Adotas Q&A with Pat Higbie, CEO and co-founder, XAPPmedia
Q: Why do you believe digital marketing is valuable to the radio industry?
A: Magna Global forecasts that digital advertising will generate more ad revenue in 2016 than any other media category—including television. And a majority of it will be mobile. Between 2016 and 2019, mobile ad spending will nearly double to account for 70.1 percent of digital ad spend and it’s already over 50 percent in the U.S. Ad dollars are flowing quickly to mobile and it represents a big opportunity for radio for two reasons. First, mobile advertising spend will be more than double broadcast radio advertising in 2016. Second, comScore estimates as much as 95 percent of online audio is consumed through mobile devices.
Radio was mobile before “mobile” was born. Starting with the first car radio in 1930 and then through the transistor radio, Sony Walkman, satellite radio and still today with smartphones, radio offers the best content consumption experience for people on the go.
Radio broadcasters are fighting over flat or declining advertising revenue every year. Digital, particularly mobile, represents a new, large and rapidly growing source of advertising dollars available to broadcasters that fully commit to mobile delivery of their content.
Q: Why is digital a “premium asset” for broadcasters and a way to expand audience listening?
A: Inside Radio reported on a Colmar Brunton report that revealed combining broadcast radio with digital streaming can increase advertiser ROI by 23 percent. That is more than a third higher than radio alone. And yet, many broadcasters simply give digital away despite its proven value.
Premium means performance and mobile advertising changes the game for radio by providing interactivity that isn’t available via broadcast. A recent XAPPmedia Interactive Audio Ad campaign for SafeLite on WEEI converted at a rate 20 times higher than the industry average for mobile rich media ads. Remarkable response rates like these generate dramatically higher ROI for advertisers and significantly higher CPM rates for broadcasters.
Q: What do you believe the future role of digital is in radio?
A: Over the past five years, time spent listening to broadcast radio experienced a 7.4 percent decline. During this same period, eMarketer data indicated that Internet radio consumption had quickly risen to about one-third of all radio-style listening. Many of the heaviest audio consumers have migrated online and advertisers are now following them with an estimated $2.75 billion in 2015 ad spending. Radio still has reach, but all of the listening and revenue growth is in mobile. Broadcasters need digital offerings to protect against audience erosion and even more so as an avenue for growth.
Q: How does digital boost overall multimedia marketing results for the radio industry?
A: Digital offers multimedia-marketing options that broadcast radio cannot. It enables audiences to interact with content and promotions because it includes a two-way communication channel. In addition, digital audio streams are delivered to mobile devices and that means there is an opportunity for geo-targeting that is more refined than the reach of a tower’s signal. AutoZone recently ran a XAPP Ad that prompted listeners to say, “Take me to AutoZone,” at the end of the promotion. What happened next? The smartphone automatically pulled up a map with directions to the nearest store. This type of service goes well beyond the 23 percent multimedia ROI cited by Inside Radio. It delivers measurable increases in foot traffic.
When you consider an ad conversion that drives store visits or the ability to drive an app download or product purchase, you can easily understand why interactive audio is capturing CPM rates four to five times higher than other audio ad formats. Digital connectivity enables consumer interactions that are simply not possible with a transmission signal.
Q: Do you believe that by treating digital audio as a “premium asset,” it can reignite radio revenue growth? Can you further discuss your partnership with jacapps and how it helps broadcasters monetize mobile audiences?
A: Yes. Mobile audio can reignite radio revenue growth. However, it requires a change in perspective. Broadcasters have long considered transmission rights as their most valuable asset. The advent of Internet radio has made their formerly captive audiences accessible to everyone around the globe. This shifts the equation so that broadcasters’ most valuable assets are their current audience, knowledge of that audience and programming skill. Digital then becomes the premium channel for reaching, and most importantly, interacting with the audience because of the increased value it delivers to listeners and advertisers.
Hundreds of broadcasters have already taken their audio content online via jacapps because they recognize this opportunity. XAPPmedia’s partnership with jacapps enables radio stations to monetize their mobile apps with voice-activated XAPP Ads, which are driving 20 times greater conversion rates and five times higher CPM than other mobile ad formats. Audio apps are not visible on the screen 80 percent of the time. That means most of the time touch interaction rates approach zero, 0.01 percent. Voice interaction doesn’t face this limitation. XAPP Ads are routinely generating 4 to 6 percent conversion rates. And, it is all measurable so broadcasters can show advertisers the precise impact of a campaign.