The hits keep on coming

Radio has stared down every competitor it has faced, but will changing consumer habits finally force it to blink?

In today’s fast-paced, digitally-driven market, a “traditional” medium like radio can get a bad rap.

In fact, Sherry O’Neil, partner at Cairns Oneil Strategic Media and former exec with Astral Radio, says that radio has a PR problem.
“In a number of presentations to retail clients, if we recommend radio, they look confused and say, ‘does radio still work?’” she says. “It’s what people believe. If they believe it, it’s a problem.”

But many advertisers and media buyers, including O’Neil, still say radio is an effective tool in their kits, and they are putting their money where their mouths are, spending just over $1.5 billion in Canada ($1.3 billion in local markets) per year since 2010, according to data from Rob Young, PHD’s SVP director of insights and analytics. Even as the internet’s share of ad spend mushroomed to 25% in 2012 from 3% in 2003 and print’s share shrunk, radio remained consistent at around 13% for the past 10 years.

Other key indicators paint a positive picture for the medium. Radio dominates in-car listening, with close to two-thirds of Canadians tuning in on the road, according to “Radio Engagement in Canada,” a survey by Vision Critical for the Canadian Association of Broadcasters. That creates a captive audience of commuters, with 58% saying they usually pay close attention to radio as they drive. Two-thirds of people who use the internet say they at least sometimes listen to radio while on the web, creating opportunities for the medium to incite online searches for a product or service.

But perhaps radio’s greatest strength is its ability to reach a local audience with relevant information, industry experts say.

“Radio is not just an audio service,” says Alicia Olson-Keating, senior director, research, at Bell Media. “The key drivers that continue to make it successful in today’s mediascape are the fact that it is local and needed for community information, news, traffic and sports.”

Radio has proven a resilient medium, surviving everything that was supposed to kill it – video, CDs, satellite and, so far, digital. Listening has decreased marginally in the past 10 years, says David McDonald, VP, director, radio investments at IPG Mediabrands – but there have not been the casualties suffered by other legacy media at the hands of online intruders.

However, a shift may be on the horizon. The internet has wrought a flock of music streaming services that are increasingly playing in radio’s space, altering the audio landscape and demanding the legacy media prove its relevance once more.

Platforms such as Rdio and Deezer, which started as subscription services offering unlimited music, have begun introducing ad-supported, free listening options. Songza is partnering with advertisers to bring branded, context-relevant musical “situations” such as “Sleep Serenity” by Febreze, to consumers. These services are not yet easily available in vehicles (see sidebar below) but data networks are fast enough to support streaming. While Rdio and Songza spokespersons say their services don’t compete directly with radio, they fight for the same share of consumer attention.

Radio vets such as Scott Broderick, VP of marketing for Newcap Radio, Derek Berghuis, executive VP radio sales at Rogers Media and Dean Rutherford, VP and GM of Bell Media radio sales, say they don’t feel threatened by the new services. Their product is also available across multiple platforms, is free, has lower ad avoidance than TV and features personalities that, according to the Vision Critical study, people feel a personal connection with.

Further, some listeners are shifting online but remaining loyal to their stations. According to the CRTC, 20% of Canadians streamed the signal of an AM or FM station over the internet in 2012.

However, broadcasters recognize a transformation is coming and are looking for ways to deliver better value with the medium, including integrating digital and other platforms.

“Radio is no longer just competing with radio,” says David Corey, VP, English radio programming at Bell Media. “There are many other options out there so it is important for us to be the best that we can be.”

Bell Media says it is aiming to create a predictive model that will benchmark the ROI radio adds to its clients’ investments. Two years ago, it launched an on-demand music player for the younger-targeted Virgin Radio in Toronto and NRJ network in Quebec, as well as mobile apps for its stations on Android and iOS.

The company says it uses its digital assets as extensions of its on-air offer and vice versa, recognizing that its digital audience is generally the same one listening on the AM/FM dial.

14_MD&M interview LightsThe broadcaster has also invested in a national brand partnership division dedicated to radio. One campaign that integrated radio with online and social was a partnering of Pepsi and Virgin Radio in Toronto, for the beverage co’s Pepsi Taste Challenge. The companies launched a pop-up store in downtown Toronto, with the station creating an extensive promotional campaign, resulting in nearly 100,000 followers on Virgin’s social channels and 7.6 million PR impressions.

Rogers Media revamped its structure in the spring to offer an integrated ad approach to clients, grouping radio sales people with those in TV, print and digital and having them report to media agency team leads. At the local level, when planning an AM/FM drive campaign, the sales reps look for opportunities to integrate digital, Berghuis says.

The CBC has also openly embraced digital, the “Beetle Road Trip Sessions” being a prime example. For the campaign with Volkswagen in May and June, CBC radio personality Grant Lawrence travelled across Canada in a Beetle Fender Edition car to meet Canadian musicians and generate exclusive content for CBCMusic.ca that was spread across CBC’s social channels. Radio was used to cover the road trip and push to the web and a Volkswagen-branded page. That included mentioning content from the trip 270 times on Radio 3, which broadcasts online and via satellite, and recording songs for the Radio 3 podcast on the road trip. Lawrence was interviewed about the trip 13 times on Radio 1.

The campaign resulted in 17,500 views between CBCmusic.ca and YouTube as of Sept. 25, as well as 1,700 tweets, 1,400 Facebook interactions and 3,400 likes on Instagram.

