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egta - Rue des Comédiens 22 boîte 4 – B-1000 Brussels (Belgium) - T: + 32 2 290 31 31 - www.egta.com 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. 7 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. 8 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.