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Table of contents

05 Knowledge Partners 05 Edison Research 08 RAB 11 IAB 14 Jacobs Media

17 Broadcasters and Online Players 17 iHeartMedia 23 CBS Radio 25 Cumulus Media 29 Pandora 33 Google 35 Gimlet Media

37 Sales Houses 37 Katz Radio Group 41 Westwood One 44 AdLarge Media 46 AudioHQ

50 Technology Partners 50 Triton Digital 55 WideOrbit 57 Jelli 61 Targetspot and the Radionomy Group 64 XAPPmedia 66 RCS and Media Monitors 69 LISNR

72 Buyers 72 OMD 76 WPP

In 2015 egta organised a second edition of its radio study trip, this time to the advertising and business capital of the United States – New York City. This gave participants – a delegation of business leaders from egta radio/audio member companies – a unique opportunity to better understand and anticipate the evolution of audio trading and innovations in the fields of radio and audio: programmatic and automation, synchronised radio and digital campaigns, innovations in advertising formats, measurement and data strategies, transformation recipes from the biggest U.S. radio companies.

Speaker: Larry Rosin, Co-Founder and President – Edison Research

Presentation available on the egtanet

Background information

Edison Research is the leading provider of information about trends in audio usage in the U.S. and throughout the world. Edison works with many top radio companies, providing strategic data and insights. In addition, since 1998 Edison has been tracking developments with online audio and digital device usage in the U.S. with its Infinite Dial research series. Starting in 2014, Edison added a new study: Share of Ear, which is the first single-source measurement for all audio. This research allows users to compare the consumption of broadcast radio to Internet radio, owned music, satellite radio, podcasts, and other audio platforms.

Larry Rosin, a leading expert in the field of media for over 20 years with specialisations in radio, audio and research, looked at the trends behind media audiences, radio as a medium and as an advertising platform, and offered his insights to serve as an interpretation framework for participants to better understand the landscape, the stakeholders, and the main challenges facing the industry.

Contribution

RTDT – Reach, Time Spent Listening, Debt, Technology

The four major themes to understand about the U.S. radio industry include: reach, Time Spent Listening, debt and technology. In general, the AM/FM broadcast radio business in the U.S. is flat, although in the current climate, the industry claims that flat is the new up.

Reach

According to Nielsen, radio in the U.S. reaches over 90% of Americans weekly, although this might be a slightly exaggerated figure, as the PPM electronic audience measurement device may be picking up incidental Larry Rosin (Edison Research) listening. The industry maintains that “there is more radio listening than ever before”; while it is accurate that there are more people listening, because of an increase in the population, this does not translate into a reach-percentage increase.

5 Time Spent Listening

In terms of Time Spent Listening, Larry mentioned the conspiracy of silence between Nielsen and the radio industry, which makes it difficult or impossible to know for sure the rate at which it is going down. *AQH data on the graph below

Additionally, the difficulties with estimating reach and TSL are related to the switch to a PPM technology that allegedly fails to register certain types of audio (e.g. classical music, speech), which disadvantages certain types of stations. The controversy over the possibility of tweaking the broadcast signal using a device called Voltair to adjust for these inaccuracies has resulted in a further crisis of confidence over the ratings. Moreover, in comparison to previous recall methodologies, the switch to electronic measurement led to a fragmentation of listening and decrease of TSL.

Debt

Commercial radio in the U.S. has been dealing with a crushing amount of debt that is strangling the industry. For example, iHeartMedia: $21 billion in debt, Cumulus Media: over $2 billion in debt and a market capitalisation of $170 million. This situation can be traced back to the Telecommunications Act of 1996, which removed nearly all restrictions on radio stations ownership and thus led to consolidation of hundreds of sellers into huge national radio businesses, funded by massive debt. The radio owners were hoping for further growth in advertising revenues from 2000 onwards, which never happened due to the economic crisis of 2008 and 2009.

Technology

Technology, however, is robust and provides exciting opportunities in terms of streaming, podcasting and sales innovations. According to Edison, weekly online radio listening in the U.S. is rapidly growing and now reaches 44% of the total population 12+, an estimated 199 million people in 2015. Average online Time Spent Listening has been growing steadily to 13hrs 19mins weekly in 2014 with a slight decrease to 12hrs 53mins in 2015. A substantial part of this growth comes from pureplayers (Pandora, Apple, Spotify, etc.), as simulcast listening to commercial radio is flat or down, with the exception of iHeart. A few years ago, most of the online listening came from stations’ simulcasts, but at the moment Pandora is approximately 7 times bigger in this respect than the simulcast of all commercial radio stations together, although Pandora’s initial growth curve is also getting flatter. Spotify has been growing rapidly over the last couple of years, especially among younger age groups. Apple Music launched recently and is also gaining ground.

Audio brand awareness is continuously growing, with 75% of Americans aware of Pandora, 62% of iTunes Radio (rebranded as Apple Radio), 59% of iHeartRadio, followed by many other brands operating in this space ranked correspondingly: Amazon Music, Rhapsody, Spotify, Google Play All Access (now Google Play Music), Beats Music, Slacker, Radio.com, TuneIn Radio, 8Tracks, Rdio, Grooveshark, Live 365, Songza, Accuradio, and others. In terms of audio brand usage, 45% of Americans used Pandora in 2015, followed by iHeartRadio with 17%, iTunes Radio with 16%, and Spotify with 13%.

6 Although not yet the mainstream trend that it seems to be given the recent media attention, podcast listening has been steadily growing and hit its highest number in 2015 with 33% of total population 12+ (approximately 89 million people) saying they ever listened to a podcast, while 17% (approximately 46 million) listened to a podcast in last month before the study, with this being especially prominent in the group of 12-24 years old.

Audio sources are also more prevalent in Americans’ primary cars, with 81% listening to AM/FM, 55% to a CD player, 38% to owned digital music, 21% to online radio and 17% to satellite radio.

In a phenomenon that is specific to the U.S. market, about one in six American households (15%) subscribe to satellite radio – Sirius XM.

The recently launched Share of Ear study by Edison – based on a nationally representative sample of 2,096 Americans aged 13+ who completed a 24-hour audio listening diary – reveals that Americans spend an average of 4hrs and 5mins each day consuming audio – the graph below shows the share of time spent listening for each audio source.

Conclusions

The key topics to understand while exploring the market are the following:  U.S. radio advertising is overwhelmingly local – the total advertising revenues of commercial radio in the U.S. amount to $17 billion, with 90% consisting of local advertising;  New York is the home of most national advertising;  Mobile is exploding, so it is becoming an increasingly important growth area for legacy radio companies, which are dependent on their ability to monetise listening that comes from sources other than over-the- air.

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Speaker: Erica Farber, President and Chief Executive Officer – RAB U.S.

Presentation available on the egtanet

Background information

The Radio Advertising Bureau serves more than 6,200 member radio stations in the U.S., and over 1,000 member networks, representative firms, broadcast vendors, and international organisations. The RAB leads and participates in educational, research, sales and advocacy programs that promote and advance radio as a primary advertising medium, helping to drive business, to grow advertising revenue, and to communicate radio’s digital transition across the U.S market.

The RAB publishes Instant Background Reports that focus on key business categories for radio, with data points such as total ad spending, Erica Farber (RAB U.S.) ad-to-sales ratios, ‘why radio’ statistics, and additional resources for information and research.

Contribution

The U.S. radio advertising landscape

As the original mobile and social medium, radio provides programming content to listeners according to their demography, geography, ethnography, etc. via nearly 11,000 commercial on-air stations, more than 7,200 streaming stations and upwards of 2,200 stations broadcasting multiple HD radio channels in the U.S. Continuing the pattern of the last few years, radio’s revenues in the U.S. are flat and amounted to $17.5 billion in 2014. Considering the multitude of media options advertisers have today, the flat radio revenue trends are considered a solid result and a success.

In terms of radio revenue sectors, spot (local and national spot advertising) generated more than $6.3 billion in the first half of 2015, while digital continues to be the fastest growing sector with $457 million during the same period.

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Radio’s message to advertising clients

 Radio today is live, local, mobile, personal, social, interactive, and experiential.

 According to the Nielsen Total Audience Report (Q1, 2015), radio boasts the highest mass reach among popular media, with 93% weekly reach for adults 18+, 93% weekly reach for young adults 18-34, and 95% weekly reach for adults 35-49.

 Radio captures 1/5 of all content hours – weekly hours spent with media.

9  AM/FM radio has greater share of ear than streaming services, including in the coveted group age of 13-34.

 Radio is driven by unique connections with radio personalities.

Technology delivers radio beyond the dial

Radio’s digital platforms continue to grow with:

 46 million of Americans downloading a podcast in the last month, and 33% of the U.S. population 12+ having ever listened to a podcast.

 Over 25 million HD Radio receivers are in the marketplace, and all major automakers are shipping HD equipped vehicles.

 Smartphones are becoming FM-enabled. NextRadio – an industry initiative to place or activate FM chips in smartphones – is a game changer for radio. NextRadio is an FM tuner application that receives FM radio signals within local areas. It also provides a platform for radio broadcasters to share information about their station and their broadcast content so that listeners can receive real-time updates as they listen. NextRadio also offers enhanced advertising opportunities, provides additional radio listening opportunities and changes the perception of radio. Over the next three years, 30 million smartphones with an FM chip will hit the market.

 Innovations in interactivity, such as listener-influenced programming via the use of platforms like LDR (Listener Driven Radio) technology; personalised playlists powered by broadcast stations, such as iHeartRadio; instantaneous ownership of audio content, such as music, exclusive interviews and concerts, sports and news programming, etc.

Radio delivers ROI for advertisers

According to ROI studies by Nielsen across various brand sectors, radio advertising positively impacts bottom line sales for many categories of advertisers:

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Speakers: . Rena Unger, Director Industry Initiatives – IAB U.S. . Luke Luckett, Consultant and Lead for Podcast Technical Working Group – IAB U.S.

Presentation available on the egtanet

Background information

The Interactive Advertising Bureau (IAB) empowers the media and marketing industries to thrive in the digital economy and is the most influential knowledge hub for online advertising, including audio, in the U.S.

The IAB is comprised of more than 650 leading media and technology companies that are responsible for selling, delivering, and optimising digital advertising or marketing campaigns. Together, they account for 86% of online advertising in the United States. Working with its member companies, the IAB develops technical standards and best practice and fields critical research Rena Unger (IAB U.S.) and Luke Luckett (IAB U.S.) on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing.

Contribution

Digital Audio Committee

The IAB Digital Audio Committee’s mission is to establish industry guidance by creating standards and best practices to help bring clarity to the audio marketplace. The Committee strives to educate marketers and agencies on the value of audio as a powerful and effective advertising medium. The main

11 stakeholders of this committee include companies such as Google, comScore, Pandora, Nielsen, iHeartMedia, AdsWizz, RAIN Enterprises, Spotify, Slate, VivaKi, etc.

IAB Digital Audio Standards

Developed by the IAB in 2012, the Digital Video Ad Serving Template (VAST) has become the industry standard for video adverting and its wide implementation is one of the key factors of growth for the sector.

To drive scale in online audio advertising, in 2014 the first standard template for digital audio advertisements, called the Digital Audio Ad Serving Template (DAAST), was introduced. The breakthrough standard was developed by an industry coalition organised by the IAB’s Digital Audio Ad Serving Template Working Group. The standard is currently in its adoption phase. The purpose of DAAST is to promote a technical ecosystem in which advertisers, publishers, agencies, and consumer playback devices are aligned to coherently deliver and track streamed audio advertising. The intent is to unify an industry fragmented by conflicting ad technologies and platform solutions.

In terms of driving digital audio growth, the benefits of DAAST implementation include: efficiency – the possibility to track across all devices and environments; scale – industry growth; innovation; and trust – moving towards client-side tracking.

Audio ad serving using an XML template

As outlined in the IAB Audio Committee White paper on DAAST 1.0, since audio players are all coded differently, an ad response must be coded specifically to match the player’s code. The operational overhead for the parties involved to achieve this limits the ability for growth. However, using a template based on standardised Extensible Markup Language (XML), audio player code can be adjusted to identify the ad file information that a server sends using the template.

(1) Request ad: the ad-stitching server makes a call to the ad server.

12 (2) DAAST Response: DAAST is the XML-formatted response the server uses to deliver the ad and all relevant information regarding how to execute it and track it. (3) Stitch ad: the ad-stitching server stitches the ad into the stream of content that it serves to the audio player. The audio player only recognises a single stream of content, but the ad-stitching server can detect, to some extent, when the ad was played as well as a few other select events. (4) Ping server using tracking URL.

White paper on DAAST 1.0 available here: http://www.iab.net/media/file/DAAST_Public_Comment.pdf

In terms of stakeholders affected by DAAST, the ecosystem includes:  Audio device manufacturers;  Audio content providers;  Audio ad tech companies;  Player, device and OS engineers;  Audio product developers.

Implementation of DAAST enables the stakeholders to:  Support interactions via voice recognition, tapping, etc.;  Track events – audio metrics are yet to be defined;  Drive ad interactions: click-through, custom click, and click tracking.

IAB digital audio education

The IAB and the members of its Digital Audio Committee have pursued a goal of educating marketers and agencies about audio advertising opportunities and discussing best practices and guidelines for reducing operational costs while driving sector growth. With its Digital Audio Buyer’s Guide, the Committee aims to answer questions that creatives, planners and buyers may have about investment in digital audio advertising.

Digital Audio Buyer’s Guide available here: http://www.iab.net/media/file/IAB_Digital_Audio_Buyers_Guide_v6.pdf

IAB Digital Podcast Working Group

In 2014, the IAB’s Digital Audio Committee approved the launch of a Digital Podcast Working Group in order to establish consensus and clarity for podcast tracking and measurement, as well as to unify communication in the marketplace and establish a more inviting environment for planners and buyers through better accountability.

The main technical challenge for podcast measurement is developing and unifying methods for deriving metrics for downloaded or streamed podcasts, which are currently inconsistent across podcast producers, publishers, and ad-serving entities.

The next steps for the group are: working together with the industry to obtain agreement on definitions of three basic but essential terms: listen, impression, and average consumption, as well as developing a guideline for podcast tracking and measurement and releasing it to the industry in 2016.

The future of digital audio

Digital audio offers marketers a tremendous reach into the American media market. The 2015 Infinite Dial study by Edison Research and Triton Digital indicates that, for the first time, more than half of all Americans aged 12+ listen to digital audio each month.

The familiarity found in such a conversational advertising medium, mirrored with the exclusive and often personal nature of digital audio consumption, is naturally leading to interest in this growing medium.

As the digital audio medium continues to grow, the IAB envisages that the market may develop enhanced capabilities for attribution, audibility, effectiveness research, and increased interaction among coordinated audio, mobile, display and video content and advertising. Current innovation may lead to increased interest in programmatic audio and similar automation, while the connected car may provide additional options for consumers’ enjoyment of digital audio entertainment in-transit.

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Speaker: Fred Jacobs, President – Jacobs Media

Presentation available on the egtanet

Background information

Jacobs Media is the largest radio consulting firm in the U.S. providing a broad array of services, including strategic guidance, research, format expertise, talent expertise, sales consultation, promotional ideation, event marketing, and digital services, with the overall aim of achieving ratings and revenue success. Jacobs Media services are used by nearly every major broadcasting company in the U.S., including Entercom, Cox, Greater Media, Journal, and others. Jacobs Media has also provided consulting services to The Corporation for Public Broadcasting, National Public Radio, and public radio stations around the country. Fred Jacobs (Jacobs Media) Jacapps – an app company launched by Jacobs Media in 2008 – specialises in the design, development and marketing of radio apps for both smartphones and dashboards of connected cars.

Jacobs Media is also a leading proponent in the development of digital strategies for radio companies. Its annual national web survey – Jacobs Tech Survey – tracks a highly evolving and changing media environment by analysing the use of digital assets to enhance programming and sales.

Contribution

Radio and the connected car

The development of in-car media apps and connected dashboards will have a big impact on the radio industry, as the car remains the dominant location for AM/FM consumption in the U.S., with 51% of share. At the same time, the automotive sector is the No. 1 revenue category for radio advertising.

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Connected car users’ satisfaction survey

According to the Jacobs Media survey on connected car user’ satisfaction, the majority of connected car owners use the in-car media features as much as they can to make their investment pay off – 76% declare they love or like these features. Moreover, each year more and more drivers are upgrading their cars and thus getting access to a greater variety of in-car media.

Safety and great user experience are very important for automakers.

However, putting dashboard innovation in context, the average age of a car on American roads is 11.5 years old, meaning that the connected dashboard is not yet mainstream.

74% of drivers do not often change the settings or pre-sets of their vehicle. This was fine when settings were quite simple and straightforward; however, today when it requires some additional training to understand how to use an in-car media system, training within dealership is increasingly important in order to ensure that radio is visible within the new dashboards.

