The Reality of Radio Revenue Online

Everywhere you look you read about the growth of audio streaming. It's an assertion which includes all forms of audio streaming: radio, podcasts, song downloads, etc.

For the most part you can bet revenue is flowing to the major players in this space, with a trickle picked up by a few of the thousands of small brands. Most all are losing money.

Let's not confuse "revenue" with profits. The latter is still elusive for nearly everyone, for a reason - an insane insistence that online radio advertising must use CPM pricing.

We have "pre-rolls" and "geo-targeting" which command higher CPM in online audio. Though, the hard truth is that radio CPM is undercut by thousands of web sites and online ad networks.

Think of your tens-of-thousands of competitors tripping over themselves in the audio arena. Name one that offers advertisers a cost-per-action or cost-per-click ad pricing. My guess is you can't without saying something like Pandora ("Response Tracking").

I've never read in a radio publication about a radio company offering advertisers post-campaign analysis of its online ads. Pandora does, along with hundreds of other ad neteworks. Through analytics, calculate a "Revenue per 1000 impressions (RPM) [which] represents the estimated earnings you'd accrue for every 1000 impressions you receive."

And here's one more important online ad revenue item that goes unspoken in radio, analytics. The word "metrics" may appear but, like other tech words used by radio (example: "digital"), its definition is not similar to the term as used by tech companies.

For online radio, outside of the biggest players, there is no way to make sustainable profit using a CPM pricing.
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Due to an overabundance of online avails - audio, banner or search - you cannot run enough commercials to pay expenses at current CPMs.

Operators of online radio stations need to become familiar with leveraging a CPA/CPC campaign.

Ad copy design with mid-campaign adjustments, landing page design and improvement, and post-campaign analysis with clients (to show how they can improve their next campaign) are all offered by advanced tech ad companies. We see how the volume of dollars are flowing in their direction. (View what Google is doing with Cost-per-Click.)

Online radio should start with simple A/B ad testing on a CPC campaign. Learning how to improve your advertiser's response in this environment will put you shoulders above any station offering CPM. Let the other online stations stick to "we'll run your commercials for $x CPM/per month."

Advertisers are being shown the advantages of CPC and CPA, mid-campaign adjustments, and post campaign analysis.

In this changing advertising market, delivering action and analysis is where you want to be. It's where the hockey puck is going. It is the only way you will generate revenue from radio, online.

Friday February 6, 2015      eMail to a Friend

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