References to the rapid growth of online and mobile ad spend in the industry have been so ubiquitous in recent months that they’ve become something of a media cliché. And with this growth in revenue has come an inevitable attempt on the part of online media owners to get a piece of this burgeoning pie. And nowhere is this more evident than in the online radio market, which, despite its relative infancy in the local market, is starting to catch the attention of Kiwi advertisers due to its resonance with the mobile-hungry youth market.
This trend was recently on show in an Electoral Commission campaign, which was hosted on Pandora with the specific goal of convincing younger Kiwis to cast a ballot on 20 September.
Pandora is already the third highest revenue-earning mobile advertising platform in the world behind Facebook and Google, but it isn’t the only player looking to cash in on the increasing desire of brands to distribute their messages via online channels. Last week, Spotify announced that it plans to roll out two new advertising services: sponsored sessions on mobile and video takeover ads on desktop.
The sponsored sessions give brands ownership of a 30-minute ad-free mobile session, which users opt into by listening to 15- or 30-second ad by the brand that attaches its name to the session.
This novel approach, which will become available to Kiwi advertisers in Q1 of 2015, implicitly concedes that Spotify users despise advertising, while simultaneously positing the brand as the hero that facilitates ad avoidance (Spotify users are particularly averse to ads, with 10 million of the company’s 30 million subscribers throughout the world signed up with a premium account).
Although different in its execution and application, this approach is comparable to Colenso’s ‘ Anti Pre-roll’ campaign for Burger King, in the sense that it also draws attention to viewers’ dislike of online advertising.
Much of the criticism levelled at advertising hosted online is that it’s often very ineffective. And this is most pronounced when it comes to the mobile channel, with studies showing that 40 percent of mobile clicks are either fraudulent or accidental.
Spotify’s chief business officer Jeff Levick says that by employing this unique approach to its mobile advertising Spotify is able to encourage users to voluntarily view its mobile ads for a benefit.
And while this approach certainly could approve appealing to brands that want exclusive access to an engaged audience, Spotify’s other product, which offers video advertising on a channel principally designed for listening, seems somewhat counterintuitive.
Despite the obvious challenge involved with ensuring that consumers actually watch the ads, Spotify’s global launch of the products has already attracted interest from Coca-Cola, Ford, McDonald’s and NBC Universal Pictures. However, if it turns out that users aren’t watching the ads, then it seems unlikely for these commercial juggernauts to use the video takeover product in the future.
This being said, Pandora’s commercial director for New Zealand Melanie Reece says that online radio has already employed video advertising since its launch in the country, and that the company has incorporated means by which to ensure that viewers do actually watch the ads.
“We only serve video at a time when we know the listener is engaging with their device and we are very careful about how often we serve auto play video commercials,” says Reece. “They are highly effective as we have the listener’s undivided attention as they change stations or skip a song.”
This approach is currently on show in an FCB-created campaign for not-for-profit organisation CanTeen, which also has a click-through feature that forwards users to a portal where they can donate to the cause.
Interestingly, in deciding to use Pandora as a channel to deliver CanTeen’s message, FCB’s digital director Kate Grigg says that she considered both audio and visual elements.
“Spotify and iHeartRadio were considered, but based on Pandora providing a strong solution for what we needed for the campaign including cross device and demographic targeting we opted for them,” she says. “We saw Pandora as a good fit for CanTeen in this instance as it reached users on their personal devices through both audio and visual means driving them to make a donation.”
She also added that she wasn’t concerned that listeners might miss out on the visual side of the promotion on account of listening rather than actively observing the screen.
“Technology built into many of these online radio services ensures that video advertising is displayed to users at a point when they are engaging with the player, which means they are likely to be looking at the screen with the sound on. Based on the audience that these platforms provide advertisers with it seems that it could be a good opportunity to deliver a video message providing the content fits the audience and environment.”
The other major player in the market, iHeartRadio, has taken a slightly different approach to spreading its message across as many channels as possible.
One of the major pulls of iHeartRadio’s service lies in the fact that it functions as an aggregator of AM/FM stations, but this in turn means that radio ads are automatically carried across to the online channel. However, Laura Maxwell-Hansen, APN’s newly appointed group director of digital media, says that this is by no means all that iHeartRadio offers.
“We’ve created brand new stations that you can listen to anywhere and anytime, such as Ultimate Access, NZ Top40, Rock Anthems, Country Nation, Flava Old School, Kiwi Kids, Radio Sport Omnibus and Rapture to name a few. Plus there are hundreds of ‘Perfect For’ stations where you can select pre-curated stations that are just what you feel like. We’ve teamed up with the My Kitchen Rules team and created stations from the contestants and Trelise Cooper chose iHeartRadio to launch her fashion music station.”
She adds: “iHeartRadio generates profit from connecting advertisers with audiences, across a range of products including events, sponsorship, in-stream spots and display advertising. From an advertiser’s perspective, iHeartRadio has the expected portfolio of display banners and takeovers, video solutions, in-stream audio, podcasts, social posts and station sponsorships.”
