What’s The Commercial Frequency For Online Radio?

As we enter 2011, more audio-consumption is to digital platforms than ever before – not just radio listening via platforms such as DAB, but listening to all forms of digital audio including Spotify, We7 and even YouTube.

However, fast-growing digital radio brands that meet audience’s needs such as Absolute 80s, Planet Rock and Jazz FM are at a commercial disadvantage.

The prices that they are able to command in the commercial marketplace, CPTs (cost per thousand), are significantly lower than their analogue stations’ heritage equivalents.

Some of the pureplay digital platforms such as Spotify do manage to achieve higher CPMs (cost per thousand impressions) than radio does CPTs. And I’m fully aware that there are significant differences between the two. CPTs are based on a one-to-many model, whereas online CPMs are based on one-to-one. Online has the ability to geo-locate, particularly in a mobile environment also provides a position of strength.

By choosing to opt in to relevant, targeted advertising, advertisers are reaching a relatively upmarket audience who lean forward rather than leaning backwards. And the technology is
continuing to evolve, with GPS built into more smartphones than ever before, and 4G/LTE networks coming soon with their faster data rates.

However, that doesn’t mean that these are not opportunities that commercial radio can’t use. On-demand audio & live streaming is a massive growth area with more podcasts and listen again opportunities each day. These are consumed via IP and also offer targeting opportunities.

So am I arguing against broadcast platforms? Absolutely not. Digital broadcasting platforms like DAB are very efficient on a one-to-many basis. IP in the UK is not in a position to be able to serve 17m simultaneous listeners at 8am – radio’s peak. And in the mobile world it’s even more problematic, with more and more caps on the amount of mobile data you can use a month.

That’s not to say that digital listening doesn’t have a future. Listening via a digital platform is a premium activity for listeners, and the next step is to prove the value of any increased depth of engagement with digital platform listening. This can be done through testing the interaction with advertising, the depth of positive feeling towards the station, and any distinguishing change in listening patterns.

  • One of the biggest complaints about DAB is that radios are too expensive. Research shows that two thirds of DAB owners are ABC1 compared to just over half of the population. For better or for worse, listening to the radio via a DAB set is an upmarket activity.
  • Listening via the internet is not the same for all stations. While the internet accounts for a under 3% share of listening to All Radio, as well as 3% share of all Commercial Radio
    listening, for Absolute Radio it accounts for over 5%. And digital-only services such as Planet Rock and BBC 6Music also do well. What’s more, the UK Radio Player is soon to launch, further promoting the internet as a convenient and simple way to listen. UK Radio Player will drive online listening as well as opening up compelling content to listeners of both BBC and commercial services.
  • Digital television listening is also set to grow as digital switchover concludes including some very significant marketplaces that have yet to go fully digital, including London.

And we need to remember that these figures are based on RAJAR, which does struggle to measure platforms listening correctly (over 10% of all listening is still not attributed to any platform). This isn’t necessarily RAJAR’s fault, but, as we enter the second decade of the 21st century, the multiplicity of ways to listen to audio becomes ever more complicated and confusing for consumers.

Radio needs to continue to create new business models – a premium product that doesn’t simply replicate the way that radio airtime has been sold since the commercial advent of the medium in the UK in 1973.

Radio must demonstrate to advertisers the capabilities that IP can allow to target listeners. Products like UK Radio Player will offer new ways for commercial clients to reach their target markets, and the future looks increasingly exciting as we enter a new age of digital trading


» Paul Carolan is Absolute Radio’s advertising director.

This article originally appeared in Absolute Radio.