Online radio is starting to take flight. It isn’t soaring, but new WiFi-ready devices are helping to get its feet off the ground. Some advertisers are already taking advantage of the space and more new ways to exploit it are imminent.

Radio, media’s great survivor, has stood the test of time, hanging on through the advent of movies, television and the internet. In fact, ‘the traditional radio medium has been growing its ad revenue base five or six points a year,’ explains Rob Young, SVP of planning and research at Toronto-based PHD Canada. ‘It’s generally been growing faster than most traditional media.’

So, what does the future hold for radio? The consensus appears to be that the medium is on the cusp of significant change. Gurus, like Pirate Radio’s co-founder Terry O’Reilly, see it following the media pack to a more flexible consumer-driven model. ‘I think radio is definitely heading in the digital direction,’ he says.

In the United States, a 2008 study by Arbitron and Edison Media Research showed that online radio is the largest and most developed digital radio platform – compared to satellite radio, HD radio and podcasting – with about 33 million Americans, or 13% of the country’s population over 12 years of age, tuning in on a weekly basis. And large ad networks, like New York-based TargetSpot, have popped up to facilitate online radio advertising for a number of American radio broadcasters with online presence, including CBS Radio, Fox News Radio and AOL Radio. In January, TargetSpot partnered with eight more networks to become the largest internet radio advertising company in the U.S., serving more than 50 broadcast partners and 1,000 internet radio stations.

In Canada, if numbers coming from Toronto-based Corus Entertainment’s streaming audio properties are any indication, online radio is beginning to shine here too. ‘We get about six million hours of tuning to Corus radio streams a month,’ says David Huszar, VP and GM, Corus interactive and integrated solutions. ‘Right now about half of the people that go to a Corus radio website listen to the audio stream.’ Between August and January, the number of monthly connections to streaming audio on Corus radio websites rose from about 3.5 million to 5.7 million. Now, thanks to the Canadian introduction of PPM, online radio listening numbers across the board stand to become more tangible, as the new audience measurement tool has the ability to pick up streaming audio as well as traditional AM/FM signals.

And with metrics, media credibility grows, extending to advertisers beyond the early adopter crowd. The ad opportunities currently available on streaming websites are varied. Options include streaming player dominations, where a brand commands the standard ad units – big box, leaderboard and the like – that wrap within it. Player dominations can also be linked to clickable video and audio pre-rolls before users launch a given stream. According to Julie Howlett, director of sales for Astral iMedia, this choice is popular with national advertisers like Unilever, which targets its Axe brand initiatives to the many different demos covered by Astral Radio’s various niche streams, and looks for opportunities to integrate content.

‘If you look at the Unilever ads for Axe, it’s not necessarily a call to action to participate in anything, but you want more information,’ says Howlett. ‘They really draw the user in with the engagement of their creative and they’re kind of mini video vignettes.’

Over on Corus Radio’s streaming audio players, Subway is an advertiser that has also taken advantage of pre-roll video as part of an integrated campaign. Once launched, a brief vid featuring Subway’s ‘dancing research monkeys’ – who are also featured in the fast food chain’s TV ads – promoting its new breakfast sub runs prior to the stream.

But the digital side of radio has not totally forsaken audio for video. Mobile phone retailer Wireless Wave is an advertiser that’s currently utilizing audio pre-rolls on Corus’ streams. Before the player launches, consumers are presented with a short audio ad, which is accompanied by a fixed big box ad within the player.

This is all on top of the standard display advertising on the site proper, an option that resonates with local advertisers based on the geo-targeting capabilities of DART enabled ads, facilitated by internet advertising solutions company Doubleclick. ‘It’s an ad-serving technology that delivers IAB standard ad units like leaderboards and big boxes,’ explains Huszar, ensuring that consumers in Vancouver who are listening online to a Toronto radio stream are served local ads.

Content integrations are also a means for advertisers to gain value on streaming radio stations. Corus has one such initiative being advertised across its network of new rock stations and their websites. It involves a cross-promotion between HMV and Explore Music, radio personality Alan Cross’ new online and on-air music resource program. HMV is fully integrated into the show and online. Consumers can click on display ads in the streaming players and on the Corus sites that transport them to the show’s online destination.

Both Astral Media Radio and Corus Radio are currently looking into offering advertisers extra value by making their streams more interactive. One example is in-stream ad substitution. It’s a practice that’s commonplace in the U.S., because of rights issues surrounding simulcasting, with ad networks like TargetSpot offering its clients a one-stop-shop to create and target internet radio ads, replacing the ads broadcast on the AM/FM bands. Ad substitution, however, is a little more difficult in Canada. ‘Currently our stream is completely duplicated from the terrestrial version,’ says Howlett. ‘There’s nothing different than if you’re listening from your standard radio, but the opportunity is there for us to have cut-in ads and that’s being explored.’