And this multi-channel approach has recently been employed in two of iHeartRadio’s campaigns.
“iHeartRadio recently partnered with McDonalds and created ‘Win the Ultimate Macca’s run to the iHeartRadio Music Festival in Las Vegas!’. The promotion ran across iHeartRadio, ZM and The Hits and included social, display (web and mob), on air and online, creating video content and a micro-site. Over 10,000 entries were received and the party starts soon in Las Vegas … [Also,] Auckland Museum teamed up with iHeartRadio to add a new dimension to the ‘Still Life’ Exhibition running now, until 5 October. We have created an ‘Enhanced Audio Experience’ on iHeartRadio to amplify the pre, during and post experience of the Still Life exhibition attendees.”
Such experiential activations by iHeartRadio have thus far played a major role in not only differentiating iHeartRadio from its competitors but have also helped to position it as a brand with Kiwis as its key focus—a strategy has been employed from day one.
When iHeartRadio first entered the market, TRN capitalised on the timely success of Lorde by commissioning her to perform at iHeartRadio’s exclusive launch event. The approach proved hugely successful and iHeartRadio quickly shot from negligible brand awareness levels to having 182,000 subscribers within eight months. Since then, iHeartRadio (with the support of APN) has thrown its weight behind several other music events, including the Ed Sheeran concert earlier this year.
Maxwell-Hansen says that these experiential and cross-channel activations have had an over-flow effect into the online domain.
“We have found that the response rate to advertising on iHeartRadio has been well above industry standard of .07 percent (Mediamind), with response rates at 0.7 percent. And the audience is more responsive, listening to some stations for two hours with a clients’ ad present for that time.”
And while those response rates are impressive, they aren’t necessarily enough to convince media buyers to purchase digital space on the channel, because as ZenithOptimedia’s business director Alex Lawson says, “it still comes down to audience, audience, audience.”
“Buying space on a digital radio is really the same as any other buy,” says Lawson. “It comes down to what the platform can deliver in terms of the audience I’m looking to reach. It’s like buying a normal radio ad except that we’re buying by the decided digital metric vs a single spot on a traditional radio channel.”
Looking at the most recent overall numbers, Pandora is set to hit 250,000 subscribers within the next week and iHeartRadio currently has around 228,000 (Spotify has not released any official figures for New Zealand).
But as Lawson points out, these overall numbers aren’t necessarily the biggest strength of the online radio players.
“Like any digital platform, especially one with a sign in procedure the main advantage of any type of advertising on it is the accountability and targeting abilities,” he says. “Being able to only go to our target group by knowing their demographics through log ins is just beneficial – not only for us as advertisers and wanting limit wastage, but for the end user who gets more relevant ad options rather than being flooded with ads that they would have absolutely no interest in.”
Reece says that this advantage forms a key part of what Pandora offers to advertisers.
“We presently charge on a simple CPM basis – scaled differently for the type of media you wish to play on Pandora and the audience you wish to target,” she says. “It’s important to note that as an alternative to traditional radio – we only serve ads to the chosen target audience so their is no wastage and we are entirely measurable.”
Similarly, TRN has introduced a discrete online rate card system for iHeartRadio that gives the advertiser the flexibility to target a specific demographic on the desired channel.
“iHeartRadio has rate cards for both on-air and in-stream online spots plus digital display formats,” says Maxwell-Hansen. “As with other media providers, we have rates by channel, in line with TV, who have on-air and On-Demand ratecards.”
While Maxwell-Hansen echoes Reece’s sentiments on the targeting capabilities of subscription-based online systems, she also pinpoints another feature that separates iHeartRadio from its competitors in the market.
“iHeartRadio has its own inventory management system that provides flexibility for advertisers to create native content in commercial ad space that is not necessarily constrained to a 30-second commercial.”
From the advertiser’s perspective, this should be seen as an advantage in the sense that it allows advertisers to customise their ads for the channel. But more often than not, advertisers tend to simply put the same message on different channels.
“It’s still scary the amount of straight TVCs we see on skip-able digital platforms that have had no thought about their construction between broadcast and digital,” says Lawson. “Digital ads need to be constructed as digital executions with the way a user interacts with it in mind. Digital radio is no different. What are the hooks for the digital radio user and how are they different to the broadcast version – what will make it stick in their mind better?”
However, the fragmentation of media means that brands now need to think across more channels than ever before, and it is difficult to imagine resources being dedicated to ensure that commercial message are customised for each of the multifarious channels available.
The Electoral Commission used a channel-specific script for its ad on Pandora and, while novel for now, this approach is likely to become more common at a time when online radio audiences are expanding while traditional radio continues to bleed listeners. Should this trend continue at its current rate, it wouldn’t be far-fetched to imagine the roles switched in the near future so that an online radio-specific ad is simply dropped into programming on traditional radio.