Moving Radio Advertisers to the Online Space
By Greg Cynaumon, Ph.D.
Partner: ROI Media Direct – 858-412-1400
This is Part 1 in a series of articles by Dr. Greg Cynaumon discussing how utilizing radio personalities in online advertising is destined to be a significant growth industry in 2010 – 2011.
Let’s take a look at the offline and online landscape Art. Once a mainstay of both local and national advertisers, today radio advertising is financially out of reach for most businesses. Additionally, radio related stocks are at an all-time low as owners and operators watch advertising revenue siphon to online. Subsequently, for the first time, Internet advertising has eclipsed radio. In 2007, U.S. businesses spent approximately $25.5 billion on Internet advertising ($653.9 billion worldwide) while $18.6 billion was spent in radio.4 This gap is widening quickly while radio station operators desperately search for innovative ways to expand and monetize their online reach.
There are roughly 12,500 U.S. radio stations, 700 Canadian stations, and 250+ XM and Sirius Satellite channels2. Most stations feature between 3 and 8 on-air personalities through a combination of both nationally syndicated (Rush Limbaugh, Dr. Laura, Dan Patrick, etc.) along with local personalities. In total, there are approximately 67,000 local and national radio personalities – each of whom carries significant star power and credibility among their audiences. Each on-air personality’s ability to augment an advertiser’s brand affinity and profitability is evidenced by the premium rates and talent fees stations charge for a personality’s tacit or direct endorsement.
Of the total on air advertisers, personality read ads account for less than 30%. This under-utilization of on-air assets is justified by the belief that over-utilization of any given personality risks credibility. Thus, a station’s ability to leverage the revenue-generating power of on-air personalities is severely limited to a small fraction of total available advertisers and only on that station.
From the inception of online advertising, radio stations have been delinquent in recognizing its value. Evidence is seen in the fact that stations routinely devalue the strength of their own websites by offering banners to advertisers as a “value ad”. Instead, radio has focused its attention on limited mechanisms such as (a) online streaming radio featuring radio ads, and (b) banners on each station’s website. KEY: Radio has yet to develop online revenue models utilizing the power of their on-air personalities outside of a station’s own website or occasional outdoor station promotions. ROI VoiceStars 360º will become the first aggregator of both national and local radio personalities for the purpose of serving this revenue-generating asset to regional and national ONLINE and OUTDOOR advertisers.