So the opportunities are there, but how do you attract more listeners? Historically, the medium has restricted consumers to listening over the internet from their computers. O’Reilly sees WiFi-ready devices like the iPhone as being potential catalysts of a possible internet radio groundswell. ‘With WiFi, suddenly you get internet radio stations not just on your computer but walking around, on the bus. That’s going to change everything,’ he says. And indeed, content providers and advertisers are already making forays into this new, uncharted territory.

On Feb. 2, Corus Entertainment launched an iPhone application, developed by streaming infrastructure provider Stream The World, that houses all 52 of its station streams in a one-stop-shop. The app incorporates the iPhone’s GPS capability to sort stations based on a consumer’s location. Following on the heels of similar apps launched in the U.S. by pure-play internet companies like Pandora Radio and AOL Radio – whose app also includes more than 150 CBS Radio terrestrial station streams – it’s the first native iPhone streaming application from a Canadian radio broadcaster.

Corus’ motivation to develop their app was ‘driven by this need that our stations have to be available wherever anybody can possibly listen to them,’ says Huszar. ‘More and more people are listening to radio on things other than FM or AM receivers, so we believe that we need to be conveniently accessible for all of our listeners.’

Stream The World is currently investigating other handsets that could house the app, keeping the soon-to-come Blackberry app store and the new Android Marketplace in mind. What does this means for advertisers? Well, they are getting a little more bang for their radio buck. ‘In a streamed environment, the advertiser is currently taking advantage of that audience with their audio 30-second radio commercial,’ explains Young. ‘They’re not buying that separately.’

In the short time since it launched, the Corus app has already seen a good measure of success. At press time, it was ranked fifth overall in the iTunes app store’s top 25 free applications with over 60,000 downloads and about 10,000 hours of logged tuning, so it’s safe to say that there is a growing audience. Pandora’s iPhone app saw similar success, being the most downloaded application in the U.S. iTunes app store for 2008.

Right now, the Corus app is set up for display ads placed by way of DART tags. ‘On each one of these station pages we have created a DART zone that’s active so that it can be clicked through, so there’s a direct opportunity right on those streaming pages to go through to a client’s website for an offering,’ says Huszar.

But that’s only the beginning. Neil Sweeney, SVP North America at Stream The World, maintains the app will be constantly evolving to incorporate different opportunities for advertisers. They’re looking into short video pre-roll placements, provided that additional data usage costs are not significant. Advertising that harnesses the GPS capabilities of the iPhone is also something that may be just over the horizon for the Corus app, which would allow for more directly targeted ads. The app also integrates with Corus’ radio automation software at the terrestrial level to capture metadata, which includes ‘now playing’ info.

‘Once you have that information you’re able to link off and do a million other things, whether that’s actually tying in ticketing information, concert listings, etc.,’ says Sweeney. Since launching the app, Corus has talked to 20 interested advertisers.

Astral Media Radio has also decided to experiment with the mobile space, getting into the smartphone game back in December by launching their Radio Perez Mobile iPhone app and a web-based version for other smartphones – drawing from the popularity of internet celebrity gossiper Perez Hilton.

The app, which was developed by Astral Media Radio’s Toronto-based syndication company Orbyt Media, leverages the GPS tech in the smartphones to promote affiliated radio stations broadcasting within 30 km of a listener’s location, and includes celebrity gossip audio shorts, RSS headlines from Perezhilton.com and selected photos. It was also designed to allow for national sponsor branding and carries a banner ad at the bottom of the landing page, though no advertisers have jumped on board yet.

Astral is currently working on other application development initiatives revolving around its streaming radio properties to increase its presence in the mobile space. ‘We have some strategies that are going on with certain partners in terms of development and yes, in a short time, we’ll be even more present in the mobile environment,’ says Sylvain Langois, VP and GM of Astral Media Radio Interactive.

The exploration of new platforms on which to extend radio streams stands to benefit advertisers, and new devices like smartphones with WiFi and GPS capabilities allow new ways to further target promotions – advantageous to both national and local advertisers. The key is achieving the critical mass to make these potential advertising avenues more feasible, and consumers’ quick appropriation of new devices certainly stands to help that process steam along.

‘Go back to 2000 and we don’t have satellite, or any real internet stations, or the amount of digital listening devices we have now,’ says O’Reilly. ‘That’s a huge sea change. The marketing thinking just has to catch up. I don’t think there’s been a more exciting time to be in advertising than now.’