11/01

Why Simulcasting Ads on Radio Streams is Dumb

Yesterday I talked with a broadcaster who is considering simulcasting their over-the-air stations with their online streams, including ads.

Is this a big middle finger to AFTRA rules which (for now at least) discourage such actions?  You bet it is.

They are not alone.  The radio industry’s dirty little secret is that many broadcasters are matching their on-air content to their streams, including ads, even as their competitors comply with the rules and “play fair.”

So why are they considering this, and why is it the easiest and biggest mistake they will make for their future?

They’re doing it for several reasons.

Mostly they’re doing it because every so often a PPM device comes in contact with a radio stream and causes an ephemeral “blip” in the ratings which is largely explainable by one PPM panelist and one PPM device.  To be sure, the volume of listening to any given radio station’s stream is tiny compared to over-the-air listening.  And while PPM is often criticized for insufficient sample size to measure radio, the measurement of online radio via PPM is an absolute joke (which is why even Arbitron is not proposing that PPM devices be used to measure online listening as part of it’s Total Audience Measurement solution).

So in other words, if you get a “blip” perhaps you can sell a “blip.”  That is, it’s easier to sell snake oil to an advertiser than to add value to that same advertiser. It’s oh so much easier to sell a lie than the truth when the lie is part of your ratings ranker. And if agencies are stupid enough to reward you for that lie, perhaps they deserve what they get.  But do their clients?

Simulcasting programming, including ads, is something that’s common outside the US where AFTRA rules do not apply. But here’s the interesting thing: International broadcasters are beginning to disconnect the streams from the stations and monetize them separately: Different spots, different sellers, different clients, accountable metrics, higher valuations.  They are recognizing the value locked inside that streaming inventory waiting to be released and they are beginning to realize it.  Could it possibly be that American broadcasters would move in the other direction?

Even in the US there are numerous examples of broadcasters, sometimes in smaller markets, earning six-figure premiums off streaming revenue – and not by simulcasting the ads.

This takes commitment and effort and focus, obviously.  It takes a plan. Because providing value to advertisers is hard work, while pulling the wool over the eyes of an agency with a PPM ranker is comparatively easy.

In the short and long run, the value of online radio can only be unlocked by focusing on that asset apart from the over-the-air stations in the portfolio. Simulcasting ads wastes the asset in favor of betting on random action in PPM which has no bearing on true listenership or true value to the advertiser.

As the world of online radio grows and the revenue attached to it follows, stations who pursue the misbegotten path of simulcasting their spots will not only run afoul of AFTRA rules, they will pursue a deliberate strategy to rip off their customers and squander their future.

The opportunity is not to twist online radio into a means of tweaking your PPM numbers.  It’s to build and compete and monetize the burgeoning online radio market independent of PPM.  It is a new market with new competitors and, at least for now, broadcasters have a seat at that table.

There are two choices:  The easy, lazy, short-term one and the one that builds new revenue matched to new content threads in a rising distribution channel from an industry which has been creating and monetizing content for 100 years.

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