Online, Is Radio Ad Revenue Enough?

How do you arrive at a rate for a :30 audio ad campaign on an internet radio station? To be sure, the answer depends if you are a station owner or advertiser! Pandora reported $125 million total revenue (fourth quarter 2013), 81% from ad sales. It has more than enough critical mass to set rates. But what of the thousands of internet radio stations acting as independents? Throw in the radio industry and its additional streams, too. It doesn't matter. What we end up with is a low ad campaign-rate, which no station controls.

"Each of these suggestions requires knowledge of coding, eCommerce, building of a targeted data base, and knowledge of how to use the internet as a marketing vehicle (include social media here)."

Speak in terms of CPM, a $2-$5 price is your standard for audio ads. Pre-rolls are more lucrative, but limited; on-site banners are way lower in rates due to banner saturation.

Staying focused on selling advertising will not help the online radio industry. There's no cavalry coming to lift ad rates to bearable levels.

What will help is generating revenue from advertisers and audience, offering a broader combination of goods and services.

The easiest to create is a merchandising program, where listeners donate to your station while receiving something of value. (Position it like this, as a "donation to the station, and receive....") Public stations have done this for years with great success. Online radio industry stations are perceived in much the same way as "public stations."

Create a "premium class" of commercial - one that delivers more to advertiser and audience than a simple :30 audio clip. I started something like this in 1997, but very few broadcast radio industry execs I spoke to back then had even been online (much less understood the internet's potential).

Get more involved in the sales of your artists' music. Have a featured position for an artist that rotates daily. Offer their music, and take a portion of song sales revenue for the effort.

Aim at soliciting advertisers that generate a bulk of their revenue through online sales. In working with them, the online radio industry can fine-tune code work required to track campaign results. You'll be setting the stage for tomorrow, and greater things.

Create a survey system which allows for querying your audience on behalf of an advertiser. There is revenue in data, and an online radio station - in conjunction with its website - is a fine place to collect it.

Each of these suggestions requires knowledge of coding, eCommerce, building of a targeted data base, and knowledge of how to use the internet as a marketing vehicle (include social media here). Without them the odds of making enough money to run a radio station through selling ads alone are against you.

We opened with a quick look at Pandora but you need to close your eyes to what it represents, and the methods it's using. Big operators like them, Live365, Rdio, Spotify, etc., are not competing for the same campaigns a smaller independent online radio station targets.

As a smaller independent radio station - or even a radio industry station that's running a website and stream - chances of reaching enough people to make a CPM pricing work are slim. If you are building an online station as a business, please keep this in mind.

Now, from the "think positive" desk: There is nothing wrong with operating an online radio station strictly for the enjoyment of being an online radio station. In golf, they are called "weekend duffers." I refer to these great radio folks as "amateur enthusiasts."

No successful professional radio talent got through without being bitten by the radio bug. Running an amateur enthusiast's station is a good way to exercise this passion (like the golfer on a weekend). And in that case it doesn't matter what the ad revenue is - it will always be enough. Plus, you have comfort knowing you are but one of a group that is putting real pressure on the broadcast radio industry - as part of the long tail of audio sources.









Today's indie artist introduction to internet radio is...

Jenny Casey

sample song

Get In Line Download Song Tweet

We listen for songs that evoke emotion; fast, slow, female, male, group, it doesn't matter. When an artist has the power to please, they should be given a chance to be heard.

Give Jenny Casey's "Get In Line" a listen.

Add it to your station playlist, free! Such is the new world of music distribution.

It's time internet radio programmers take a chance and reach into a huge pile of talent.
It is there that new hit songs will increasingly be found.





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