Pandora realised that this is a key opportunity and started a car dealership program to promote the Pandora feature on the dashboard of new cars to recruit new users and show them how to use its service in the car. The U.S. radio industry is so far not involved in this type of cooperation with dealerships, losing this opportunity to Pandora.

Some of the European markets such as the U.K. and Austria are ahead of the U.S. in terms of cooperation between car manufactures and the radio industry. A great example is the development and implementation of Radioplayer – a joint effort of the industry across these markets, which gives radio companies more weight when dealing with car manufacturers.

The good news for the U.S. radio industry is that the majority of car buyers consider AM/FM radio to be a very essential feature of their new cars.

15 However, the importance of connectivity features like smartphone connectors, Bluetooth and Wi-Fi in the car is increasing every year.

There is a lack of standardisation among automotive connected platforms, which puts a burden of understanding the differences between in-car media systems on the consumer. Apple and Google, on the other hand, have developed their own platforms – CarPlay and Android Auto – which ensures consistency across all car manufactures, including a familiar design and user experience for iOS and Android.

A survival guide for broadcasters in the connected car area:

 Buy, lease, rent, or test drive a connected car to get a better understanding of your listeners’ experience;  Attend connected car events to find out what is going on in the industry;  Develop a mobile strategy for your radio business as it greatly affects radio’s in-car position;  Develop a dealership marketing program that is not just focused on advertising sales to the automotive industry, but also on leveraging the marketing opportunity for radio as an in-car platform.

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Speakers:

. Bob Pittman, Chief Executive Officer and Chairman – iHeartMedia . Brian Kaminsky, President of Programmatic and Data Operations – iHeartMedia

Background information iHeartMedia – formerly Clear Channel Media & Entertainment – is the largest radio broadcaster in the U.S. Apart from specialising in radio, iHeartMedia is a global media and entertainment company with digital, live events, out-of-home and on-demand entertainment and information services.

The company owns and operates 858 broadcast radio stations, serving more than 150 markets throughout the U.S., and the company’s radio stations and content can be heard on: AM/FM, HD digital radio, satellite radio, on the Internet at iHeartRadio.com, and on the company’s radio stations’ websites, on the iHeartRadio mobile app, on enhanced auto dashboards, on tablets and smartphones, as well as on gaming consoles.

With 245 million monthly listeners in the U.S., 87 million monthly digital uniques, over 75 million social followers, and 196 million monthly consumers of its Total Traffic and Weather Network, iHeartMedia has the largest reach of any radio or television outlet in the U.S. iHeartMedia also presents more than 20,000 events across the country each year, including the iHeartRadio Music Festival.

For the first half of 2015 iHeartMedia reported $2,944,423 million in revenues, which includes the company’s core broadcast radio business. iHeartMedia has been moving to expand its capabilities in custom-marketing services on behalf of major advertising clients. It has recently invested in Jelli in order to enable programmatic ad- buying of broadcast radio inventory, and in Unified for audience insights analytics, targeting and data matching. It also partnered with AdsWizz to develop a new method to insert targeted audio ads in live broadcast radio streams for the iHeartRadio platform. iHeartRadio is the highly popular digital radio platform founded in 2008 as iheartmusic.com. It aggregates and offers access to more than 1,900 live broadcast (incl. over 800 local iHeartMedia stations across the U.S.), and digital-only radio stations, plus user-created custom stations with broad social media integration and on-demand content from its premium talk partnerships and user generated talk shows. iHeartRadio has approx. 70 million registered users for its streaming music and digital radio service.

Contribution by Bob Pittman, Chief Executive Officer and Chairman – iHeartMedia

Bob Pittman is the co-founder and programmer who led the team that created MTV and has been CEO of MTV Networks, AOL Networks, Six Flags Theme Parks, Quantum Media, Century 21 Real Estate and Time Warner Enterprises. He was also COO of America Online, Inc. and later of AOL Time Warner.

From the users’ perspective, radio has never been in a better shape. It is a 100% digital medium.

If it was invented today, radio would belong to a digital category. In the U.S. radio has a 93% reach compared to 85% for TV in general with an even lower Yuri Loburets (egta) and Bob Pittman (iHeartMedia)

17 figure among Millennials: 75% for TV. Similarly, when you consider the average age of radio listeners in the U.S., it is comparable to that of a digital user, while the average TV viewer is older than a press reader. iHeartMedia specifically has the largest reach of any radio or television outlet in the U.S., outreaching Google, Facebook, Verizon and AT&T.

Mobile is just another radio. Radio is the biggest mobile medium at scale.

A mobile device is just another radio, as has been the case with the car radio, kitchen radio, bathroom radio, etc. Approximately, one third of iHeartMedia listeners use a mobile device to listen to radio, however so far it constitutes only 5% of total listening. Moreover, this listening is incremental rather than replacing their AM/FM listening. iHeart’s AM/FM stations are growing on average 10% year-on-year in terms of number of listeners, while iHeartRadio online registers approximately 20% growth.

Forty nine per cent of Americans listen to radio before shopping, followed by 20% reached by out-of-home and 10% by TV. Radio is that last mile before purchase, and when comparing to mobile it is worth noting that two thirds of smartphone usage takes place inside the home, while two thirds of radio usage happens out of home.

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BUT radio as a business has a serious problem. It is still sold like yesterday’s news. We need to look, feel and trade like digital.

The key challenge for radio and number one focus for iHeartMedia as a business is to change the way radio is bought and sold: to look, feel and trade like digital. Radio needs to transition away from the current siloed agencies approach, where the average profit margin of an agency on TV and radio sales comes to 2-3% compared to 45% on digital. Agencies and their advertising clients are heading towards automated processes and data-driven/data-infused media buying, and the radio industry needs to follow these trends to stay competitive. Apart from being more profitable for agencies, it is also beneficial for radio to automate its sales and thus to drive efficiency.

Data is key to implement these changes: advertisers are increasingly looking for custom audiences. For example, let us say that a particular advertiser aims to place its message around an audience of people who will be in the market for a new car within the next 12 months. In terms of radio planning, it comes down to which consumer groups are listening to which stations, rather than placing spots around a morning show for 25-45 year-old women.

National versus local advertising sales approaches

In addition to the demand for custom audiences, there is also the issue of national versus local radio sales structure in the U.S. iHeartMedia has sellers in more than 150 markets. The objective is to be able to offer a client any solution within the iHeart brand, not limited to the local market. In order to succeed with this approach, it is necessary to eliminate any technological trading barriers, and this is where automation and digital-like trading strategies become important again. iHeart keeps investing in this area, for example, via a recent partnership with Jelli for programmatic ad- buying of broadcast radio inventory. This solution is also available via Katz (sales representative firm owned by iHeart) to the whole radio market, rather than only iHeart stations.

Programmatic ≠ RTB

When talking about programmatic, the radio industry should stop thinking in terms of real time bidding, and view it more as an extension of automating trading and driving efficiency. It is more about replicating the smartest, not the dumbest, buys.

Radio has the highest ROI, BUT remains undersold

Radio delivers the highest ROI in the U.S., on average 6:1 – superior to both TV and digital (TV – 2:1, Facebook – 2:1), while at the same time it gathers the most unfair share of advertising dollars compared to the size of its audience and the results it delivers. The medium has been underinvested for years. The main reason for this discrepancy is that it has not been communicating directly with the clients. Rather than growing the radio pie in this way, the industry has been competing internally for a share of already allocated radio budgets.

Radio’s perceived deficit: measurability. Tension between measurability and results.

The U.S. media industry is fascinated with digital due to its measurability. However, considering the ROI figures, digital does not yield the best results. Nonetheless, radio still needs to address its perceived measurability deficit, and so far the best answer seems to be data matching – in the case of iHeart collecting and extrapolating the data points generated from one third up to two thirds of iHeart listeners while they use digital products and access the stations via mobile, and using the data matching technology to monetise broadcast radio more effectively.

An example is iHeart’s recent investment in Unified for analytics and targeting data, and applying the precision, data and insights from its digital and social properties to broadcast. This strategy of merging digital measurability with the high impact of radio is in line with iHeart’s key priority – to trade as digital.

Competition with music and on-demand services. Radio versus music collections.

Radio and music collections have always co-existed. They serve different purposes, provide different kinds of experiences, and thus operate under different business models. Music collections, represented today in the U.S. by Pandora or Spotify, are for when you want to escape the world and avoid any interruptions.

19 Radio is about joining in, re-joining the world and looking for information, entertainment, new music, etc. Radio is the main source of new music discovery for 73% of Americans.

What is unique about the Pandora model is that everyone loves a good playlist, but hates making it. However, the issue of ad tolerance remains; when users are escaping the world, how many spots can they tolerate? On the iHeart platform users can also create their custom stations; however, there are no commercials on these as they represent a different experience.

The main iHeartMedia ambition in five years: for radio to be considered as a part of digital

Radio is growing in terms of its consumption and impact, but it is stagnating in terms of the buying and selling processes. The main ambition of iHeartMedia is to change that in the next couple of years. This urgency is in iHeart’s culture, as a leader of the radio industry in the U.S., the company feels a responsibility to move the radio business into the digital future.

Contribution by Brian Kaminsky, President of Programmatic and Data Operations – iHeartMedia

Presentation available on the egtanet

Applying the precision, data and insights of digital and social to broadcast iHeartMedia (then CCME) started its development of data and automation infrastructure several years ago with the introduction of programmatic trading around its display inventory, and creating a digital audio infrastructure in partnership with AdsWizz.

The next milestone in this area was the realisation that in order to follow market demand to move away from ratings-based purchasing to audience- based purchasing, they needed more insights and data matching capabilities to take advantage of data collected from 86 million digital users and 75 million social followers, as well as hours of listening generated from digital platforms. The strategy was to transform this vast array of data into a dataset that could be used to evaluate and understand iHeart’s 240 million broadcast audience, which would subsequently open up the possibility of a programmatic and digital-like experience of trading radio. Brian Kaminsky (iHeartMedia) iHeartMedia could not have achieved it on its own but proceeded with equity investments in technology partners that could help apply the precision, data and insights of digital and social to broadcast in the unique way required by the business. iHeartMedia did not opt for a cookie-based technology approach but for human behaviourally informed targeting capabilities. Following the company’s overall strategy not to go after more share of the radio business – a losing proposition – the goal is to tap into new clients and new budgets allocated to digital, but in order to achieve that you first need tools to inform and trade your inventory in a digital way.

SoundPoint Analytics: iHeartMedia & Unified

Through a recent partnership with Unified, IHeartMedia can now build data-driven campaigns that reach the deepest concentration of a client’s target audiences across the company’s formats, markets, and stations, and track the impact of that campaign via digital signals.

The available tools include:

 Custom Audience Segmentation: creating advanced audience segments through the meshing of iHeartMedia proprietary digital data, data from on-air broadcasts and data from third-party sources. For example, Nissan Purchase intenders for the next 180 days.

 iHeartMedia Station and Artist Affinities: (1) Creating reports that demonstrate the affinity of iHeartMedia’s radio station audiences to consumer products and brands. For example, identifying stations by market with users who have strong affinity to the Nissan brand. (2) Creating reports that illustrate the alignment between artists and various brands based on iHeartMedia digital audience data, iHeartMedia playlist patterns, and Unified connected data sets.

20 For example, identifying artists that have strong affinity to the Nissan brand.

 Social Audience Extension: extending custom iHeartMedia audience segments into social media and continuing to drive awareness and reinforcing the messaging in the client’s iHeartMedia radio campaign. For example, taking money from a client’s social media budget by enabling the targeting of the custom iHeartMedia/Nissan purchase intender target on Facebook, Twitter, etc.

 Impact Analysis via Social Metrics: (1) Measuring specific social engagements (e.g. Twitter chatter, Facebook page performance) before, during, and after specific brand's advertising activity on iHeartMedia’s properties. For example, tracking Nissan Tweets and visits to their Facebook page and pre- and post-campaign to measure the lift. (2) Reporting post-campaign highlighting lift and impact on social engagements related to advertising on iHeartMedia, comparing social engagements before, during and after advertising campaign. For example, featuring a particular piece of Nissan content in advertising and track all sharing in primary channels and all earned media that occurs in dark social (nonstandard sharing).

Programmatic: automation, audience and accountability. iHeartMedia & Jelli.

Data collection, fusion and the resulting informed inventory enables the move to into programmatic, the objectives of which for the radio business are twofold: driving efficiency in planning and optimisation on the one hand, but on the other hand also giving buyers confidence to commit a fair share of dollars to radio – to prove its superior ROI results via familiar digital infrastructure to access radio inventory. iHeartMedia, in partnership with Jelli, recently announced the first-ever programmatic platform for broadcast radio. This new offering allows brands to leverage premium inventory to reach audiences at scale in an automated way, with greater accuracy and accountability. The advanced ad serving technology will eliminate errors in spot placement and provide the ability to copy split and change creative, which is currently not available in the network radio space. Clients will be able to view a dynamic dashboard that will allow them to track their campaigns to the following level of detail:  Creative by station;  Station/Market;  When it’s running;  Campaign delivery confirmation;  Results in real time. iHeart Media’s Private Network, and Expressway from Katz – an industry-wide exchange – combine the scale and effectiveness of radio with the efficiency of digital, and covers:  Over 1,389 stations live on platform;  200+ Designated Market Areas, covering 99.4% of the U.S.;  Over 30% combined share in top 25 markets;

21  660 top-10 stations and 85 No.1 stations.

iHeartMedia’s in-house yield management structure evaluates prices and available inventory across the entire network, which allows to dynamically provision inventory between sales methods deciding what portion to put up for programmatic sell, and to build campaigns around insights on how audiences are changing in real time, e.g. taking into account macroeconomic or environmental factors such as weather and mortgage rate, with a possibility to swap creative instantly and to pull or optimise a campaign within minutes, which for many networks takes weeks because of decentralised traffic systems.

For iHeartMedia, the resulting efficiency is immediate. There is no longer a need to contact 700 stations, instead they use the platform tools to set up buy, define targeting criteria and run the campaign. In terms of necessary infrastructure, Jelli software is currently being deployed at all iHeart stations. On the other side, the Jelli team is building demand-side tools with agencies across radio marketplaces.

Targeting capabilities

There is a tremendous operational benefit to data matching and programmatic. iHeartMedia will be using the platform to take its wealth of data, as well as data from third parties, especially from marketing partners, and apply it to its audience in a variety of ways that describes their purchase and interest patterns.

For example, if a CPG (consumer package goods) company has two types of customers (one group that shops on Mondays and Tuesdays vs. another that shops on Saturday and Sundays and at different times of the day), iHeart will be able to find those people and deliver messaging from their radio stations that matches those audience profiles, at the exact right times – i.e. meshing together the best formats and the time of day and insights from the marketer, allowing to target impulse purchases like fast food, casual dining or groceries.

It also creates the ability to tap into the relationship between music passions and brand preferences across beauty, fashion and beverages in a dynamic way and at massive scale.

Another example of a targeting capability that previously was not available at scale to the radio buyer might be a snow tire brand that is running ads on radio stations across the mid-Atlantic region. Normally, the ad copy describes the general benefit of snow tires. Whenever the weather forecast predicts a blizzard in the next three days, the ad copy will automatically shift to encouraging listeners to purchase snow tires because of an upcoming storm, and will play the new ad copy.

Optimisation based on patterns in purchases with cash register and credit card data from clients is another possibility to enrich audience insights.

22 Digital audio: audience insights and commercial structure

In terms of iHeartRadio consumption, the proportion of users who listen to simulcasts of live stations versus users creating their custom stations is approximately 7-8:1. Live listening dominates, but the use of custom capabilities is growing, for example, with the recent introduction of My Favourites Radio product. iHeartRadio does not require personal registration data; the insights are collected from users’ behaviour: listening patterns and preferences, and meshed with all the other data points: device ID, data on registered users, etc.

In terms of sales structure, iHeartMedia underwent a transformation, merging its dedicated digital sales team that was selling cross-platform digital solutions with its connections team – also dealing with cross-platform and cross-formats packages. The next step is to recruit specialists to approach digital-only agencies, and to further develop the branded entertainment division.

Speakers: . Jeff Sottolano, Vice President, Programming – CBS Radio . Adam Wiener, Senior Vice President of Content, Community and Operations – CBS Local Digital Media

Presentation available on the egtanet

Background information

CBS Corporation is a mass media company whose operations span virtually every field of media and entertainment. CBS Radio is one of the largest major-market broadcast media operators in the U.S. and the leader in spoken word: news and sports radio. CBS Radio reaches nearly 70 million consumers nationwide each week making it the No.2 radio operator in the U.S. in terms of reach.

Contribution

Leveraging local assets and affinities

CBS Radio owns and operates 117 radio stations in 26 U.S. markets – including the top 10 as ranked by Nielsen Audio – as well as an extensive array of digital assets. CBS Radio distributes its programming via AM, FM and HD Radio stations, radio.com and CBS Local Digital Media apps.

