optimize campaigns and plan strategies. “It’s not a disintermediation of the relationship, but a change in the relationship,” Michael Kassan, CEO of media consultancy MediaLink said at the NAB Show. Agencies predict the seller’s role will evolve into part researcher and part real salesmanship, as opposed to order taker. “It won’t be, ‘Here are your avails, I made it cheap, give me your order,’” predicts Magna Global’s Janice Finkel-Greene, who is an active participant in the initiative. The conversation will instead pivot to the seller using qualitative listener info to position and differentiate the station’s audience based on how it matches up with the client’s target. Required skillsets will change from negotiating and relationships to analytical and conceptual abilities or what OMD’s Natalie Swed Stone calls “analysis-driven creative.” “Figuring out what the algorithm should be based on is where people come in,” Finkel-Greene says. “I don’t necessarily see people, certainly in the near future, being taken out of their negotiation process.” In two to three years, Bob Pittman says he would like iHeartMedia sellers to stack up with those selling Facebook and the other big digital players. “We can make everything better with more data applied to it,” Pittman said. “It requires that our company be a marketing collaborator, we can’t be a negotiator for spots s and GRPs.” Taking the busy work out of ad sales will allow sellers to spend more time on actual sales, Pittman said. On the back-end, more analysis to track ROI. Beyond planning and buying, programmatic proponents say it will enable more sophisticated post-buy analysis and enable a faster feedback loop so advertises can adjust campaigns on the fly. One goal is to track campaigns in flight, monitor their impact on sales and make necessary tweaks along the way. IHeartMedia CEO Bob Pitman said it will allow radio “to layer data in on a regular basis, looking for attribution in the way the client is looking for it.” A movie studio may want to drive people to watch a trailer before the movie comes out, which can be tracked against an ad campaign. “It’s aligning all of the data and all of the investments for the client to track everything that they’re doing and see how it all works together and what the ROI was and how it affected sales,” OMD’s Natalie Swed Stone says. Chipotle keeps radio on its intentionally lean media menu. Chipotle has used radio to build its brand, and as the restaurant chain makes headlines for scoring its first billion-dollar quarter its media strategy isn’t changing. Chief creative and development officer Mark Crumpacke told investors this week that the company is airing radio spots in 30 of its top markets and using more streaming radio ads than ever before. “The campaign runs in two flights — one is spring, and another this fall,” he said, adding, “We are running more national advertising than ever before.” Chipotle spent $4.8 million on radio in 2014 according to Kantar Media, which gave the medium a 25% share of the chain’s total media spending last year. Radio could see an uptick in total dollars, even though the media mix and calendar remains the same. “We are actually spending more than ever this year,” co-CEO Montgomery Moran said. Chipotle is also buying print, outdoor and social media ads, but television is still noteworthy for its absence. “Very early on we decided to spend more on our ingredients and less on our marketing,” Crumpacke said. He credits their current media mix, combined with local events, for helping making the Mexican-inspired menu “quite buzz- worthy.” During a conference call Crumpacke also took a whack at other fast food chains that are spending a lot more on marketing with limited-time offers and new menu items. “These new menu items and offers rarely build long term loyal customers. Instead they only provide a spike in sales during the advertising window,” he said. Report: Wheeler backs Pandora buying South Dakota FM. Pandora’s long-delayed purchase of hot AC “Hits 102.7” KXMZ, Rapid City, SD has reportedly won the backing of FCC chair Tom Wheeler. Two unnamed sources tell Bloomberg that Wheeler is recommending Pandora should be given a waiver of the foreign ownership rules. While Pandora hopes the deal will allow it to pay the same streaming royalties as broadcasters, it’s not copyright issues that are behind the two-year delay. Instead, the proposed sale has become a test case for the FCC’s new policy of allowing foreign ownership of broadcast [email protected] | 800.275.2840 PG 2 NEWS insideradio.com TUESDAY, APRIL 28, 2015 stations to exceed 25% on a case-by-case basis. Because it can’t say definitively how much of its stock is owned by foreign entities, Pandora is seeking a waiver to the decades-old cap. KXMZ seller Connoisseur Media has already collected two- thirds of the $600,000 purchase price as Pandora has been operating KXMZ under a local marketing agreement. NAB, RTNDA seek voluntary rules governing media’s drone usage. Any doubt that drones will play a bigger role in electronic journalism was grounded last week with a quick walk through the drone pavilion at the NAB Show in Las Vegas. But before stations can begin using drones, the federal government must first spell out the guidelines. The National Association of Broadcasters and the Radio Television Digital News Association are pushing for “voluntary best practices” rather than strict rules of the air. In a joint filing with the National Telecommunications & Information Administration, which is writing the rules, the NAB and RTDNA say attempts to regulate drone use for newsgathering “raise serious First Amendment concerns.” They point to Supreme Court decisions that provide protections for how the press gathers information in addition to what it reports.