Chris Boyce, executive director, radio and audio, CBC English Services and a 20-year radio vet, agrees with his colleagues that radio will remain an attractive medium for advertisers. But the CBC isn’t waiting around for music streaming services to start stealing share. The company launched its own radio/pure-play streaming platform, CBC Music, in 2012, to prepare for the increased opps. It streams networks Radio 2, Radio 3 and CBC Music: Sonica, as well as 47 streams devoted to different genres.

The Canadian digital music market is still in its infancy and while the technology is available to target ads on streaming services, the scale is not there as yet. According to the Vision Critical study, just 4% of Canadians listen to internet radio on a daily basis. But you only have to look to the U.S., Boyce says, where according to the study, web-music giant Pandora is heard by 26% of Americans ages 18 and older, to see the potential for these services. Though licensing hurdles have kept Pandora and rival Spotify from entering Canada, Apple is expected to bring in its iTunes Radio service eventually, as is Google with its Google Play Music All Access service. Microsoft’s Xbox Music subscription service is already available in Canada and recently added free streaming on the web and released iOS and Android versions.

Boyce says he expects the Canadian digital music market to catch up to the U.S. in the next 18 months.

“If it’s happening [in the U.S.], it’s going to happen here eventually,” he says. “It’s not a question of if, but when, and for us it’s about being positioned for when it happens.

“People are going to continue to listen to radio in the future but how they listen to it is going to change,” he adds. “If I was an advertiser, I’d look at how consumption has changed in the states and is likely to change in Canada.

“I think there are huge opportunities for smart advertisers who can get in early [with digital audio] and probably reach different audiences more efficiently than with broadcast.”

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New kids on the audio block

CBC MUSIC

Launched in Canada: February 2012.
Cost: Free
Ad opps: Its web version includes pre-roll video while the app has display, as well as mid-roll audio, playing an ad every 20 minutes.
Reach: There are more than one million visits to the desktop version per month and more than 170k visits on the mobile app.

SONGZA

Launched in Canada: August 2012.
Cost: Free. Ad-free version Club Songza costs 99 cents per week.
Ad opps: Sells display ads, pre-roll video as well as native ads it says pair a brand’s products with a person’s occasion – from lounging by the pool to boosting their energy. Its users are offered curated playlists, which can be sponsored by brands. For instance, someone getting ready for bed could choose “sleeping soundly” by Febreze to listen to the sounds of a rainfall, a mountain stream or acoustic singer-songwriters. They are also exposed to a web page featuring a Febreze wrap and banner ad promoting new scents for the bedroom, as well as 15-second pre-roll. Its CEO, Elias Roman, says the company is working on a platform to deliver news and information and is open to partnering with a broadcaster.
Reach: Monthly active users are in the seven figures, according to Roman.

RDIO

Launched in Canada: August 2010. Introduced a free streaming option for mobile, called Stations, in October, which offers unlimited access to music.
Cost: $9.99 for unlimited web and mobile access.
Ad opps: Its mobile version is ad-free for now, while its web version features ads, through a partnership struck with U.S. radio operator Cumulus Media. It currently has no advertising partners in Canada. It has partnered with Facebook, Shazam and Twitter, the latter for its #Twittermusic platform, which allows users to discover artists and songs that people are tweeting about, then listen to the song in its entirety with Rdio’s premium account.
Reach: The service does not disclose its user numbers but says Canada is one of its top performing countries.

iTUNES RADIO

Launched in Canada: Predicted for 2014.
Cost: Free. iTunes Match subscribers, who pay $24.99 a month, can skip the ads.
Ad opps: Apple released iRadio in the U.S. with its iOS7 mobile operating system in September. Through iAd, it offers in-line video, pre-buffered audio, interactive display and targeting. It is attracting blue-chip advertisers such as McDonald’s and Nissan. People who hear a song they like can click to purchase it right away.
Reach: Apple says it immediately attracted more than 11 million unique listeners within a week of launch.

GOOGLE PLAY MUSIC ALL ACCESS

Launched in Canada: No date has been set though it just entered Mexico in October.
Cost: $9.99 subscription service.
Ad opps: Google’s service is ad-free and allows subscribers to both search for music and build custom radio playlists based around songs they like. Music is synced across devices and can be stored offline using the Google Play Music app.

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Bumpy road ahead?

The car has long been radio’s domain and also its bread and butter (up to 53% of listening happens in the car, according to Bell Media). But the introduction of Wi-Fi-enabled autos in Canada in 2014 may change that. Rogers announced in September it is partnering with U.S.-based Sprint Corp. to introduce “connected car” technology, using the Sprint Velocity program. It includes an interactive touch-screen dashboard with customized content, including news, sports scores, weather alerts and driving directions.

It’s not clear if the service will be capable of streaming high-quality music content at a reasonable cost at first (that’s up to automakers, Rogers says). But elsewhere in the world, including the U.S., players such as Pandora, Spotify and Slacker Radio have partnered with automakers to introduce online streaming music in cars.

Of course, radio has the advantage of being free and it already survived satellite radio’s entry to the auto market. But it’s just one more thing for traditional broadcasters to be prepared for.

“This is something we have spent a lot of time looking at over the last year or so,” says Chris Boyce, executive director, radio and audio, CBC English Services. “You can debate when the moment will be, but it’s coming.”