CBS Radio offers advertisers a number of local, multi-market and digital opportunities to reach their local target audiences.

With 500 national and local opinion leaders at CBS Radio, audiences trust live and local radio hosts in a way no other medium can duplicate. In this way, programming is designed to serve the community with relevant local news, information and entertainment.

CBS Radio executes over 1300 live signature events with market-leading brands to create additional opportunities to interact with the local community. Jeff Sottolano (CBS Radio) and Adam Wiener (CBS Local Digital Media)

23 CBS Sports Radio

The CBS Sports Radio Network provides around-the-clock national sports coverage to affiliated radio stations. The network has more than 330 affiliates across the U.S. and Canada, including radio stations in all of the top 10 U.S. radio markets. Westwood One is the exclusive syndicator and sales partner for CBS Sports Radio.

CBS Radio has made heavy investments in play-by-play rights for more than 25 professional sports teams, which serve as a marketing tool for the company’s radio brands.

Altitude – the integrated cross-platform solutions team

Altitude is the creative content group – an in-house agency for CBS radio properties – that drives growth for CBS clients such as American Express, Ford, Allstate, Lexus, Chase, 21st Century Fox, MasterCard, Geico, Verizon, Jeep, Mercedes-Benz and others, in markets that matter to them. Altitude develops custom content and branded integrations across CBS radio, digital and sometimes TV assets for truly multi- platform solutions. As a result, CBS Radio maintains direct relationships with some of the largest U.S. advertisers.

CBS Local Digital Media – one route and domain for all CBS Radio assets

CBS Local Digital Media is an interactive network of various websites connecting consumers with content across all CBS assets nationwide including news, sports, entertainment, music, podcasting, and native advertising. In terms of audience and usage, it serves 54.1 million monthly unique visitors, 33.4 million monthly unique mobile visitors, and generates 24.2 million monthly listening streaming hours. radio.com – the streaming home of CBS Radio radio.com is the streaming home of CBS radio – a website and an application bringing together the music and entertainment from all the stations in the CBS portfolio.

CBS Radio also looks for additional distribution for its content and additional access points to its streams, for example via a partnership with TuneIn.

Eventful

In 2014 CBS Local Digital acquired Eventful – a digital media company that provides demand-based platforms for live, digital and broadcast events with an objective to make it the leading destination for users seeking information about things to do in their area, and thus to further leverage CBS local affinities and live events properties. To use Eventful, registration data is required, which builds a huge database of first- party data about its users and their preferences.

Play.it

In 2015 CBS Local Digital launched Play.it, a podcast network connecting users with premium on-demand content, hosting at the moment over 400 podcasts including original and repurposed CBS Radio shows with 16.2 million monthly unique listeners. Play.it has a dedicated on-demand audio sales team.

Challenges and opportunities for radio as a medium and an advertising platform:

 Audience and revenue: while CBS Radio and the radio industry as a whole is proud of the 93% reach of the medium, radio’s further growth in terms of audience and time spent listening is limited, and so is its revenue growth potential.

 Distribution: listeners consume content using platforms other than radio or other than the radio brand audio operators digitally.

 Connected car: the U.S. radio industry as a whole is concerned with how the dashboard of the future will look like and what will be radio’s place in it.

 Digital efforts complement AM/FM and constitute growth opportunity in terms of both audience and revenues, but they require substantial development investments.

24  But digital is a playground to test new initiatives at potentially lower cost.

 Communicating radio’s strength to clients. Getting new clients on radio.

 Revenue diversification: the industry needs to be less reliant on transactional advertising revenue (whether it is coming from network, local or programmatic sales). There is a 14 minute an hour commercial load on-air, while on the digital side advertising tolerance is much lower, so radio businesses need to look into commercial free revenue streams.

 Importance of local engagement, content integration and native advertising. Radio cannot sell as many “spots and dots” as in the past, it needs to develop new products: talent engagement, live events, branded integrations, and other unique propositions.

 Data is a tremendous opportunity. Correlations between platforms, as well as mining first-party behavioural and interest data from radio’s digital and social extensions allow making informed decisions about on-air properties.

 Programmatic for broadcast: the area that CBS Radio is looking into but has not engaged in yet. The challenge remains how to implement programmatic for on-air in the way that it is additive to other sales efforts and revenue, keeping in mind that for radio transational processes and revenue will remain dominant.

 Impact of digital and social media on spoken word properties: news and sports. Importance of context, opinion and analysis, rather than just information which is now available everywhere.

Speaker: Pierre Bouvard, Chief Marketing Officer – Cumulus Media/Westwood One

Background information

As America’s second largest operator of radio stations, Cumulus provides exclusive content and high- impact local marketing solutions in 90 metropolitan areas (including eight of the top ten), reaching over 150 million listeners through approximately 460 owned-and-operated stations, more than 14,000 station affiliates and 8,500 broadcast radio affiliates, as well as numerous digital channels.

Cumulus websites average over 11.4 million page views from approximately 10.5 million unique users on a monthly basis and stream music to approximately 4.2 million unique users each month.

Westwood One is the national-facing advertising sales arm of Cumulus Media.

Contribution

Challenges for the radio business in the U.S.:

 Flat revenues: in the U.S. revenues for traditional media are eroding, but radio is the only Pierre Bouvard (Cumulus Media/Westwood One) medium where revenues are consistently flat. What is happening under the surface though is that radio spot revenues are going down, while digital extensions of radio are making up for the difference. In terms of split between national and local, 80% of radio revenues come from local and only 20% from national sales.

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 Scale of radio ownership is only 20 years old and can be traced back to the Telecommunications Act of 1996 that relaxed ownership caps and turned small radio businesses into large scale media companies: iHeart, Cumulus, CBS, etc. Additionally, the first 10 to 15 years of the business were just about transactions – buying, and only for the last five years, the consolidated companies have been trying to work together across stations and act as big national platforms.

 Challenge of breaking through into the media plan. The common agency and their advertising clients’ mentality is: “I cannot cut a lot of TV, and I need to spend way more on digital!”.

 It is not that radio has a bad image… it has no image. Because radio has been so local in the U.S., the industry has not told its story to big national brands. In order to promote radio as an advertising platform, radio has a lot of marketing to do.

 Advertisers are shocked that AM/FM radio is America’s number one mass reach medium. Bigger than TV in terms of reach: Radio (93%) vs. TV (87%).

 Ramping up digital fast enough to cover erosions of traditional over the air radio.

Strategies and tactics in the face of growing online audio and mobile advertising

Streaming of online radio is fairly flat in the U.S., the parts that are growing are the interactive audio solutions.

The two coolest things in the advertising world at the moment are: mobile and data; this is what agencies and their advertising clients want to talk about, and radio needs to become part of this conversation. An example of a U.S. industry initiative in these areas is NextRadio: a free interactive portable radio for smartphone, initiated by Emmis Broadcasting, embraced by the National Association of Broadcasters, and currently owned as a radio industry collective.

Every smartphone in the world has an in-built FM receiver, which tends to be turned off. In the U.S., the four major mobile carriers: AT&T, Verizon, T-Mobile and Sprint did not turn it on in the past, because they preferred their customers to use data plans instead. In order to address this, the U.S. radio industry developed the NextRadio app and initially convinced Sprint to enable it among their customers. In the past year, T-Mobile and AT&T have joined as carriers supporting NextRadio. The remaining hold outs are Verizon and Apple.

In order to further its case for getting radio on the smartphone, the radio industry has approached Congress with the public service aspect of NextRadio, specifically the importance of an activated FM receiver as a communications means in the event of an emergency when the wireless infrastructure collapses. Congress agreed, but opted for self-regulation and asked the industry to come to an agreement on the best way forward.

Eighteen per cent of audio listening happens on the smartphone – users listening to their music collections or streaming, out of which only 4% comes from AM/FM, so apart from getting the carriers on board the radio industry also needs to educate consumers about NextRadio and promote it among them.

What is powerful about this app is data, a census measurement of tuning and all of the associated interactive advertising actions. In terms of NextRadio usage, it looks like a typical radio curve with a higher time spent listening per occasion. The industry needs to do a better job of mining NextRadio’s data, it can serve as a gigantic listening panel with insights accessible to the broadcasters’ sales teams.

In terms of advertising on NextRadio, it constitutes simulcast of AM/FM, so there is no extra audio inventory, but the industry is at the moment running pilots with several advertisers to explore display opportunities.

Podcasting

Podcasting is on the rise in terms of both consumption and industry’s interest. There is a lot of new content, IAB held its first “Podcasting Upfront”, while agencies and advertisers believe the format can create a very powerful audio advertising environment – podcast listeners make a decision and effort to download and listen to a show and are thus considered highly engaged. This combined with show talents reading the ads

26 makes it a very effective platform for brands. However, the key challenge is measurement: Apple only reports downloading, while advertisers want to know audience size and commercial audience metrics. Advertising perception study and radio’s marketing challenge

Westwood One wanted to understand the relationship between the perceived and actual audience size of AM/FM radio and streaming services. They turned to the leaders in advertiser sentiment (Advertiser Perceptions), online radio usage (Edison Research), and media measurement (Nielsen) to conduct a first-of- its-kind study.

The results were the following:

 Advertisers and agencies think the weekly reach of AM/FM radio is 64%. The reality is 93% of all Americans are reached by radio each week, making it America’s No.1 mobile mass reach medium. Among much coveted Millennials (18-34), radio dominates with a weekly reach of 93% compared to 76% in the case of TV.

 Advertisers and agencies think that the share of audio time spent with AM/FM radio is nearly the same as streaming: 55% for radio and 45% for Pandora and Spotify. In reality, AM/FM radio share is 9x greater than Pandora and 17x larger than Spotify. In fact, in terms of share of audio time spent, AM/FM with 52% is the king of all audio.

 Advertisers and agencies think Pandora and Spotify reach 27% and 20% of Americans respectively. In reality streaming services reach a small percentage of Americans – according to the study: 15% for Pandora and 5% for Spotify.

The main message for the radio industry is that it needs to do a better job at telling its story.

Promotion of radio/audio advertising

To address radio’s marketing challenge, Cumulus and Westwood One started an insight leadership blog with key insights on the power of audio and ROI and sales impact studies, and hired a PR company to ensure that these stories find their way to the industry press. They also plan to use the airwaves to promote radio’s success stories.

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Programmatic and the radio business

At the moment programmatic is mostly all talk, no action. Half jokingly Pierre said that the best business to be in now when it comes to programmatic is the conference business.

In the long term, however, programmatic can reduce the difficulty and complexity of buying local spot radio. With multiple stations and multiple markets, automation can help smaller stations and medium and smaller markets get purchased.

Audio currency and proof of ROI

The U.S. is moving towards a hybrid approach to its audio currency combining: Portable People Meter for over-the-air and Nielsen’s census SDK (software development kit) data for streaming. Nielsen is also partnering with Facebook to add age and gender data to its streaming measurement solution.

The industry is also investing more in ROI research to prove radio’s ability to generate results and impact brands’ KPIs. Nielsen, for example, has recently published twenty two different ROI studies matching credit card data at household address level to their audio ratings panel. Examples include studies in the areas of:  Endorsement marketing: radio personalities deliver higher ROI;  Radio drives online sales for Amazon Prime Day;  Radio elevates the media mix;  Radio drives ROI across multiple categories.

Presentation compiling the Cumulus and Westwood One ROI studies with Nielsen available on the egtanet.

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Speaker: Timothy P. Murphy, Executive Director of National Spot Sales – Pandora

Presentation available on the egtanet

Background information

Pandora is a personalised radio and automated music discovery and recommendation service powered by the unique Music Genome algorithm. The company is a pioneer and leading music streaming business in the U.S. with a 9.7% share of all U.S. radio listening, as well as 62% share of Internet radio listening in the country, broadcast included. It is the No. 1 radio station in 14 out of the top 15 U.S. markets and has a local sales presence in 37 markets.

Launched in 2000 and publicly traded since 2011, Pandora counts over 250 million registered users and 80 million monthly active listeners, 84% of whom tune in on mobile devices. They now have 1.7 billion listening hours for June 2015 alone, 8 billion stations launched and 55 billion pieces of thumb data feedback.

Pandora generates the majority of its $1 billion revenue from the sale of audio, display and video advertising. The company has expanded its sales teams in local markets, growing its local advertising revenue. Pandora has paid approximately $1.5 billion in royalties in the history of the company, including $500 million from September 2014 to September 2015.

Pandora will leverage its data assets and introduce mobile programmatic capabilities for its iOS and Android platforms in the coming months – leading the transition to mobile programmatic buying. The company – already a Big Data powerhouse – has also recently announced the acquisition of music analytics company Next Big Sound.

Pandora is currently active in the U.S., New Zealand and Australia, with headquarters in Oakland, California, 12 regional offices, and 1,746 employees worldwide as of September 2015.

Contribution

The Music Genome Project

The Music Genome Project – first conceived by Tim Westergren, co- Founder of Pandora, in 1999 – is an effort to "capture the essence of music" using over 450 attributes to describe songs and a complex mathematical algorithm to organise them. The methodology allows Pandora’s music experts to analyse each track and to leverage it with billions of data points collected about each listener’s tastes and behaviors over the last 16 years. The Music Genome Project is updated on a continual basis with the latest releases, emerging artists, and an ever-deepening collection of catalogue titles.

Timothy P. Murphy (Pandora) Under the Music Genome model, every song out of the 1.5 million tracks, by over 200,000 artists, across 600 genres available on Pandora has been curated by an expert with a musical background. The company employs more than 90 musicologists. Approximately 80% of these tracks are not played on U.S. terrestrial radio.

29 Data, engagement and targeting

Firstly, Pandora collects declared data: age, gender and geography. When signing up for the service, a user needs to provide: their name, email, year of birth, gender, and zip code. Pandora has the second largest database of declared information (after Facebook).

It was a strategic decision at the service launch to require users to declare certain types of information. Addressing their potential resistance over privacy concerns, Pandora carefully selected the type of declared data it requires, for example asking for a year of birth only rather than birth date, for post code rather than address, for gender only rather than also ethnicity, which could be considered as a more sensitive question, not asking for income or marital status, etc. The strategy was to ask for enough information to be able to do first-party targeting but not to ask for too much or too sensitive information for users to question providing them.

Secondly, interest data can be gathered from thumbs up and thumbs down feedback and music preferences, while behavioural data can be inferred from usage patterns such as time of the day and device used to access the service.

Thirdly, characteristics such as ethnicity, household income and life stage can be identified by profiling listeners based on their mobile provider (in the U.S.: AT&T, Verizon, T-Mobile and Sprint), and their zip code making educated guesses based on a higher proportion of users of given ethnicity using a certain provider or living in a certain area.

Lastly, third-party data from various research providers is fused with the Pandora dataset. Since Pandora users need to provide a valid email address, as they are travelling around the web – via email matching – a lot of additional data points on who they are and what type of consumers they represent can be collected.

Pandora audio ads are targeted on the declared data and ethnicity, while digital display ads use all the types of data collected.

Streaming music landscape and audio consumption

There are different streaming services models on the U.S. audio market, with Pandora being a pioneer and a streaming leader.

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The emergence of new services has not stopped Pandora’s growth, although it is flattening at the moment with 80 million monthly active users. As shown on the graph below, streaming audio in the U.S. is not a zero sum game with all the services growing.

Pandora is now streaming on over 1,000 types of connected devices and on the dashboards of over 160 car models.

In terms of mobile time spent Pandora is the leader with 23:48 hours spent per user per month, followed by Facebook (21:00), King (7:18), Souncloud (6:24), Netflix (5:06), YouTube (4:24), Instagram (4:00), Messenger (3:48), Pintrest (2:12), and Google (1:42). Although Spotify does not subscribe to the comScore report quoted above, its mobile time spent is estimated to come to approximately 15 hours spent per user per month.

Despite a perception of Pandora being a lean back service, 1.3 billion monthly thumb interactions – users curating their stations – suggest more of a lean-in experience.

The Pandora advantage. Commercial proposition.

Comparing its proposition as an advertising platform to broadcast radio, Pandora positions itself as delivering personalised, targeted information to brands’ consumers with less clutter and more measurable results.

31 In the U.S. the commercial load on broadcast radio comes to 10-12 minutes/hour compared to under 4 minutes/hour on Pandora following the clock model: when you launch the service, the first break has one spot, second break – two spots, and the final break with a single spot – this is the maximum ad load given the service is sold out in a given demo in a given city. Additionally, Pandora’s spots are 15s and 30s spots, while the standard unit for broadcast radio is 60s. It was a strategic decision of Pandora not to increase spot load or spot length at the moment, as users who stream media show lower tolerance for the number and types of commercials. Pandora chooses to increase prices rather than add advertising units, which could potentially endanger its time spent listening.

Moreover, Pandora delivers actual ratings (Triton Digital Webcast Metrics) rather than estimated audience (broadcast panels are limited, for example 3,000 people for the city of New York).

