With advertisers shifting from buying media in silos in favor of building out unified media planning and buying platforms that combine all of their media inputs together, media companies have followed suit. Speaking to investors at this week’s annual J.P. Morgan Global Technology, Media, and Communications Conference, iHeartMedia Chairman and CEO Bob Pittman said they are starting to see a payoff in investments made to construct a unified ad platform. “It's already beginning and it happens in stages and pieces,” he said.
To illustrate its success, Pittman compared the company’s revenue performance in the 2020 COVID ad downturn to that of first quarter 2023. “If you want some evidence of how that's helping us, our broadcast radio Multiplatform Group in the 2020 downturn was down 30%. In the first quarter it was down 7%.” Pittman noted the difference between iHeart’s ad performance and that of the big digital platform companies “was enormous in 2020 and very small in Q1. And I think that's an indication of the success.”
The more iHeart can make buying its broadcast inventory like digital inventory, the better off it will be to take advantage of the company’s scale and reach, Pittman said.
Digital revenues comprise 28% to 29% of iHeart’s revenue stream, President and COO Rich Bressler told the investor crowd. As evidence of how rapidly its Digital Audio Group has grown, Bressler said it accounted for just 7%-8% of revenue three to four years ago. He offered this as evidence that the company’s strategy is working. “Those are some proof points that we are reaching advertisers in the way they want to be reached,” Bressler said.
As some are asking whether podcast’s growth as a medium is beginning to slow because of maturation, Pittman thinks just the opposite is true in 2023. “To the contrary, podcasting has been the best performer of all media, and I don't see that slowing,” he said. “Everything's been compressed down as a result of the ad downturn, but nothing other than that seems to be affecting podcasting,” Pittman said. “You continue to see the audience grow, the interest grow, and the usage grow. Today there are more people listening to podcast than are watching or even subscribing to Netflix on a weekly basis.”
Meanwhile, the company’s Multiplatform Group, made up of 860 radio stations and assorted networks, reaches 90% of the U.S., Pittman said, with minimal audience overlap with its growing podcasting business. “Our podcasting provides fresh customers,” Pittman said. “So if we can deliver that reach at a better price than they're getting elsewhere, that's the double win for the advertisers. And I think they're all moving in that direction in one form or another.”
Asked what the company sees on the horizon over the next 12-24 months, Pittman answered, “Recovery, recovery, recovery! We suffer on the way down because so much of our business, almost all of it, is ad-supported. And we have leverage. On the way up, both of those turn into assets for us. So we are looking forward to the recovery and obviously preparing for it, and building the leanest organization we can to take full advantage of that increased revenue.”
By this time next year, iHeart and other media companies will be benefitting from robust political ad spend. In the 2022 mid-term elections, iHeart booked $170 million in political ad revenue, a record high for the company.
One area the company is investing in is artificial intelligence, which Pitman said they see as a way to trade off the tedious tasks like music scheduling on their radio stations to computers while leaving more strategic decisions to their employees. Since it began doing that, its radio stations have seen ratings jump 10% to 15% while costs have come down, Pittman said. “We see the opportunity to use the technology to have a tremendous benefit to this company over both the short and long haul,” Pittman said.