The portion of AM/FM radio listening taking place online hit 10% for the first time last month amidst disruptions to media consumption caused by shelter-in-place orders from the COVID-19 pandemic. While the percentage has been slowly creeping up for the last six years, most AM/FM listening takes place over the air, making streaming a major growth opportunity for broadcasters to maintain existing audiences and attract new, younger listeners.
“Audio habits are changing with so much at-home time now,” says BIA Managing Director Rick Ducey. “Audiences are spending more time on streaming and podcasting in ways they haven’t when at work in pre-pandemic times. These new audio habits are likely to take root and grow over time.”
In addition to traditional AM/FM radios, the at-home audio environment features an array of tech including smart speakers, mobile phones, tablets, PCs and smart TVs. These devices create new listening opportunities for broadcasters who promote their online streams and digital-only content.
“Stations that have been lax on streaming their programming are more or less saying they don't want to participate in the future,” says Gordon Borrell, CEO of Borrell Associates. “The slackers seem to be in the minority, though. So many stations are forward thinking with their streams, which is great. But I'm worried they'll stop there and not be aggressive enough in going beyond just a high-quality stream of their station programming.”
Borrell believes the conversion of broadcast listening to streaming won't be a one-for-one proposition. To be successful, he says, “the programming will need to be different and the business model will need to be different.”
Ducey envisions a lasting post-COVID effect of more radio station audience engagement via digital platforms. “Once these habits are set, it’ll be hard for consumers to shake the new habits off,” he postulates.
Jim Howard, CEO at Marketron, sees digital as the future of radio. While linear broadcast still accounts for the vast majority of AM/FM consumption, it’s only one component of the broader cross-media campaigns that advertisers are seeking out. “Across our customer base we’re seeing the broadcasters getting in tune with that idea and building up their digital revenue,” Howard says. While some stations and groups restrict their sales efforts to their own digital properties, others have rapidly grown to where 30%-40% of their total revenue now comes from digital. “The opportunity is huge,” Howard says, when you consider that digital ad revenues are seven times larger than radio’s.
BIA’s forecast anticipates growth in broadcast radio’s online audience. “The ability of local radio group operators to monetize these digital audiences is growing,” says Ducey. “Overall, we’re seeing slow declines in over-the-air and increased online sales that keep radio’s topline relatively flat.”
Radio companies that have built out their digital portfolios are cranking out more on-demand content than ever before. That’s paying off now as changes in media consumption well underway before the outbreak began have accelerated. “Consumption habits are changing and advertisers are thinking differently today,” Howard says. “They probably will never go back to the old way of thinking. Advertisers are rethinking how they reach these audiences.”
That’s speeding up the shift from single-thread linear ad products to cross-media campaigns that include broadcast, streaming, third party digital and other tactics. “The name of the game is multi-touch,” Howard contends. “Advertisers want cross-media campaigns that reach the buyer across multiple touchpoints.”
As consumers move through the purchase funnel from awareness to consideration to purchase, rarely is there a single touchpoint that is solely responsible for the sale. With more and more advertisers seeking out multi-touch and multi-tactic campaigns, broadcasters that offer them are best positioned to succeed in today’s evolving marketplace, Howard says.
Ducey sees a similar pivot on the horizon. “Radio sellers who see and respond to the audience and advertiser acceleration to digital audio with new formats, content and appeal to different demo groups are in line for better than average performances,” he says.