Pandora’s targeting capabilities are based on zip code, age, gender and genre, while broadcast targeting is demo skewed.

Another advantage Pandora holds over broadcast is visual display advertising accompanying the audio advertising, while only charging for audio advertising (not for these companion banners). Since Pandora does not charge for companion display when bought with audio, agencies do not hold them to viewability standards. However, its visual products are still designed to be instinctively viewable, for example: display and video ads are served when a user is touching the screen (for example, adding or skipping a song), they are not run below the fold or to the side and there is only one ad on the screen.

Pandora’s CPM rates are increasing by 5% to 20% year-on-year. Two thirds of Pandora’s revenue comes from audio advertising.

Adding display to audio campaigns on Pandora drives mid- to lower-funnel brand metrics:  41% increase in message association;  280% increase in brand favorability;  129% increase in purchase intent.

Supercharging audio campaigns with video drives brand metrics throughout the purchase funnel:  94% increase in ad awareness;  67% increase in message association;  229% increase in purchase intent.

Approximately 3.9 million people – 5% of all Pandora listeners – are subscribers to Pandora One, the ad free subscription service.

Sales structure

Pandora’s gross billings from June 2014 to June 2015 came to $1 billion, while the Q2 revenue for 2015 was $230.9 million, representing a 30% increase year-on-year, including $58.9 million from mobile, an increase of 67% year-on-year.

Eighty per cent of the revenue comes from advertising, as 95% of listeners use the ad supported service. In terms of the split between digital and radio agency advertising budgets, Pandora gets 55% of its revenue from digital and 45% from broadcast budgets.

Digital revenue and sales structure:  Digital budgets – direct agency sales.  Performance budgets – for direct response advertisers.  Programmatic budgets – only display advertising is sold programmatically, it is not possible to buy audio programmatically. Pandora has built its own SSP, only does private deals and is not present on open exchanges.

Radio revenue and sales structure:  National network radio budgets – 15 people, selling syndicated shows, CPMs between $4 and $7.  National spot holding company agency budgets – 50 people, selling to all the big agencies, selling radio on city-by-city basis, CPMs $8 to $11.  Local radio small agency budgets – 200 people – local sales force, selling to regional agencies and direct clients, CPMs between $15 and $16.

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Speaker: Elias Roman, Product Manager – Google Play Music/Chief Executive Officer and Co-Founder – Songza

Contribution

Songza’s approach

Addressing the challenge of music services development, Elias referred to the concept of the tyranny of choice – users do not really want access to everything as they do not have time for it. The better model is to provide the right things at the right time. Songza developed under the assumption that the service should not be about how people find things, but about how things find people – based on their current activity and needs. Therefore, the main premise is the context, and Songza products are built around it – be it location, time of the day, activity, weather, etc. Context is the starting point to music discovery and delivery, while content comes second.

Marrying data and creativity. Google’s data-driven and human curated music service.

Before implementing the context-based approach of Songza, Google’s music service already included a radio feature that generated playlists based on users’ preferences – a song or an album they selected at the start of their listening. Moreover, it kept a very complex and computer-driven approach to music recommendation based on a dual-sided machine- learning technology and advanced machine listening to analyse not only users’ music tastes but also components of the songs themselves.

Songza, in contrast, is closer to Pandora in its model, using human musicologists to decide what songs go well together in a given context. Supported by Google search technology, listeners can now search for their playlists by any type of activity from the most common categories like workout, relax, party or dancing on the table in the office themes. Elias Roman (Google Play Music/Songza)

Google is currently combining the best of the two approaches: Songza context-based playlists curated by music experts and data-driven algorithm playlists for artists and genres. These two models are always kept separate and never combined in a single playlist. The only complimentarity is the use of data and algorithms to understand and evaluate the context in which users find themselves at a given moment to provide the best insights for the human curated playlists – a marriage of data and creativity.

So far the human rather than the automatically created playlists are more successful in terms of consumption. One of the best examples of the former are playlists devoted to kids, which make the experience appropriate for minors by excluding inappropriate lyrics, but which are also targeted to the music tastes of the parents.

Curation and discovery

Curation and discovery are essential to the music industry. Radio used to be the main provider of these services, however today it is challenged by YouTube, Google Play Music, Pandora and others who also aim to fulfill this role.

Move into podcasting

Podcasts have been available on Google Play Music since October 2015 with a strategic goal to introduce context driven podcasts to users who are not yet familiar with the format and are looking for a laughing

33 out loud or getting lost in the story type of context. Taking into account that approximately 80% of podcast consumption takes place on the iOS platform, launching it on Android has a huge growth potential for the spoken word on-demand market.

Advertising opportunities

Google’s first significant step into the music market came in 2011 with the introduction of Google Music – a store of millions of songs available for purchase, with Goole+ integration, artist hubs, personal cloud storage and streaming options.

In May 2013, Google launched its unlimited subscription music service – called Google Play Music All Access. Apart from enjoying the advantages of one of the biggest music databases, competitive prices and mobile integration with Android (and potentially with iOS), Google is benefitting from its existing massive consumer base to make the subscription model more popular. At that stage, Google was building its music ecosystem and a free ad-supported option was not a priority.

However, in June 2015, Google debuted a free, ad-supported access model to its radio service within Google Play Music. In contrast to Spotify, Google’s free option offers only a radio-like interactive service without access to the music-on-demand or locker service parts of Google Play Music.

Google does not plan to establish specialised sales teams for Google Play Music; sales for the ad supported service are done by the same sales force as in the case of YouTube, AdWords, and other Google products.

Contextual targeting

Because the service is based on context, Google is now working closely with advertising clients to offer them contextual targeting opportunities. Several ROI studies conducted by Google indicate that this approach works best in terms of brand perception and relevance, for example, a training for marathon playlist is the best environment for Nike, while users of a party playlist will be more receptive to products like a mixology app. Another example of even more comprehensive contextual targeting is a B2B sound branding service offered by Songza during Mercedes Fashion Week.

Advertising formats

Google’s radio service features traditional and interactive display ads as well as skippable TrueView video ads. Advertisers can buy the ads through Google’s AdWords product that sells its search ads and the display ads it runs across a network of third-party sites, and the radio ads can be targeted using the same options as regular AdWords ads such as by keyword and location.

Google is also investing in the development of audio advertising, which is a native format for music services – not requiring users to look at the screen and interrupt their activities. But before introducing it, the company aims to explore what improvements Google could bring to audio advertising in terms of user engagement, connecting data points, measurability, etc.

International rollout

At the moment, the ad-supported Google Play Music service has launched in the U.S., but an international roll out is in the pipeline. The context-driven playlists option is so far available via subscription in the U.S., Canada, the UK, Austria, Germany, Brazil, Australia, New Zealand, with forthcoming launch plans across other markets. Goggle is also developing local teams to make the context-driven playlist feature relevant to the countries in which it plans its next launches.

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Speaker: Matthew Lieber, Co-founder and President – Gimlet Media

Background information

Gimlet Media is the premier media company focused on producing narrative podcasts. Gimlet’s shows include: StartUp, Reply All, and Mystery Show. Gimlet has currently 25 full-time employees, $2 million in revenue, and three shows that are routinely in the top 30 on iTunes, attracting an audience of over four million people each month, a number that has doubled since the beginning of 2015.

Contribution

Origins

The company has emerged as the podcast revolution’s spokesman. That is largely due to its origins: Alex Blumberg (formerly producer of This American Life and host of NPR’s popular business podcast Planet Money) launched a podcast, called Startup, to chronicle his efforts to launch his own podcasting network. Over the course of 14 episodes, Blumberg went from workshopping his pitch to coping with the realities of being the boss. In the process, listeners also heard Blumberg and his co-founder Matt Lieber (who formerly produced radio shows – On Point, Fair Game, and podcasts like Slate Culture Gabfest, also worked as a management consultant at The Boston Consulting Group, where he focused on media and digital business) raise $1.5 million in funding, $200,000 of which came from a crowd funding campaign in record time.

From the creative perspective of Alex Blumberg, there was a void to fill and demand in the digital world for intelligent and professionally produced long spoken word format. From the business perspective, Matt Lieber saw an opportunity in the fact that it is challenging for the legacy media to react fast to the digital disruption and shifts in media consumption habits such as the podcasting renaissance. Now Gimlet is the largest organisation in the world focusing exclusively on podcasts. Additionally, there is a business opportunity for AM/FM spoken word content to shift to digital.

Podcasting consumption

Podcasts are enjoying a moment in the sun largely thanks to the success of Serial, which has achieved nearly 72 million downloads since it began airing, shattering all records. According to Edison Research, podcast listening has been steadily growing and hit the highest number in 2015 with 33% of the total U.S. population 12+ (approximately 89 million) saying they have ever listened to a podcast, while 17% (approximately 46 million) listened to a podcast in the month prior to the study, especially prominent in the group of 12-24 years old.

According to Gimlet, podcasting generates new net listening – on Matthew Lieber (Gimlet Media) average four additional hours of listening among the format fans in situations where other media, including radio, cannot reach them such as commuting, workout, shopping & errands.

Monetisation

There are currently over 300,000 podcasts on the iTunes directory alone. While barriers to entry are low, barriers to scale and profitability are high. Therefore most podcasts remain small as they do not have the advantage of network effect, editorial and talent development, or monetisation possibilities.

35 Gimlet’s strategy is to invest in a small number of shows to build strong brands that can increase in popularity over time with a franchising and monetisation potential. A lot of the value in the podcasting industry will be concentrated in the head of the tail where brand advertisers want to be.

In terms of the company’s structure, for the very reason of substantial investment in content, talent and network required, Gimlet founders decided to create a venture funded company.

All the advertising on Gimlet’s podcasts is created and recorded by the show hosts using their talent to create a premium tier of CPM native advertising, while engaging listeners to make the ad experience feel like flipping through a Vogue magazine where advertising is not only part of the content, but also enriches the content.

For every thirty minutes of content, Gimlet shows have on average 2.5 minutes of advertising. The show itself is designed with the ad unit in mind, with a 30s pre-roll and two times 60s midroll built around a story cliff hanger before the ad comes in.

Historically, podcasting was dominated by direct response advertisers. For Gimlet shows, the split is currently half for direct response and half for brand advertisers. Yet given the young, affluent and educated audience, Gimlet’s ambition is to attract more of the bigger brand budgets, such as Ford, Microsoft, HP, etc.

In July 2015, Gimlet announced it would add the option to pay $5 monthly for membership, a decision motivated by a desire to diversify revenue streams to include more than advertising. Members are given early access to pilots for new Gimlet shows, as well as other benefits and additional content. Gimlet is exploring other ways to diversify its revenue.

Measurement

The biggest challenge to podcast profitability is measurement. Podcast programs can be downloaded or streamed, and there is no standardised measurement system across publishers. As a result, podcasting lags behind streaming music in precise consumption metrics and third-party verification.

In order to address this challenge, Gimlet set up a pre- and post-campaign survey for Ford to determine how a campaign affected brand favourability and purchase intent. Ford considered 3% uplift to be sufficiently successful to further invest in Gimlet’s show. The survey showed 17% uplift in brand favourability. This result made Ford sign up for the next season, and it continues to be used as a case study to demonstrate that podcast are a very effective medium for brand advertising due to both story telling experience and listeners’ connection with the hosts.

Concerning the issue of ad skipping, it is difficult to estimate as 80% of podcasts consumption takes place on iTunes, where publishers have no access to data. However, a reference could be data from Spotify showing that merely 5% of podcast users skip ads, which is attributed to light ad loads and satisfaction with the listening experience.

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Speaker: Mark Gray, President – Katz Radio Group

Presentation available on the egtanet

Background information

Katz Media Group is a leading media representation firm in the U.S. for radio and television stations.

Katz Radio Group – a radio division of Katz Media – is the largest radio sales house in the U.S. It reaches 242 million active consumers across all 50 states with more than 4,000 radio stations and thousands of digital platforms.

Katz Radio Group has been re- organising to keep pace with the changing radio advertising sales environment, examples of which include re-launching its interactive divisions, offering an expanded range of online, mobile and audience targeting products, as well as introducing streaming audio ad products. Katz will also launch a programmatic buying ad exchange for the industry called Expressway using cloud-based technology provided by Jelli.

Contribution

Katz Radio Group: vision, mission, clients and structure Mark Gray (Katz Radio Group)

Katz Radio group has nearly 100 years of transactional excellence in radio. Following the consolidation of the radio sales representation market in the U.S. ten years ago, Katz is in a unique position. The company is the engine of radio sales, representing the vast majority of U.S. radio broadcasters, with the exception of Katz’s owner – iHeartMedia. The company’s vision is for radio to become one of the primary vehicles used by advertisers, while its mission is to drive sustainable growth (of advertising dollars) to the medium.

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According to Katz, it is a strong advantage to represent almost all players on the market. When its sales executives go out to the market or call on agencies, they are not selling specific stations, they just sell radio. Additionally, it gives an opportunity to form stronger relationships with buyers. The only way to get any or every station with one call in the U.S. is to go via Katz.

The company is divided into four parts:

(1) Spot Divisions for national spot advertising. Since the core of Katz’s radio business is national spot advertising, this part is further subdivided into six spot divisions dedicated to the groups of broadcasters represented. The reason for the subdivision is to be able to do conflict sells across these groups.

(2) Katz Partnerships – responsible for new business development and calling on agencies – but above their buying departments – they call on the planning teams, account teams, brand managers, all the way up to the top management of the agencies, trying to form relationships, advocate for the medium, and thus sell more radio.

(3) Katz Digital – for the development of online and audio products. However, digital audio sales are now being done by all the Katz sales people, which makes sense given that media agencies have tended to evolve their radio departments into audio departments. This approach also allows Katz’s senior radio sellers to leverage their existing relationships with their current partners.

(4) Strategy, Analytics & Research – in charge of proving the ROI of radio, Katz solutions, and specific campaigns, partnering with Nielsen, Ipsos, and other research organisations.

Evolution of Katz Radio Group

Following changes to the radio advertising marketplace, Katz Radio Group has evolved over the past few years:

 From being an order taker/seller to becoming a consultant: In the past, the main part of the job in national spot sales was to take orders from buyers, which is no longer the case following radio’s market drop in 2007 and 2008. From being a purely transactional business, Katz needed to become a consultant: to form relationships, to partner with different stakeholders and to bring more dollars to radio, as allocated budgets were no longer enough.

 Previous focus on broadcaster partners shifting to focus on the buyer: The company’s focus used to be on the broadcaster. Today, it needs to spend much more time on the buyer’s side to advocate for the medium and to develop new business.

 From emphasis on heritage – the strength of legacy media – to innovation.

38  From providing efficient transactions to becoming a strategic and valuable partner.

 From being a player in the marketplace to becoming a leader driving the radio advertising industry.

National spot radio revenue streams

Katz Radio is based on its transactional excellence. The key to its business is its people, which is why Katz places a big emphasis on its culture of hiring, training, developing and retaining top talent.

In terms of where Katz focuses its time and efforts, the biggest share goes to agency and advertiser development – building partnerships with top agencies across all of their teams and at the highest management levels, as well as developing direct relationships with key advertisers.

There is a lot of advocacy and research work across the industry, and Katz spends a great deal of time, funds and resources to increase the visibility of radio via involvement in key agency and advertiser events, as well as creating and promoting case studies, research and success stories for radio.

Lastly, Katz is involved in programmatic stewardship, developing programmatic on behalf of all broadcast partners via a recent partnership with Jelli and the upcoming launch of the Expressway programmatic exchange.

Katz Digital

From the audience point of view, pureplayers have done a tremendous job in terms of attracting listeners. However, despite the growth, no one has yet figured out how to make money out of digital audio. For broadcasters, and their sales representatives in particular, monetising outside of on-air has been very challenging, and it is no different for Katz.

Katz has a big streaming audio network that the company claims attracts 70% of all digital audio listeners. The company represents almost every broadcaster who is using advertising-supported streaming, as well as Spotify and other smaller pureplay affiliates. This digital part of Katz’s business is growing, the sales teams are getting better at monetising it, and clients are increasingly requesting digital audio to be a part of their campaigns (to a large extent thanks to Pandora’s marketing efforts to promote the format). However, it is still not a big part of Katz’s revenues: digital revenue comes to $23 million, compared to $2 billion from spot advertising.

In addition to the industry’s buzz around digital, even radio sales people themselves may not fully grasp the economics of the business and the reality that – despite the fascination – digital remains a relatively small part of the business.

Digital audio revenues will follow advances in technology, measurement and targeting capabilities – the current challenges for monetisation. However, what the industry should avoid is to take radio dollars and shift them to streaming dollars, but rather to make sure that the revenue from the latter is incremental. Additionally, a large audio footprint and the representation of big digital brands – such as Katz’s recent partnership with Spotify – in one portfolio can serve as a door opener to agencies and ultimately help sell more traditional radio as well. Audio’s story can improve radio’s perception, if the radio companies approach it in a smart and strategic way.

