The Radio and Webcasting Market
Advertisers consider radio the single most effective and cost-efficient advertising medium. It's everywhere -- in virtually every car, home, and office. It reaches listeners in multiple locations throughout the day. And since it holds on to listeners for hours at a time, it can deliver a message over and over for maximum effect.
Although heavy Internet users listen to the radio somewhat less often than their less-wired peers, radio and the Internet actually go hand-in-hand. More Americans listen to the radio while they web-surf than listen to recorded music, talk on the phone, or watch TV. And industry experts say people who listen to talk/personality, news, and news/talk radio are highly likely to shop online.
Market Statistics and Trends
Radio is a significant medium for building Internet brands and driving traffic to web sites: nearly three in 10 people online have visited a web site as a direct result of hearing a radio commercial.
Just as importantly, the Internet is helping radio stations expand their audiences far beyond their broadcast range:
- The number of people online who listened to radio via the Internet grew from 18 percent to 30 percent in 1999.
- 35 percent of people online have listened to their favorite radio station online.
- Online radio listeners are actually more likely to listen to stations outside their local market (53%) than within their local area (44%).
- Radio listeners are hugely interested in seeing new "value-added" content on their favorite stations' web sites.
- An estimated 11 million people -- an audience 1 million people larger than the current Los Angeles metro market -- have listened to radio online in the last month, and 4 million people, the equivalent of the Philadelphia market, have listened to online radio in the last week.
Online radio listeners are predominantly male (58 percent) and between the ages of 25 and 44 (41 percent).
Talk shows attract 49 percent of all webcasting listeners. In the first webcasting ratings survey, conducted in October 1999, nine of the top 25 online radio stations were devoted to talk programming.
"Streamies," people who watch or listen to Internet audio and video, represent 43 percent of web users and 24 percent of all Americans. They are the most savvy online users -- spending almost twice as much time online than the average person -- as well as the most likely to make online purchases.
Industry Issues and Growth Projections
By 2005, nearly 60 percent of American adults are projected to be online; 80 percent of them will use entertainment sites. However, by 2003, only 15.3 million homes in the United States will have the broadband access necessary to take full advantage of streaming audio and video. The vast majority of Internet users are either sticking with their 56k modems or are not yet able to subscribe to DSL or cable modem services. In addition, accessing streaming media is, as yet, much more difficult than simply turning on a TV or radio: no single multimedia platform has yet emerged as the delivery method of choice, and 20 percent of video and audio streaming attempts fail. In effect, these limitations are constraining the development of the streaming media market.
Internet streaming media, also known as webcasting, is a largely untapped advertising market. Only one in five advertising agencies that place ads online have purchased webcast ads, and half of all ad agencies have never been approached by webcasters trying to sell time -- this despite the fact that Internet users each spent an estimated $650 shopping online in the last year, and "streamies," who are most likely to make purchases online, spent considerably more than that. Additionally, the amount people spent online was not correlated with the size of the Arbitron market they lived in, but smaller markets were essentially ignored.
Industry analysts have found that people with Internet access spend less time listening to the radio than people who aren't online -- a full 90 minutes a week less. Converting these people to listeners by providing them with value-added online features as a complement to on-air broadcasting will, consequently, be one way a station can improve its ratings.
Spending Estimates
The radio industry's advertising revenue has experienced steady growth over the last decade -- in 1998, for example, ad revenues for radio climbed 13 percent to $15.4 billion, up from $13.6 billion in 1997. The most recent figures show revenues climbing 21 percent in the first quarter of 2000.
The market for streaming video -- approximately $635.8 million in 1999 - is expected to grow to $1.2 billion by the end of 2000.
More than two out of three advertising agencies currently purchasing webcast time expect to increase their webcasting budget this year. Of agencies not currently placing webcast ads, more than half expect to do so this year. Senior advertising executives agree that webcasting will get a significantly larger chunk of their placement dollars in the next three years.
