Can Radio beat Spotify at its own Game?

SCA’s Brian Gallagher certainly thinks so.

Radio has, since the 1960’s always shared ear time with owned music via a succession of innovations. At home we saw the gramophone develop into the Hi-Fi and now the smart speaker while the car graduated from the 8-Track to the CD stacker and the iPod. Spotify is the most technologically advanced of these yet, allowing users a convenient means of accessing millions of tracks stored in the cloud. 

While research study after study shows that none of that has put much of a dent into radio’s share of ear, Spotify and similar services are able now to compete with radio for advertising dollars – something your iPod couldn’t do. As an “IP delivered” media platform, Spotify has the ability to provide data on every individual user and accept programatic advertising that targets those individuals based on their known interests and buying habits. 

Ostensibly this level of data and control of placement is unprecedented in media buying and is a seductive argument for advertisers.

SCA’s Chief Sales Officer Brian Gallagher (left) is not convinced: “When you hear someone (an ad buyer) say, I need more data, I think, consider for a second what you’re doing in the digital space and how you’re spending your clients’ money where you don’t have visibility and transparency. You’re accepting high levels of ad fraud and the metrics around  what constitutes a delivered ad is two pixels for X amount of seconds – it’s crazy. Whereas what we’re still delivering, even through the diary system in radio, is transparent, accountable media practice.”

That’s not to say that IP doesn’t offer pinpoint targeting and measurement if used properly. What’s more, it can also help verify broadcast radio’s efficacy. 

Says Mr Gallagher, “It’s interesting that now that we’ve got such high levels of IP delivered audio listening through our apps and online, we can track on any given day, the shape of the day compared to what GfK says the shape of the day is. There’s no difference! So, I’m satisfied that when we talk about a 20 x30 sec package that’s delivering X amount of reach across the day on broadcast radio, that we’re actually delivering something I can put my hand on my heart and say, yes, you’re getting it.”

For the moment, though, Spotify offers advertisers a means of ‘in-stream’ placement that radio can’t. 

Mr Gallagher agrees, “Agencies want to incorporate audio product into their programatic buying systems and do it quickly. As an industry, we (radio) are not delivering them enough inventory fast enough in the way that they want to bring it in.”

Things are about to change.

“Over the course of the next year or so, we will be ready to go in and compete head to head for that revenue. We’ll be ready to do proper in-stream advertising placement.”

Here’s how it will work.

Mr Gallagher explains: “Right now there’s people listening to Triple M in Sydney on an app. And the ad feed they’re getting, listening to The Grill Team, is whatever’s going to air on the broadcast service. When we go to ‘instream’ advertising, all the people listening to ‘broadcast’ radio will get that ‘broadcast’ ad break. But all the people listening via the app will get a feed of ads targeted towards them (individually). So the data that’s being generated in their eco-system will be reflected in the advertising that they hear.

“So, that’s coming but we have to do a bunch of things to be ready for that,” Says Mr Gallagher. 

One of the major challenges is that the playout system needs to be re-engineered so that when it goes to a regular ad break for broadcast radio, it also ‘tells’ a separate ad server, to play the required mix of ads to those individual listeners who are listening via apps or online.

SCA uses RCS’ most advanced playout system, Zetta, across all its metro stations and is currently rolling out to their regional stations. 

RCS Vice President Asia Pacific, Keith Williams (left) has no doubt that his products are up to the task. “We will provide SCA’s online stream listeners with a tailored and customised experience,” he says. “Zetta, as the world’s most advanced playout system, provides the capability to easily split commercial and programming content across not just terrestrial radio, but with a powerful API and export options, it also provides the tools to interface with streaming providers for in-stream content injection.”

Once all this is implemented, it should put radio on an equal footing with Spotify and other IP delivered audio, as far as advertisers are concerned. But before we get carried away, Mr Gallagher predicts that in three years time only about five per cent of SCA’s output will be available for programatic ad placement because only about five percent of content is delivered through apps and online.

In the meantime, broadcast radio remains in rude health. It would seem that if Spotify and such are luring advertisers away from other media, it’s not from radio. 

Despite the enormous disruption and fragmentation brought on by new media, radio revenue has continued to grow year on year over the last decade. Moreover, radio continues to maintain about the same share (currently 7.5%) of available advertising dollars that it has for at least the last 30 years.

If radio can grow its revenue by five per cent by bringing its digital outlets up to speed with automation and programatic, there’d surely be happy days ahead.

Peter Saxon