Key issues facing national spot radio

 Dollars shifting away from legacy media to digital – pure spot revenues have fallen by 3-4% for radio in the U.S., and digital radio dollars are not making up for that. This decrease is happening in the context of growing radio industry efforts to promote the medium, to innovate in products and sales processes, etc., and it would be more substantial without these initiatives.

 Greater competition within audio – although the emergence of pureplayers might not be as damaging to the radio listening as commonly perceived. Research shows that if you listen to Pandora, for example, you are a heavy audio – including radio – listener.

39 Programmatic selling and Expressway from Katz

Katz believes radio has no choice but to embrace programmatic. The technology is here, and the demand from agencies and their advertising clients to automate and simplify the sales processes is unquestionable.

Some of the U.S. broadcasting groups “have their heads in the sand”, claiming that they are still looking into programmatic and not sure whether they will participate. But there are already many clients planning their campaigns and not asking for a specific medium: “I want to be on TV or radio”, they dedicate a specific budget to programmatic regardless of the channel. If radio wants to ever tap into these dollars, it needs to have the infrastructure in place. Another barrier to adoption is that the majority of radio broadcasters in the U.S. have a lot of debt and thus refrain from investments in the future, including the ones necessary to implement programmatic technology. They tend to focus on the next quarter sales efforts, but in the long- term this is a detrimental approach, as programmatic will not only protect but also grow the national spot business.

For Katz, from a sales representation perspective, if it does not engage in programmatic now, it will not have a business in five years. It is not about bidding for spots, or a race to the bottom; the way they sell will remain the same in terms of broadcasters controlling the prices. The difference is in introducing automation to the front end. In terms of effect of programmatic on sales forces, automation is a major opportunity, making it possible for sales teams to devote their time and efforts to proper trading and new business development. Instead of spending time trading paper and chasing budgets that are already allocated and are not sufficient, radio sales people can focus on new relationships and business.

In April 2015, Katz Media Group announced its partnership with Jelli to create Expressway from Katz, providing programmatic buying to the broadcast advertising inventory of all its partner radio stations – to be launched in the first quarter of 2016. In terms of the implementation process, standardising the required technology on the station side (installing Jelli servers across the groups represented by Katz will take place from November 2015 and continue throughout 2016). Integration is also progressing on the buying side, with the Strata, Mediaocean, Marketron and WideOrbit systems.

Expressway is a major opportunity for the radio industry in terms of:

 Increased revenues:  Taps into the $20 billion programmatic pool;  Attracts digital budgets, growing radio’s piece of the ad pie;  Leverages the enhanced targeting capabilities marketers seek (akin to Facebook, Google, etc.);  Makes radio easier to buy.

 Unlocked efficiencies:  Increases automation;  Creates manpower efficiencies, allowing all parties to funnel resources to business development;  Reduced errors, increases value through real-time reporting;  Leverages agency relationships and capitalises on existing electronic interfaces.

 Increased value of inventory:  Enables better audience targeting;  Generates additional demand by appealing to digital buyers;  Protects high value inventory;

40  Allows broadcasters to set their own pricing.

 Media leadership:  Becomes the first, definitive supply-side-centric platform in media;  Promotes an open, standard platform for the industry;  Puts radio at the table of strategic programming initiatives at major agencies;  Leap-frogs TV.

Katz estimates that it will do 5% of its business programmatically next year and possibly up to 20% within the next three years.

In terms of data-driven targeting enabled by programmatic, this complex kind of targeting will remain hard for radio to do for quite some time. iHeartMedia is well-positioned to develop on this front, as it collects large volumes of data and continues to invest in data infrastructure and data matching technologies, but this is not yet the case for many broadcasters on the U.S. market.

Comparing programmatic adoption for the spot market versus the digital audio market, Katz believes that the processes will mature faster on the spot side. Moreover, it is relatively more complex to set up for the TV industry, mainly due to there being more stakeholders involved in the process compared to a radio landscape dominated by iHeart, Katz, and Jelli.

Speaker: Steve Shaw, President – Westwood One

Presentation available on the egtanet

Background information

Westwood One is the sales arm of the second largest radio operator in the U.S., Cumulus Media, and a multi-platform provider of sports, music, news, spoken word and digital audio content.

Contribution

Approach to the marketplace

In today’s marketplace, many of the U.S. radio broadcasters are transitioning to become audio companies. As a result, they present a bifurcated offer – they are both broadcasting companies and online audio streaming services, with different internal approaches to trading, targeting, and product development. The key question in this regard is how to find the right approach to the market.

Cumulus Media/Westwood One decided to position itself as a leading pureplay radio company and thus to become device agnostic with the goal to find, deliver and follow the right ears throughout the day regardless of the platform. This can be achieved Steve Shaw (Westwood One) by providing consistent messages to listeners wherever they might reach them – on a car radio, desktop, mobile or smart TV. Although this approach has not yet been embraced fully by the industry in the U.S., according to Westwood One this is the right strategy in the long term.

41 Content: sports – talk and live play-by-play

Westwood One is strong in the area of sports: both talk content and live play-by-play, including exclusive contracts with the NFL, the Olympics (every two years) and regular live sports and entertainment events. So the key focus for the company is how to target audiences across different platforms and devices to build on this exclusive content from an advertising perspective.

Reach and advertising structure

To its advertising clients, Westwood One offers 245 million weekly listeners and 27 million monthly digital users across 454 owned and operated radio stations in 94 of the U.S. markets.

In terms of the offer to its 8,200 affiliates, which serve a large and demographically distinct audience, Westwood One enables a variety of formats and genres, award-winning personalities, major pop culture events, extensions on digital and mobile devices, national sales opportunities, production libraries and services, local concerts and events, 24/7 programming and new traffic technology.

There are three models for advertisers to reach the above audience:  Local solutions through 94 markets and 454 stations;  National spot advertising sold by Katz on a geo-targeted basis – market by market;  8,200 affiliates of Westwood One have their own sales departments.

According to Westwood One, local radio advertising focused on local clients will most likely remain unchanged in the nearest future.

But national radio sales are transforming, especially as advertisers are looking for a more digitally savvy and a more data-driven environment. As a result, both the agencies and the broadcasters are more focused now on making trading more effective, simpler and quicker, in order to grow this part of the radio market.

In contrast to TV, which has been disrupted continuously since the launch of cable in 1970s, the radio industry has only recently started its transformation with the emergence and growth of pureplayers such as Pandora. In this context, the network model for radio is uniquely well positioned to answer market demand and to offer a combination of local affiliates with different types of content and distinct audiences, at scale, with reach and easy execution of the sales process. Part of the market’s fascination with digital is that it offers a one-to-one approach, while broadcast remains one-to-many. Yet premium sponsorships and endorsements available within the network model provide an opportunity to make radio more of a one-to-one marketing platform. Thanks to all these drivers, network radio is not experiencing the same declines as the radio market overall.

Competitive disadvantage of radio – lack of back-end data on performance and proof of ROI

The upfront season for radio in the U.S. is changing. It is no longer only about presenting a radio, or even an audio offer, but about providing insights and ROI studies to prove the medium’s performance.

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Programmatic buying on the rise

Programmatic is a misused term across the radio industry. In the radio context it is more about automation of processes rather than the original one-to-one programmatic and bidding for inventory meaning of the digital word. Radio might get there over time, but for the moment programmatic for radio is about easier buying and enabling back end metrics in terms of delivery.

Measurability deficit and data potential

Furthermore, radio – compared to the digital offer – is perceived as much less measurable and granular. Therefore, the industry needs to focus more on audience insights to better understand who the people it is reaching are. Especially now, when radio companies are able to collect more data from their digital assets, more efforts should be dedicated to analysing it, as well as statistically and reliably translating it to the broadcast audience. Digital data matching and extrapolating this data to broadcast is a great way to increase the value of inventory and the advertising offer to the clients. The biggest U.S. broadcasters, such as Cumulus, CBS and iHeart are very active in this area. It is also critical for the industry to join efforts in such initiatives to not only stop the erosion of radio budgets, but also to bring clients back to the medium.

Traffic systems for the future

When designing its own network traffic system to deal with more than eight thousand affiliates, Westwood One did not just improve the efficiency of its current business processes. The company developed the system from scratch in order to not only service its existing business model, but also to future-proof it and provide the foundation for programmatic and data infrastructure coming to radio sales.

Experiential events

The organisation of experiential events is another great platform to drive people with the power of radio brands and to have a hands-on experience with advertisers. This is true for both a small local event at a car dealership and a concert for 20,000 people supported by a global brand.

Westwood One Digital

In terms of digital operations, Westwood One Digital is an aggregator of audio streaming publishers in the entertainment, sports and news space. The platform has 27 million unique users per month and 190 million monthly online audio ad impressions.

Avoid digital pitfalls – do not commoditise your inventory!

One of the main traps for radio sales people starting with digital sales is the abundance of inventory in the digital world. They have a tendency to sell everything: every spot and every impression. Having the digital granularity and measurability at hand, they want to make sure not to let the plane take off with any empty seats. According to Westwood One, this approach is a huge mistake, which leads to inventory commoditisation. The more exclusive radio companies can make their digital offer, the more value they can get from it. Price and sales results should not be the main determining factors in designing the audio offer.

In the case of Westwood One, the majority of digital sales come from general radio sales teams, as there is higher interest in streaming from traditional radio clients, rather than from digital advertisers. Additionally, 90% of digital audio is sold as a support within the radio package, while 10% constitutes standalone digital audio campaigns.

Podcasting renaissance – time-shifted DVR for radio

Podcasting remains so far small in terms of advertising turnover. However, there is not a single big advertiser today who is not inquiring about this format in the context of its 2016 plans. Westwood One is well positioned in this area, as it produces a lot of content that can be utilised in an on-demand format, via its Westwood One Podcast and On-Demand, where favourite shows are captured and can be time- shifted.

43 New focus on social media and monetisation

It is still not clear how to effectively monetise social media, which is true not only for the radio industry but even for some of the social network companies themselves (for example, Twitter). So far, radio is using social as a great driver for its radio shows beyond the radio dial on Twitter, Snapchat, Instagram, and Facebook. Dedicated members of the Westwood One radio team, including the VP of Social Media, are driving engagement and sales for their radio stations, the network, and affiliate partners across a whole spectrum of social.

Speakers: . E.B. Moss, Vice President, Marketing Solutions – AdLarge Media . Jay Green, Vice President, Digital Sales and Content Partnerships – AdLarge Media

Presentation available on the egtanet

Background information

AdLarge Media is an independent audio-centric advertising sales company, representing radio, digital, and mobile content providers. Whether network radio, digital or mobile, sports, music, talk or entertainment, AdLarge leverages the power of audio to create revenue. It serves a large portfolio of agencies and brands offering customised packages that target a brand’s consumer in lifestyle- relevant audio environments. The company also offers creative brand integrations – including sponsored features, entitlements, and promotions on-air, online, on-site and on-demand – and advanced ad-insertion capabilities. E.B. Moss (AdLarge Media) and Jay Green (AdLarge Media)

AdLarge also services producers of content via revenue share models between audio publishers and show talent.

Contribution

On-demand audio is trending up

Podcasting has received a great deal of press recently, resulting in an increased awareness and buzz around the format.

In terms of consumption, according to Edison Research, podcast listening has been steadily growing, and it now reaches up to 33% of total U.S. population 12+, approximately 89 million people.

The main drivers of this growth are:  Listening to what you want – targeted to the listener’s interests;  Listening when you want – an on-demand experience;  Listening where you want – due to smartphone and Bluetooth technologies that enable portability.

44 Podcast monetisation

Podcast listeners are believed to be engaged to a higher degree than when consuming other audio formats; they are investing their time and attention to get the content and to listen to it at their convenience, which makes it a very valuable platform for brand advertising.

Initially, podcasts were embraced by direct response clients, which were able to track how successful their campaign was, although they typically invested smaller budgets. At the moment, brand advertisers are starting to invest in the format, including in the U.S. for example Walmart, Wrangler and DXL. For some of these companies it is their first experience in buying audio.

Enabled by WideOrbit technology, AdLarge offers its clients real-time dynamic ad insertion opportunities within podcasts, which allows them to buy different ads around the same podcast content on different platforms.

This technology also enables brand messages to be adapted – the splitting of copy according to the geo position, time of the day, platforms and devices used. It is also possible to design time sensitive campaigns (e.g. special offer of the week) in a way that a spot will be placed only around streamed podcasts episodes, but not within the same episode downloaded and listened to the following week, for example. In this way, clients do not pay for potentially irrelevant time-shifted consumption of their advertising.

One of the main strengths of podcast advertising is that in most cases it sounds like live reads from podcast hosts, making it very native to the content and thus providing additional credibility and trust for an advertiser’s messages. Other sponsorship format options include: branded environments, banner placements, skins and social media integrations, etc.

First ever Podcast Upfront

In order to promote podcasts as a marketing platform, the IAB together with seven key publishers and sales representative firms active in the podcast monetisation area, such as CBS, ESPN and AdLarge, organised a series of upfronts for more than 200 attendees from agencies and brands.

Programmatic for podcasts

From 2016 advertising on some of the AdLarge-serviced podcasts will be offered programmatically across trading desks. The technology is working well for spots, but not for more native brand integrations around the content – created by AdLarge in cooperation with publishers and advertisers. When comparing gross CPMs across formats, live reads come to around $25, while regular mid-roll spots achieve between $4 and $7. It is also the native nature of live reads that make podcast advertising resilient to ad blocking, but on the other hand it is not possible to track the live reads, and the sales process remains complicated and difficult to scale. Pre-recorded live reads, however, can be tracked by a tag the same way regular spots are.

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Speaker: Matt Cutair, Chief Executive Officer – AudioHQ

Presentation available on the egtanet

Background information

AudioHQ is an advertising sales representative focused on developing a premium and exclusive advertising platform that connects advertisers with digital audio advertising inventory and offers integration opportunities across a targeted line-up of publisher partners. The company represents streaming audio services such as TuneIn, 8tracks, Jango, Yahoo Sports Radio, Mixcloud and AccuRadio.

Contribution

Digital audio sales marketplace in the U.S

AudioHQ is a relatively new player on the market, it was launched in April of 2014, yet since a major part of advertising budgets in the U.S. are allocated upfront, 2015 is actually the first full year of the company’s operations in terms of sales.

AudioHQ was launched to fill a void in the digital audio ad sales marketplace, and to bring forth the combined benefits of the network and the premium direct sales models.

Traditionally, the online audio market in Matt Cutair (AudioHQ) the U.S. has been bifurcated between two models: (1) Premium direct sales model – for big publishers such as Pandora, Spotify, iHeartMedia, etc., characterised by direct sales teams, registration data for enhanced targeting, high levels of user engagement and limited commercial inventory. (2) Network sales model – for everyone else and especially networks such as TargetSpot or Katz. It offers aggregation of scale, efficiency in buying and pricing leverage for buyers (rather than for the medium or small publishers).

Niche online audio sales house

As the U.S. audio market has matured, there has been a growing discontent with the network sales aggregation-based model among the agencies, whose main concerns include:

 Duplication of inventory – on a market where supply has been higher than demand, medium and small publishers are plugging their inventory into multiple networks in order to get a share of advertising money from all possible sources. However, agencies and their advertising clients have begun to realise that different networks often sell the same inventory.

 Lack of transparency – the scale and efficiency focused networks can run million of spots, however the level of control and granularity is much lower than in case of premium direct sales.

 A One-size-fits-all approach – when thousand of streams are thrown into one bucket, a lot of different types of inventory (for example: talk, sports, different music formats) are bundled together. As a result, it is difficult to understand what is actually being bought and how to target the right consumers.

46 To address these concerns, AudioHQ has positioned itself as a niche sales house operating under a hybrid model combining premium direct and network sales, filing the market monetisation gap by replicating the traditional radio sales house model when applied to digital audio.

AudioHQ build its value proposition around the following pillars:  Premium inventory – the company is working with a number of selected branded publishers, rather than with thousands of no-name streams;  The inventory is very targeted;  The sales process allows for full transparency and granular reporting on what the clients are buying, and where their ads are run.

Audio HQ focuses on the two most valuable pools of inventory: (1) Customisable music services – able to leverage registration and other types of first-party data for enhanced targeting, to limit their commercial inventory and to provide higher user engagement. (2) Spoken word – including sports, news and entertainment content, which provides valuable opportunities for brand advertising but has been underserved on the U.S. audio sales market.

Exclusive publisher relationships.

AudioHQ’s business model is based on exclusive sales representation contracts with its publishing partners. More than 80% of the inventory it represents is exclusive, which also reflects the focus on non- duplicative offers. Each publisher has a unique approach to the market, differentiated offer and audience profile. For example, AccuRadio has only 1 million listeners, which is quite small when compared to Pandora or Spotify, but it has the oldest audience profile available on the online audio market with the biggest consumption happening on a desktop during the day. At the other end of the spectrum, approximately 80% of 8track’s audience falls into the profile of 18-44.

AudioHQ’s anchor partners for premium audio content are: TuneIn and SoundCloud, combined with a line-up of personalised audio services such as AccuRadio, 8tracks, MixRadio (Microsoft), Jango and Slacker, with a range of monthly audiences between 500,000 and 13 million users.

However, despite this unique positioning, the lack of centralised or single-source audio measurement in the U.S. remains a big challenge for the audio industry in terms of offering unduplicated reach to the clients, and it is no different for AudioHQ.

Agencies and their advertising clients.

The main targets of AudioHQ are traditional radio buyers. The majority of its publishing partners have their own internal sales teams focused on digital buyers. What AudioHQ brings to the table is its ability to tap into radio budgets and growing audio budgets from traditional advertisers. Examples include the insurance,

47 home improvement, retail and auto after-market sectors, with national clients such as Geico, Walmart, Home Depot, Autozone, etc.

Five years ago less than 30% of national radio advertisers were investing in digital audio, today the figure comes to 85%. Therefore, it is essential that AudioHQ’s proposition mirrors the offers they are accustomed to in terms of scheduling, reporting, and metrics – cost-per-point, GRP, etc.

AudioHQ’s primary ad units include: 30 second spot with a companion banner, skippable audio, which provides additional information on users’ reaction to the spot and an opportunity to adjust campaigns accordingly (however, the majority of users tend not to skip audio ads), as well as content sponsorship and integration special formats.

In-Home network – contextual targeting.

In 2015 AudioHQ launched a new In-Home targeted ad network for inventory served on connected devices. It was conceived as an advertising opportunity for a specific type of streamed listening, separate from computers, cars, and phone/tablet mobile devices. In-home digital listening is a growing trend, highlighted by the popularity of connected audio devices such as Sonos WiFi speakers, the Chromecast television add-on, and Roku. An example of the value of in-home targeting for advertisers such as DIY stores or the retail sector is the opportunity to move people out of home and into stores during evenings and weekends.

KPIs for online audio.

Online audio requires alternative performance indicators to CTRs (click-through rates), which are commonly used in the digital world. Growing on the go audio consumption on mobile devices, where interaction with a screen is not possible, as well as in-home consumption on connected devices such as Smart TVs with unclickable screens, make the CTR metric useless. The industry needs to push other metrics forward, while partnerships with brands for studies evaluating ROI of online audio are essential to grow the market.

Programmatic for online audio.

Audio HQ is not currently active in this space, but it believes programmatic audio is going to become a big part of the industry. It is 18 to 24 months away in the U.S. and it might actually mature faster in Europe. The key barriers to programmatic audio market development in the U.S. include:

 It requires buy-in from scaled audio players, such as Pandora, which is so far not open to programmatic as it is doing well with premium direct and optimising yield with local sales.

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 The primary focus of the U.S. tech infrastructure providers and ad exchange platforms is currently on programmatic for mobile and video, and until they develop solutions for these two markets, audio from the technological development perspective is less of a priority.

Long-form digital audio content.

AudioHQ has also recently announced a partnership with talent agency Paradigm to create long-form digital audio content. The two companies will collaborate on developing, distributing, and selling this on-demand audio programming along the traditional Hollywood studio model.

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Speakers: . John Rosso, President, Market Development – Triton Digital . Benjamin Masse, Senior Vice President, General Manager Advertising – Triton Digital

Background information

Triton Digital’s technology has connected audio supply to advertising demand since 2006, providing the technical backbone for the digital audio marketplace. The company’s technology enables both live and on-demand publishers to build audience and revenue globally. Triton Digital has also made that audience available programmatically, maximising audience buying efficiency for advertisers across the world.

Triton’s measurement solution, Webcast Metrics® is the Media Rating Council accredited source for digital audio listening data, making it the industry standard for audience measurement. Thanks to this solution, advertisers have an accredited way of easily comparing local digital audiences, regardless of the music service. It also helps advertisers compare terrestrial and digital local audience metrics side by side.

Contribution by John Rosso, President, Market Development – Triton Digital

Presentation available on the egtanet

Online Audio Measurement

Webcast Metrics, available on the market for eleven years, currently measures more than 15,000 audio streams globally, working with publishers such as Pandora, iHeartRadio, CBS Radio, Cumulus Media, ESPN and Entercom in the U.S., as well as with Spotify, Karnaval, Prisa Radio, and Sky Radio internationally.

According to Triton’s data, the average number of people who are listening to online radio at any given moment in time in the U.S. is approximately 4.3 million, compared to 22 million for broadcast radio. Mobile dominates online audio consumption with an average share of 80% of listening. John Rosso (Triton Digital)

Webcast Metrics methodology

In order to measure online audio, Triton’s Webcast Metrics employs two census measurement methods: listener tracking and server log processing.

The reason behind using census is that sample-based methods, traditionally used for radio audience measurement, including PPM, have several disadvantages and limitations, including:

 Current panels are too small;  Meter codes may not register efficiently in a dynamic content environment;  Limitations of headphone-based listening;  Device instrumentation challenges for SDKs (software development kits) to keep up to date with all versions and updates of operations systems.

50 Census measurement, on the other hand, provides an opportunity to precisely, second-by-second, measure each streaming session of online audio. The collected data is then cross-checked against a series of quality control procedures – approved by the U.S. Media Rating Council – to filter out suspicious sessions, for example no robots are counted, too many sessions from the same IP address, too long sessions, and sessions of less than one minute are eliminated, etc.

Mirroring radio’s Nielsen data and integration with agency dashboards

The industry demands an equalised set of metrics across broadcast and online audio. Therefore, Webcast Metrics introduced Local Reports fully comparable with legacy radio audience measurement in terms of geography and population covered by Metropolitan Survey Areas, and in terms of metrics reporting on AQH. This allows integration of Webcast Metrics into agency dashboards along with the Nielsen broadcast radio data, making it possible for agencies to plan and book their terrestrial and online campaigns comparing apples-to-apples using single AQH statistics for both types of radio.

Key challenges for online audio measurement

There are several challenges related to online audio measurement that Triton is working on at the moment:

 The importance of dis-anonymising the audience to be able to track unduplicated consumption across different devices. The more accurate the data that can be collected and matched for each audio impression, the smarter the impression, and the higher its advertising value.

 Proving campaign delivery and effectiveness is another challenge, as the majority of digital buyers are used to conversion attribution metrics such as click through rates, which is not an optimal solution to track audio campaigns.

 Measurement of podcasting is harder than it looks for two reasons: technological limitations to track downloads and the closed Apple ecosystem where most podcasting takes place. Additionally, there is no universal agreement among buyers as to what kind of metrics they need for podcasting.

Contribution by Benjamin Masse, Senior Vice President, General Manager Advertising – Triton Digital

Presentation available on the egtanet

Programmatic and online audio advertising

Triton Digital does not offer automation solutions for broadcast radio, which according to the company is not pure programmatic, in contrast to the views of some experts and providers in the industry.

Outlining services and solutions radio needs to grow, measure and effectively trade online audio inventory, Triton mentions:

 Content and quality of the stream, with reasonable ad load to increase and keep listeners.

 Addressable and traceable audience through smart players, instead of the broadcast media Benjamin Masse (Triton Digital) approach where a lot of publishers just transfer their streams, quite often through dumb players without any extra information available and collected – no registration data, no cookies, etc. This kind of inventory is neither targetable nor traceable, so not of much of value in the digital world. Although publishers can monetise it under the broadcasting paradigm of GRPs, if they want to tap into digital budgets, they need to change their approach accordingly.

51  Inventory at scale (pre- and mid-rolls), webradios, podcasts. It should be possible for buyers to plan proper campaigns, instead of picking small pieces of audience here and there. Unless you are a publisher who controls 80% of the market, putting up Chinese walls for your inventory is not a good strategy.

 Automation of processes, including standard compliance (DAAST, OpenRTB, OpenDirect, TAG) is critical for growing online audio’s ad share. Media holding companies’ shareholders and tier one marketers are making this mandatory. They require from all media: better automation, lower costs, and protection from fraud. And if radio is not able to put these mechanisms in place, at some point they will stop buying radio having plenty of other opportunities available on the market.

With regards to current demands in terms of technology from both audio publishers and advertisers, Triton lists the following:

From publishers:  Streaming infrastructure that supports live spot replacement and on-demand stitching (for webradios and podcasts);  Digital measurement (from forecasting to affidavits and attribution) and in most cases based on real time data;  Development of smart players (supporting cookies and mobile adID) strategies, as well as audience platform (Audio DMP) development, instead of spreading content around all available players;  Yield optimisation across demand-sources, including support of non-guaranteed (OpenRTB) and guaranteed (OpenDirect) programmatic deals.

From advertisers:  Access to supply, whether the publishers are using DFP, TAP, AdsWizz, WideOrbit, etc.;  Increasing the addressable audience using technologically accepted transactional mechanisms (cookies and DeviceID);  Proper interoperability with the other constituents of the Lumascape, especially DSPs, DMPs and attribution vendors. Buyers want to be able to buy any and all formats (including audio) through a single platform, instead of having separate platforms for audio, video or display;  Advertisers (as well as publishers) need at least basic, but transparent digital measurement (from forecasting to affidavits and attribution);  Support of both non-guaranteed (OpenRTB) and guaranteed (OpenDirect) programmatic deals.

Importance of standards to bring clarity to and to grow the online audio market

Before the development of DAAST – the Digital Audio Ad Serving Template – introduced by the IAB in 2014, buying and trading online audio was – and in many cases remains – very complex, time consuming and inefficient. It required more manual work, which led to higher rate of mistakes and delays in reporting. The purpose of DAAST is to promote a technical ecosystem in which advertisers, publishers, agencies, and consumer playback devices are aligned to coherently deliver and track streamed audio advertising. The intent is to unify an industry fragmented by conflicting ad technologies and platform solutions. DAAST also provides reporting that enables publishers and buyers to manage their campaigns efficiently and almost in real-time.

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Another important standard driving the development of online audio advertising is Inventory Quality Guidelines – also initiated by the IAB. This is a voluntary, self-regulatory programme that supports the development of common standards to combat digital ad fraud, malware and piracy. The requirements put in place and the publishers’ accreditation process ensure all audio traffic is genuine, and thus provide transparency and confidence in the inventory traded.

53 Future of the online audio marketplace

Speaking about the current state of the online audio marketplace and the future needs, there is room for a lot of improvement and development: there is still not enough addressable audience, not enough connected tools for buyers and insufficient standardisation.

Overview of Triton products

 Streaming audio platform

 TAP – Triton Advertising Platform – an advertising server that includes:  TAP Live with Mid-Stream Spot Replacement option and synchronised banners.  TAP OnDemand: o Pre-roll and in-stream ad stitching for pureplayers and webradios. o Pre-rolls, mid-rolls and post-rolls for podcasts (streamed or downloaded).

 a2x – audio exchange network to serve ads on any devices, which has served over 1 billion impressions since its launch three years ago. In the U.S. almost all big publishers, with the exception of Pandora and iHeartRadio, participate in a2x. Within the network, Triton tracks advertising based on the audio delivery, but not the accompanying banners.

Triton’s advice is to do the same with any audio ad and to avoid making the banner part of the mix or to track audio campaigns based on the banner views.

To illustrate the disproportion between standard banner-based metrics and the actual impact of an audio campaign, Triton presented results of a Xaxis study for a client (a credit card company). The graph below shows the results for the baseline campaign – a display-only campaign. Adding an a2x audio component boosted the campaign’s results up to 4.1x.

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Speaker: Susie Hedrick, Vice President of Radio Sales – WideOrbit

Presentation available on the egtanet

Background information

WideOrbit is a broadcast and advertising technology provider. WideOrbit helps media companies manage their advertising business across all media platforms via any sales method, from direct sales to programmatic. WideOrbit is the sell-side system for more than 3,000 major media companies across broadcast TV, cable and satellite networks, radio, Internet, digital print and mobile, managing more than €26 billion in ad spend annually.

In 2014 WideOrbit acquired Abacast, a company that specialises in streaming, live and on-demand advertising insertion and other monetisation techniques for digital radio. The Clarity platform, which offers streaming, ad injection and audience measurement to audio publishers, is the first distribution partner for Nielsen Audio’s newly developed streaming audience measurement technology. WideOrbit’s programmatic digital audio solution, combining WO Programmatic Digital and WO Streaming, allows stations to transact inventory through direct selling channels, ad network partners, and programmatic technology from a single solution. Susie Hedrick (WideOrbit)

Contribution

Technology drivers for traditional radio, online audio, and programmatic advertising

 Simplify – using technology to reduce costs and increase operational efficiency, reducing barriers between technology platforms and distribution methods, combining all processes in one platform.  Elevate – improving productivity and insight by developing features that drive complimentarity between once separate and distinct products.  Reach – growing audiences and revenues by expanding relationships: reaching the audience in different ways and super-serving advertising clients.  Evolve – grow with programmatic by embracing technology in an industry traditionally based on peer-to- peer and direct transactions.

Simplify

In the U.S., most of the technology operating systems for radio broadcasters were designed for local businesses, which made them isolated infrastructures and inefficient for cross-platform or national campaign management. Given the growing demand from buyers and changes in the media companies’ sales operations, the industry needs to integrate its digital and broadcast solutions across traffic, automation, streaming and podcasting.

With these premises in mind, WideOrbit integrated its products to help radio businesses leverage their inventory cross platform and at a national level, also making it much easier to book for buyers. The result is one system/platform of record and campaign management providing flexibility through single database solution, structuring inventory in a way that allows recognition of all of its types, as well as operating the entire group of stations with a centralised traffic, reporting, automation, and analytics.

55 Elevate

According to Wide Orbit estimates, the main challenge related to the monetisation of online audio in the U.S. is actually the cost of transactions. Between 30% and 70% of revenue is retained from online audio transactions, compared to 95% in case of broadcast. Radio sales forces are succeeding in selling their online streams; however, in order to complete the transaction they have to proceed with on average seven more steps from planning, reporting to invoicing in the case of online compared to broadcast.

To address this challenge, WideOrbit is designing products to improve productivity and insight by developing features that streamline workflows and create complimentarities between previously separate and distinct sales products.

Reach

In order to extend publishers’ reach, WideOrbit develops technical solutions that integrate streaming and downloading with all formats of advertising and monetisation around audio content.

Evolve

WO-On-Demand enables audio syndicators to inject ads into shows, overriding whatever ad-insertion is present in the show’s original version. An example of this solution being used is the technical opportunity to dynamically replace old ads in podcasts that are downloaded several weeks or months after production, making sure that advertising messages remain relevant.

WideOrbit has also obtained a patent for song-skipping in broadcast simulcasts, a tech innovation the company has been developing for more than two years. When implemented, listeners of live-streamed terrestrial broadcasts would be able to skip songs – rather than switching stations – a chief personalisation advantage over pure lean-back listening. In this way, after skipping, each new session starts from the beginning of the content (beginning of a song or an ad break).

Programmatic focused on new revenue streams outside of the existing sales reach

In order to bring new revenue to broadcasters, programmatic solutions need to be based on three core features:  Easy execution through automation – via full integration with traffic and booking systems;  Maintaining control of inventory – so that publishers can see exactly what is happening with their inventory, control availability, clients list, creative, and set a floor price;  Increasing revenue by accepting new demand – to ensure not just automation, but also incremental sources of revenue.

56 The future of advertising software development

The key demand from the buying side of the industry is cross-media integration. Agencies and their advertising clients expect media companies and their technological providers to develop one-stop-shops for all platforms fuelled with data.

Speaker: Mike Dougherty, Founder and Chief Executive Officer – Jelli

Presentation available on egtanet

Background information

Jelli is the largest technology ad platform for audio advertising focused on providing programmatic solutions for terrestrial radio. Founded in 2008, the company’s original focus was creating crowd sourced radio with listeners controlling programming by voting songs up and down in real time. But over the past three years, Jelli’s focus has shifted to creating a platform that will make it possible to automate the process of buying and selling radio ads in the easiest and fastest way. Jelli’s patented, cloud-based audio platform is used by advertisers and publishers to reach hundreds of millions of listeners monthly, serving billions of audio ads programmatically.

Jelli-served ads reach over 245 million listeners monthly across more than 1,200 radio stations throughout the U.S. The company has partnerships with many of the leading radio operators and networks, including Townsquare Media, Entercom, Emmis-owned WQHT-FM, Sun Broadcast Group and Focus 360.

In April 2015, Jelli announced a wide-reaching partnership with iHeartMedia and its subsidiary Katz Media Group, the largest media representation company in the U.S. This partnership will see the creation of a private ad exchange for the broadcast advertising inventory of iHeartMedia-owned stations, and Expressway from Katz, extending programmatic buying to the broadcast advertising inventory of a huge number of radio stations from the multiple broadcasters represented by Katz Media Group. Additionally, Katz will be providing the option to create private ad exchanges, like iHeartMedia’s, to its clients as well.

Jelli has introduced automation into several stages of the life-cycle of an audio ad, powered by its SpotPlan, RadioSpot and RadioDash software and ad serving infrastructure.

Jelli operates in the national market for pre-recorded (spot and network) advertising on linear broadcast radio, and for now its focus excludes the local sales to local advertisers, sponsorships and on-air promotions.

Jelli also raised a $21 million round of funding to grow its business as it prepares to expand to other kinds of audio services – specifically related to streamed music. Mike Dougherty (Jelli) Contribution

Reinventing radio advertising

Radio is currently reinventing itself in many different ways, and Jellli is focused on reinventing radio advertising and making the monetisation of radio as advanced as mobile, Google or Facebook.

57 Mike referred to AdWords as the biggest advertising product of all time – simple, easy to use, allowing many people to buy a lot of advertising every year. A similar success story is Facebook using its vast quantities of data to fuel its advertising offer, whilst keeping the process simple, which is a big driver of its advertising revenues growing from zero to $10+ billion in the space of 5 years.

Radio produces more than 200 billion hours of time spent listening during car commuting and in other places where Facebook and Google cannot reach audiences. Therefore, radio broadcasters have an unparalleled monetisation opportunity with more than 4 trillion ads per year, natively mobile, forming a $17 billion market. Moreover, in the U.S. radio remains a highly effective medium to reach people prior to purchase. But it is also old school, manual and complex in terms of how it is bought and sold and this is the area where it needs to change in order to be competitive and to grow the medium’s market share.

Programmatic advertising surge – radio is not getting its fair share yet

Agencies in the U.S. and globally continue to shift their focus towards data-driven programmatic trading for digital display, mobile advertising, social media and – in the last 12 months – for video. But so far radio is getting zero out of programmatic because the industry has not built the plumbing to plug into these budgets. If radio wants to get one out of every ten advertising dollars from programmatic (as it does in case of traditional media budgets), the necessary technology needs to be put in place.

In the U.S. radio remains hard to buy and to use as an advertising platform, which often results in a lot of waste. It is highly logistical across transaction processes, prone to human errors, evaluated using delayed paper reports, and it lacks the necessary ad technology.

Selling radio’s so-called middle seat (i.e. additional un-sold inventory that has been unlocked thanks to automation) – packaging it up and selling it at the same price as the premium inventory – is, alone, a $1.6 billion opportunity for radio when powered by technology.

Another forthcoming battleground for radio is the connected car. Today, only 3% of new cars have CarPlay or Android technology, but in five years the figure will be 56%. And as soon as the car becomes mobile, companies like Google and Facebook will use the opportunity to go after the consumers there.

Making radio as easy to buy as Google or Facebook

Using Jelli’s technology, radio companies can offer advertisers easy access to 90% of the U.S. population in the places where neither TV, nor Google or Facebook can reach them.

Jelli creates a connected ecosystem for audio advertising, providing solutions for both buyers and sellers:

 SpotPlan – a programmatic buying platform for radio that allows plans to be optimised algorithmically by station lineup, day part, demographic, market, impression and GRP goals, and enables:  Algorithmic plan creation optimised for every individual buy;  Powerful targeting capabilities;  Optimal utilisation of inventory.

 RadioSpot – a cloud-based ad server for broadcast radio that provides ad serving for radio affiliates and media agencies via cloud delivery and real-time data, including:  Real-time compliance accountability and copy control;

58  Data-driven targeting such as weather targeting, mortgage rate targeting, audience profile-based targeting, etc.

 RadioDash – a real-time campaign dashboard offering detailed radio campaign insights and instant validation of spots running on broadcast radio, as well as tracking station compliance in real-time, including:  Self-service reporting;  Real-time events, metrics and insights. iHeartMedia Programmatic Marketplace and Expressway from Katz iHeartMedia invested in Jelli in order to implement the technology across its owned stations and to launch a private ad exchange for its broadcast advertising inventory. It took between March and September 2015 to integrate iHeart’s 850 stations and to install Jelli’s servers across them.

Additionally, a partnership between Jelli and Katz Media Group (iHeart’s subsidiary) and the resulting Expressway from Katz – a public exchange to be launched in the first quarter of 2016 – extends programmatic buying to the broadcast advertising inventory of non iHeartMedia radio stations represented by Katz across the U.S. market.

The ultimate goal is to create an industry-wide audio spot exchange for broadcast radio. The initiative will combine the scale and effectiveness of radio with the efficiency of digital, and it will outreach any other programmatic platform or digital audio offer available in the U.S. so far.

It is a joint belief of iHeartMedia, Katz and Jelli that increasing automation and reducing the complexity of buying terrestrial radio will help the medium to get a fair share of growing programmatic budgets and will position radio as a proper digital advertising platform.

According to Jelli’s estimation, in 2016 up to 10% of national radio advertising will be traded programmatically. Furthermore, radio’s adoption of programmatic will be faster than other legacy media, simply because it is already late in the process and tapping into an already established ecosystem – buyers know what programmatic is and they want it now. The demand is particularly strong among radio and audio agencies/departments, which see that their clients are pulling money out of radio. They require tools to invest in radio and to get the money back from budgets allocated to digital. And going even further they require a unified platform for buying across all types of audio, including digital and terrestrial.

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The two models of how programmatic for broadcast can work from a sellers’ perspective are:

 A rep model – sales forces using the platform to create proposals for clients, similar to the traditional sales representation model, except that the resulting proposals are data-enabled for targeting, and it is possible for clients to get real-time reporting.

 DSP model, to be announced in Q1 2016 – agencies will have access to live software that will allow them to buy and execute radio campaigns through the exchange directly. Answering the most common concerns of broadcasters: “what will happen with prices and sales teams if we make our inventory available directly to the DSPs?’’, under the Jelli DSP model prices will still be negotiable, while sales teams will remain very involved. It will not be an RTB model, there will be no bidding, and publishers will fully control the price as well as engage their teams to further drive sales. Actually, as a result of the envisaged targeting opportunities and thanks to better services, the price of premium radio inventory on DSPs should be even higher. And secondly, radio broadcasters should keep in mind that, on the contrary, non data-sweetened radio inventory outside of such platforms will become more of a commodity and thus will be traded cheaper and cheaper with time.

Integration process with the stations

The process of server installation and integration of Jelli’s technology with traffic systems is coordinated together with stations technicians who know how to hook up Jelli’s solution with the specific configuration of their stations. For operational support Jelli provides service-level agreements to make sure that everything runs smoothly on the platform side.

2016 international strategy

Jelli’s expansion strategy for the nearest future is to focus on partners who have scale across markets such as Canada, Europe, South America and Asia.

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Speakers: . Thierry Ascarez, Chief Business Development Officer – Radionomy Group . Mitch Kline, Strategic Advisor – TargetSpot

Background information

TargetSpot, part of the Radionomy Group, is one of the largest digital audio advertising platforms, connecting top national brands and local advertisers to highly engaged Internet and mobile audiences. With over 55 million monthly unique listeners, the TargetSpot network includes more than 100 of the leading online music, Internet radio and audio content providers with more than 4,000 audio content destinations connecting with listeners on mobile, tablet, PC, in-car, etc. TargetSpot sells premium inventory and offers its advertising clients rich media campaigns delivering high-impact audio, display and pre-roll video advertising across thousands of online properties.

TargetSpot advertisers can target consumers by demographics, behavioral segmentation, listening preferences, cross-devices, and geography down to zip code level; including real time reporting and analytics.

TargetSpot has also introduced an international programmatic monetisation platform called TS BlueBox.

Contribution by Mitch Kline, Strategic Advisor – TargetSpot

Presentation available on egtanet

Digital Audio Landscape

To set the scene of the U.S. digital audio landscape, Mitch provided a brief overview of growing online audio consumption – average listening hours grew ten-fold since 2009 up to 6.7 billion hours estimated for 2016 – and key entities/stakeholders of the marketplace, which include:

Barriers to monetising online audio and the technology to address them

Although the consumption of online audio is growing, it is still far behind broadcast radio. The barriers to monetising online audio include:  Fragmented listening and lack of scale;  Lack of uniformity (ad length, standards) and efficiency;  Advertisers need more data and insights on audiences.

61 TargetSpot addresses these challenges by offering:  Proprietary ad server – allows for increased uniformity;  Stream-level ad insertion – allows for increased uniformity;  1:1 ad serving (no batch ad serving) – increases targeting accuracy and reporting;  User-level data on ad calls – allows for granular targeting;  DAAST compliancy – makes it easier and more efficient to buy inventory among different types of publishers, and promotes industry growth through standards;  Dedicated ad ops team – provides complete control of campaigns;  Third-party tracking – provides credibility for clients, industry and TargetSpot.

Through partnerships with leading third-party data providers, TargetSpot aggregates user-level data to identify, segment, and target listeners by device, as well as by behavioural and psychographic characteristics. On average, such data-supported impressions have 30% higher CMP compared to just age/gender audience profiles. Furthermore, the retargeting opportunities enabled by TargetSpot third- party data analysis are highly appreciated by clients, who are willing to pay more to retarget very narrow and specific audiences, which would not have been possible without sophisticated data management. From its experience with data management, TargetSpot advises publishers to collect as much relevant first-party data as possible in order not only to make their inventory smarter, but also to save on some of the cost of buying third-party data.

Contribution by Thierry Ascarez, Chief Business Development Officer – Radionomy Group

Presentation available on egtanet

TS BlueBox – an international programmatic monetisation platform

TargetSpot has introduced an international programmatic monetisation platform called TS BlueBox. The DAAST-compliant service is designed to help create revenue for digital audio publishers with a single, integrated solution. It currently includes the U.S., the U.K., Germany, France, Spain, Switzerland and Belgium, although more countries will be added later in 2015.

The TS BlueBox service offers advanced targeting by device, audience segmentation, and geography. It also has reporting tools that detail metrics such as allocated and paid impressions, and it can review performance by day and by hour.

Thanks to a recent partnership with Nielsen, TargetSpot will be using Nielsen’s PRIZM, which makes it possible to apply data targeting across its entire platform, including a wide range of channels listeners increasingly turn to for audio content – Smart TVs, streaming sticks, game platforms, wireless speakers, etc.

62 Other Radionomy Group solutions

In addition to the advertising network Targetspot, the Radionomy Group of companies includes Radionomy, SHOUTcast and Winamp:

 Radionomy is a global service that allows people to create their own Internet radio stations: user- curated and semi-professional web radios, and provides the tools to stream, promote and monetise them.

 SHOUTcast is a streaming software used by more than 65,000 radio stations around the world to broadcast their programming Mitch Kline (TargetSpot) and Thierry Ascarez (Radionomy Group) online. The platform also helps over 10 million listeners each day to discover thousands of radio stations.

 Winamp Player allows users to listen to and manage their music library, podcasts, watch videos and listen to online radio. The Radionomy group is going to re-launch Winamp Player (part of the SHOUTcast acquisition) in 2016 and will make it a smarter player better suited to connected devices, including cars.

Together, these three companies form the Radionomy Group’s long tail strategy: TargetSpot is focused on premium publishers and middle sized broadcasters, Radionomy aggregates the long tail of hobby stations, while Shoutcast sits in the middle, which all together builds a volume of monetisable inventory.

TargetSpot’s sales strategy

TargetSpot’s main goals are to provide scale and to enable targeting rather than to focus on the exclusivity of a publisher’s inventory, which is one of the key differentiators between the business models of advertising networks and sales houses.

According to Thierry, there is a certain degree of controversy around sales exclusivity, as some publishers have exclusive deals with their sales representation partners, while they are at the same time present within aggregator platforms such as TuneIn. In this case, aggregators can monetise via pre-rolls around publishers’ content themselves, regardless of any exclusivity deal with a sales rep. If around 50% of the audience comes via TuneIn, in reality half of the impressions are not really exclusive.

TargetSpot’s commercial strategy is to focus on agencies in the big U.S. markets and to develop its audio programmatic offer. Secondly, it wants to grow and develop scale in the area of international monetisation through its TS BlueBox platform. Last but not least, the company aims to further expand its targeting capabilities with more granular impressions, down to local segments.

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Brand safety

To ensure a safe environment for brands, TargetSpot provides advertisers with a list of stations participating in their campaigns, as well as monitors content of its partners, especially in the case of talk content. And it works the other way round as well – publishers can provide TargetSpot with a list of advertisers they do not accept on their stations such as, for example, e-cigarettes, dating websites, etc.

Companion banners

Although the value of companion banners within audio advertising is increasingly questioned across the industry, there is still a huge data value potential associated with the accompanying banner. Additionally, adding a companion banner is a good way to introduce audio to display-focused agencies and buyers.

Speaker: Pat Higbie, Co-Founder and Chief Executive Officer – XAPPmedia

Presentation available on the egtanet

Background information

XAPPmedia is a technology company that provides innovative and unique interactive audio services, introducing voice activation to radio advertising by allowing listeners to talk back to radio ads when they come up on Pandora, Spotify, NPR and other mobile apps.

The technology uses an iPhone or Android device’s microphone to let users actively participate in the ads, rather than passively listen or tune them out. These ads are designed to generate responses from so called ultramobile users that are listening to the radio on a device in situations where it is not convenient or safe to engage with the screen.

XAPP Ads connect consumers directly with an advertiser’s brand and give clients measurable, direct-response marketing not available on broadcast radio.

Contribution

Radio – the original mobile medium

Going back to the first car radios in the 1930s, radio used to be the original and the strongest mobile medium. Today, the industry is transitioning to a mobile audio environment that is even broader than radio, with smartphones becoming the main consumption device. Pat Higbie (XAPPmedia)

One of the main advantages of audio content is that it can be consumed while people are doing something else. But it is also a challenge to engage listeners with advertising while they are busy with another activity, and this is precisely the area that XAPPmedia is focused on – providing engagement tools for audio advertising and improving mobile interactive performance.

Following the launch of the original iPhone in 2007, with a revolutionary touch interface experience, the mobile industry attempted to translate desktop advertising experience into the touch mobile environment, which proved not to be an optimal solution, especially in the case of mobile audio.

64 According to XAPPmedia’s data, 77% of the time people are listening to audio on mobile, the apps used are not visible on the screen.

Monetisation and listener engagement potential

XAPPmedia’s interactive audio services provide a solution for this, by introducing voice activation to radio advertising. A demo is available here https://youtu.be/b1vBrIp7z9k.

Consumers can simply interact with the ad by saying aloud the prompted phrase, for instance while jogging or driving. The variety of possible actions ranges from calling a number, downloading content, triggering an email, receiving a coupon or other information. As a result, listeners instantly connect with the brand without having to remember website addresses, telephone numbers or even look at their screen. For example, Ourisman Toyota ran a 20% off promotion on NPR for listeners who booked appointments through the radio ad. “Want to learn more?” – the voiceover said. “After the beep, just say ‘XAPP Me!’” The listener then heard a beep and was given two seconds to repeat the words into their mobile microphones.

Pat presented aggregated results from several commercial campaigns that XAPPmedia has executed for companies across a range of sectors. Sound activated campaigns delivered response rates that were eight times higher than those that were touch only.

Interactive ads generate three to four times higher CPMs because of the value they bring to clients. The format also provides an opportunity to test different creative options to further increase the performance of campaigns.

65 In addition to advertising, the technology also works for content enabling, which has the potential to engage listeners in a new way, including formats such as: content promotions, voting (e.g. the GRAMMY Awards), a listen now feature for extra content, name the artist quizzes, prize draws, sharing on twitter, etc. It offers simple, spontaneous and convenient ways to engage with audio.

Data and technology infrastructure

As is the case with any interactive solution for measureable advertising, XAPP technology provides massive amount of data to both publishers and advertisers.

The XAPP team uses a SDK (software development kit) to embed its technology into apps, audio players and ad servers. In terms of the time framework, basic integration can be implemented in several hours or days.

On the creative side, there are no barriers to create XAPP-compatible ads. Each agency and publisher can create their own, as software developer skills are not required to produce these ads. The key features are: a strong call to action and making it possible for listeners to take instant action.

Privacy concerns

XAPP-enabled apps need to be connected to a microphone, which might pose a challenge to both publishers and advertisers in terms of privacy concerns. The solution according to XAPP is to promote the technology and to convince listeners that in exchange for giving access to their microphones, they will benefit from a better user experience with more relevant ads and additional content features. The better publishers explain it to their users, the higher the permission rate. For example, in case of the NPR listeners in the U.S., the permission rate is about 92%.

The business model of XAPPmedia

In terms of its business model, XAPPmedia remains flexible and proposes different arrangements depending on the scale and level of integration with a given partner, ranging from a CPM-based charge for impressions to a more comprehensive partnership with broadcasters and their sales houses often based on a revenue share model.

Speakers: . Philippe Generali, President/Chief Executive Officer – RCS Worldwide/Media Monitors . Mike Powell, Senior Vice President International Operations – RCS Worldwide/Media Monitors

Presentation available on the egtanet

Background information

RCS – a subsidiary of iHeartMedia – is the world’s largest broadcast software company. Its software is used by more than 10,500 radio stations, TV music channels, cable companies, satellite music networks and Internet stations worldwide. It provides broadcasters and webcasters tools to manage both content and advertising.

Media Monitors – a subsidiary of RCS – is the leader in local media monitoring. It matches audio to fingerprints of millions of over-the-air radio, broadcast TV and local cable commercials, and the company also scans hundreds of local newspapers and websites to deliver tracking data for broadcast, Internet, cable, print, media research firms and advertising agencies around the world.

66 Contribution

Broadcast technology: demands and challenges

In today’s marketplace, radio stations are looking for the best tools to maximise efficiency and return for their advertisers, as well as the best possible intelligence on the effectiveness of advertising. In order to meet these demands on the technology side, providers need to adapt accordingly and offer flexibility and goal seeking rather than rule-based solutions.

Innovations in traffic software

The standard capabilities in demand for radio traffic systems include:  Corporate visibility/transparency and group wide uniformity;  Reliability, accuracy and performance;  Efficiencies and revenue creation;  Auditable workflow;  System integration;  Optimised scheduling.

However, innovations are also necessary to catch up with the changing marketplace. The traffic department used to be the gatekeeper – a data entry and sales execution/error correction service. Smarter system solutions now allow sales executives to enter orders themselves, but with configurable rules to prevent errors. Therefore, the traffic department’s function is no longer about data entry but about inventory management, while pricing is more controlled and set centrally by sales and commercial directors.

Therefore, the technology systems in place need to provide flexibility to enable – rather than to delay or prevent – new and diverse sales and pricing methods, including key features such as:  Multi-media sales;  Mediacentric CRM platforms integrated with inventory and accounts;  Data mining/Inventory/Revenue Management;  Living Log for late money;  Programmatic/improved sales- traffic-playout-accounts system integration;  Portable/mobile sales;  Sales team reporting – live dashboards. Mike Powell (RCS Worldwide/Media Monitors)

In terms of future delivery options, both broadcasters and webcasters are seeking cloud-based options for the entire product suite that enable mobile sales forces and improve redundancy, as well as reduce costs and administrative burdens.

67 Overview of RCS broadcast solutions

Zetta is a multi-feature radio automation system for both terrestrial radio and streaming.

For more information: http://www.rcsworks.com/en/products/zetta/

Aquira is a traffic system designed for radio businesses, which provides real time and mobile access to sales and inventory data, and a vast range of scheduling, billing, and reporting options.

For more information: http://www.rcsworks.com/en/products/aquira/

GSelector is a multi-station radio scheduling system.

For more information: http://www.rcsworks.com/en/products/gselector/

68 Innovations in data and monitoring systems. Media Monitors.

Data, analytics and monitoring tools are increasingly vital to operate radio businesses. Media Monitors applies its patented radio monitoring technology and listens to top-rated radio stations in major markets across the U.S. – 24/7, 365 days a year. A team of over 500 spot data specialists research and identify hundreds of new advertisers and commercials every day, offering:  Data and analysis for prospecting to generate sales leads;  Advertising campaign verification;  Strategic decision-making with current information;  Competitive intelligence reports.

Media Monitors Radio Spot Data is accredited by the Media Ratings Council (MRC).

Speaker: Jillian Zatta, Business Development – LISNR

Presentation available on the egtanet

Contribution

Data-over-audio technology

LISNR has developed a high frequency, inaudible technology; a new communication protocol that sends data-over-audio. It is a digital sound file that turns any speaker or piece of media into a beacon, working seamlessly across physical and digital spaces. It uses data-over-audio to activate the delivery of contextually-relevant content and advertising messages.

In the development phase the challenge was to use technology that is scalable and easy to deploy using already existing hardware. The decision was to use sound. Sound – specifically the ability to send messages, data and video over ultrasonic frequencies – has the power to become the new technological standard for real-time engagement and focused marketing initiatives. LISNR is promoting sound as the next great marketing medium. One of the key components of LISNR’s infrastructure is the huge amount of inexpensive and efficient speakers that are everywhere – at major sporting venues and big buildings all the way down to cars and kids’ toys. Each and every one of these speakers is able to carry data via sound, and sound travels through the air for great distances, needing nothing more than an existing speaker or microphone infrastructure.

69 Unlike some other data transfer technologies, like Bluetooth and Wi-Fi, LISNR’s technology does not require the use of much battery life, and it does not require any specific technical standardisation in devices or the building of a transmission network. It works with all devices able to receive and transfer sound, such as radio, TV and smartphones.

To enable LISNR technology to work, a user needs to open access to the microphone on their device via an app. Answering privacy concerns, LISNR does not record any audio – the technology just listens to it for a maximum of two seconds at a time to detect sound in a specific band – a Jillian Zatta (LISNR) tone in an inaudible frequency range. Users do not have to be online to receive the message; it can be cached and received at another moment in time.

P&G Idea

CEO and Founder of LISNR, Rodney Williams, a former brand manager at P&G, explains that the idea to develop LISNR came while P&G was exploring different technologies to engage with consumers in-store. In contrast to other beacon technologies, which send the same signal over and over again, LISNR’s Smart Tone can adjust the communication based on different conditions, for example whether it is the first interaction with a given consumer or whether it is time to send a follow up message.

Sound as the next marketing medium

As a marketing medium, sound creates new opportunities to connect with users at scale, with hyper-focused precision. There is an opportunity for retailers and brands to capitalise on those moments leading up to a purchase with a customer experience that is highly personalised and customised to their needs.

A series of pilot campaigns by LISNR for major brands such as Sony, Pepsi, Mondelēz International, AT&T, Budweiser and the Dallas Cowboys caught the attention of the press and generated over $1.2 million in revenues for the company over the course of 2014.

One example of advertising delivery comes from the Budweiser Made in America music festival. Budweiser’s festival app delivered useful information to attendees who had downloaded it, based on their exact location. As they approached concession stands, for instance, they would receive discounts, and close to the exit they received reminders from taxi firm Uber. It proved very popular with users, with over 90% engagement. To deliver additional content, audio smart tones were used to push close-up video of home run hits at Major League Baseball games to attendees in the stadium, using the facility’s public address system. People received this content in real-time, synchronised precisely to events happening on the field of play.

Recently, LISNR also worked with John Frieda (a hair care advertiser) to create intelligent end-cap displays that used sound waves to simulate personal hair consultations and deliver coupons at-the-shelf. For example, just because a customer strolls by a display does not mean they are ready to make a purchase. LISNR can enable timing settings in a SmartTone, delivering targeted communications only after a customer spends a specific time in a designated area. Captured data from these technified in-store experiences can be aggregated into a visual heat map. The data enables retailers and brands to make smarter display decisions – making it easier to connect with shoppers in-store.

LISNR was also engaged by Visa to help drive digital commerce and develop a new way to make mobile payments.

For media, the most relevant use case of LISNR is synchronisation.

The technology is also applicable to broadcast television and radio, opening new possibilities for second- screen interactivity. It enables broadcasters to create parallel experiences for listeners: from voting for

70 specific songs, special promotions of the shows and the partner brands, to enhancing radio broadcasters’ offer to sponsors of the events they are hosting.

LISNR provides a software development kit to integrate its technology in any app on Android, iOS and Windows Mobile.

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Speaker: Natalie Swed Stone, U.S. Director of National Radio Investment – OMD

Presentation available on the egtanet

Background information

Natalie Swed Stone commands industry respect with over 30 years of experience in the media business. As U.S. Director of National Audio for 14 years, Natalie guides all national audio investments for OMD clients. Her role is to provide strategic counsel within OMD on effective use of all audio platforms. Natalie’s background includes 10 years in network radio sales. She is the most experienced national radio investor and has been named a Media All-Star by Mediaweek, a Media Maven by Ad Age, and an Urban Knight by American Urban Radio Networks.

Contribution Natalie Swed Stone (OMD) OMD – the largest media agency and the biggest spender on national audio in the U.S.

OMD – a division of Omnicom – is the largest media agency in the U.S. It is also the biggest buyer of national audio, investing in all of its aspects: on-air, streaming (investing in streaming for 10 years already, display – on the other hand – is handled by the digital teams), satellite, multicultural, personality integrations and event sponsorships. In terms of OMD’s clients, the top 30 spenders on audio are mostly retail focused companies with call-to-action campaigns, where audio has been proven to deliver high ROI.

Thanks to its reach and thus ability to build awareness, effectiveness in terms of cost efficient CPPs (cost- per-point), and ability to maximise the frequency of a targeted buy, national advertisers in the U.S. are increasingly turning to radio.

Looking at consumption, however, although radio’s reach is very stable in the U.S., time spent listening is down for terrestrial radio and continues to grow for streaming.

72 With regards to internal agency processes, OMD is increasingly employing research and data to justify its audio investments to clients demanding proof of ROI, especially as procurement specialists are taking a lead in most of the clients’ marketing decisions.

Is radio getting its fair share of ad dollars?

Today, average TSL figures show that around 11% of people’s daily time is spent listening to radio. However, ad investments in the medium are not proportional, and represent only 50% or less of the TSL results.

Top clients under-spend on radio, with the top 25 advertisers allocating approximately 4% of their budget to the medium. The main reason for this discrepancy is that these top clients spend their budgets nationally, while until some years ago the national radio sales infrastructure was underdeveloped. However, in the last couple of years the national radio sales processes are improving, which translates into national audio budgets growing and aligning closer to consumption.

Evolution on the agency side

With research and data becoming increasingly critical, the agency’s job is not just about media planning anymore, but more about analysing who its client’s customers are and what their habits are, evaluating both

73 brand insights as well as competitor insights. Agencies do not start their evaluation with charts of time spent between different types of media or ratings, but rather with identifying who are the prospective customers of the brands they represent.

The agency approach to audio buys

As marketers and their agencies are evolving, the U.S. radio networks have no choice but to become more flexible and efficient in terms of national campaigns, especially given that streaming takes a share of listening that is encroaching on the radio business.

An example of a new way of trading is buying nationally with a copy split across different regions, which is a cheaper and faster alternative to buying several local campaigns as in the past. For the agencies, it is all about saving clients money, as agencies today spend approximately 40% of their time being audited by media auditors and procurement specialists.

Audio budgets align with usage

Pureplay continues to lead listenership, with 75% compared to 25% in case of broadcast streaming. Therefore, companies like Pandora and Spotify get the biggest chuck of agency streaming dollars. Despite huge marketing investments (for example, iHeartRadio is the No. 4 radio advertiser in the country), the broadcast streaming business is not growing. According to Natalie, the reason is that the online product mirrors the broadcasting product, including a lot of commercials. On the other hand, pureplay offers fewer commercials, which is appreciated by listeners.

But overall the industry’s attention to audio advertising is growing because of the aforementioned marketing and B2B communication of key players, and particularly of iHeartMedia with Bob Pittman promoting audio by visiting each top advertiser and attending all relevant industry events. Moreover, iHeartMedia is hiring marketing experts, rather than radio guys to make its conversations with clients and agencies more relevant.

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Digital paves the way in targeting capabilities and reporting

Radio should be able to provide similar planning, reporting and targeting capabilities as digital can. This was very challenging with network radio in the past in terms of traffic, execution, content environment safety and reporting. Ad serving mistakes and controversial content issues were common. Automation brought by the Jelli ad server means that it is now much easier to reliably execute national radio campaigns. In terms of reporting, radio used to provide reports and proof of performance only 90 days after the campaign, which within the Jelli infrastructure is now possible on the following day, including a copy check.

Programmatic

Programmatic is definitely the industry’s future, and OMD is looking into technical possibilities to have a programmatic infrastructure for every medium. Clients are increasingly demanding programmatic solutions, they are following industry press and it is the programmatic opportunities that are getting their attention, for example iHeartMedia’s recent programmatic radio marketplace.

When OMD talks about programmatic, it does not consider cheap remnant inventory or auctions to be a part of it. It is more about automation, technology, efficiency and data.

On the other hand, when agencies are buying broadcast radio targeting specific demographics, like for example women 18-49, they are actually getting many bonus impressions. With digital, buyers are getting just the target demographics.

In the end it is all about ROI

Radio networks in the U.S. have understood that they need to invest in their own ROI research and to communicate it to the clients. Additionally, they should offer to make ROI research for their advertisers – who in turn can use the insights in their conversations with procurement teams. It is no longer enough to just have ad ratings tell a radio story.

Radio claims to have the highest ROI, but according to OMD, TV still leads in this area, with radio being in the top three along with digital.

In addition to proof of ROI, data is a core part of OMD’s new business. So far, radio has not been able to provide rich and granular data, and therefore radio remains outside of the daily data-driven conversations with agencies and their advertising clients.

Image of radio

Major national advertisers believe that radio as an advertising platform is being reinvented. They increasingly see opportunities for their brands using audio – both broadcast and digital – and are coming to understand its role in the media mix, instead of focusing on the single legacy medium of TV.

Agencies and clients are looking forward to having all media in one place, including audio. There is no one medium better than the other; it is just question of proper planning, using the advantages of each specific medium for a given campaign. And although some stakeholders in the radio industry claim that pureplay is not radio, this positioning is not going to change the way OMD and other agencies are allocating their budgets based on efficiency, effectiveness and share of listening across broadcast and pureplay.

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Speaker: Sir Martin Sorrell, Group Chief Executive – WPP

Background information

With $19 billion estimated worldwide revenue in 2014, WPP is the world leader in advertising and marketing, offering a comprehensive and – when appropriate – integrated range of communications services. WPP is present in 111 countries. WPP’s mission is to develop and manage talent, and to apply that talent, throughout the world, in partnership and for the benefit of clients, with profit.

Main points of discussion

 WPP’s four strategic priorities: new markets, new media, data investment management, horizontality (see slide in appendix)

 10 challenges that are worth the industry’s attention, as they will shape the future of our business:

1. A shift in the balance of power: markets are evolving… Power – economic, political and social – is migrating South, East and South-East; to the so- called BRIC countries and beyond to Africa, the Middle East and to Central and Eastern Europe. Sir Martin Sorrell (WPP) 2. Talents: the danger in more mature markets is often the lack of talent! We need to find ways to motivate people, as there is an oversupply in production and an undersupply in talent.

3. Disintermediation: we are witnessing a disruption in traditional industries with the arrival of companies such as airbnb, Uber, etc. The growing dominance of web giants is having a tremendous impact on the supply chain. . Mary Meeker’s analysis of Internet trends in 2015, which compares time against money spent on media in the U.S., for the first time shows a discrepancy with regards to TV, which gets 37% of the media time and 41% of the ad spend.

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. Figures show that there is a large growth opportunity for both the Internet and mobile. . TV/radio companies need to work together to promote their media more effectively as well as make the most of the development of mobile. . Engagement being a much better metric, there is a need for more and better data. . Clearly, traditional media that have moved to digital are much more powerful than we thought. . (In answer to a question: clients are starting to question the value of the sexy investments they made in digital. Still, Facebook is a branding mechanism. Google and Facebook are media owners, not technical companies. They should be made more accountable for their measurement, efficiency, prices and ROI.)

4. Changes in the world of retail and distribution: the challenge today is that manufacturers can appeal directly to consumers thanks to the web, ecommerce and proximity retailing. The new Tescos (supermarket chain) are called Alibaba or Amazon.

5. The importance of internal communication: It seems to be increasingly challenging to explain change to management structures: it is quite unbelievable what people will do not to make things happen! Activating a dynamic change strategy is therefore of the utmost importance.

6. Organisational structures: whereas the influence of local and global realities is gaining ground, regional influences are decreasing: the pressure on cost is such that change is often forced upon structures for the wrong reasons. There is a growing dissemination of responsibility and accountability to the local level.

7. The rise of procurement: more often than not, the focus is too cost-oriented with little or no focus on the top line. For firms to grow and succeed, cutting costs will only get you so far. At some point, you need to look to investment-driven top-line growth – which has the potential to be infinite. . Chief Financial Officers tend to remain in their position four to five years, while Chief Marketing Officers have a two-year life span! Unfortunately, the rise of finance and procurement is here to stay: the focus tends to always be on the short term (cost synergies, taxes, etc.).

8. The growth of government: in many countries, governments are WPP’s best clients, especially just before elections. More than 50 per cent of the world’s GDP is generated by the public sector. The importance, therefore, of governments as regulators, investors and clients is vast, and this trend is here to stay.

9. Social responsibility: lots of people are focused on good immediate results. If you are in business for the long term, you can simply not afford to do bad (“Doing good is good for business” – Richard Branson)

77 10. Industry consolidation: big empires are being created: AB InBev is a brewery empire that now represents 1/3 of the beer market; the merger between Rite Aid – Walgreens and Boots, is another example. The media and agency world is no exception.

Appendix

WPP’s four strategic priorities: new markets, new media, data investment management, horizontality

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