by Zachary Lewis (Founder - Liquid Compass)
When I first read an article that your publication ran pertaining to Saga?s decision to run over-the-air commercials in their stream, I immediately thought to myself ? this has the potential to wake a sleeping giant. The question that is now on the table among broadcasters ? ?should I (radio) follow Saga?s lead by no longer adhering to a standard of replacing commercials when broadcasting online, or should I focus my efforts on what we as an industry have done best for the better part of a century? Over-the-air radio.?
After the Denver Broncos won their first (and second) Super Bowl, Mark Cuban made his billions, the dot com bubble burst, and a newer technology picked up steam with audio enthusiasts, broadcasters began a new conversation that was focused on what to do with this new platform ? streaming? The music industry also began a very different conversation at the same time that recognized streaming as a lifeline to help save an industry that was losing billions.
If the radio industry wanted to continue to attract new listenership by building its audience online, a solution must be found quickly to help radio pay for a potentially staggering streaming cost which was (is) largely made up of royalty fees. As a result, ad replacement technology emerged as a viable solution to help the radio industry solve its new problem of an unaccounted for cost to support a growing audience that desired to consume radio through new vehicles, such as streaming.
Early technical requirements of ad replacement (or insertion) software was basic to help solve this problem. Video pre-rolls, player takeovers, and even synchronized banner ads with audio spots were not part of the equation at the time, as the only requirement was to replace a normal stop set with a bank of spots ? which could be anything, PSAs, station promos or hopefully, (paid) advertisements. The objective for streaming vendors supporting the radio industry was also fairly straightforward: integrate ad insertion software to open up online commercial inventory that never existed before as a tool to generate ?new? revenue.
Easy enough, right?
What about other important questions like ?sound?, ?fidelity?, ?sales training and execution?, ?additional technical or broadcaster requirements?, ?is there anything that we?re not thinking of?, ?how?s the fish???!? Unfortunately the response that streaming vendors received from the broadcasting community was very clear, ?I don?t have the time, effort, or energy required to support broadcasting online, to include selling digital inventory. You do it!?
Given that streaming technology was not widely adopted among listeners, and internet-only radio didn?t appear to be a threat (at the time), the prevailing response from broadcasters was actually not all that surprising, and frankly, understandable. However, this response fueled innovation for other players to enter the market that had the experience, know-how and expertise to respond to the loudest of concerns ? ?Cover Our Costs. Make Us Money!? This inspired new businesses to surface that could assist in this capacity such as TargetSpot, Katz360 and others. Unfortunately however, those other ?I wish we would have known to ask? questions went unasked, as the radio industry needed to first find a financial solution to its royalty conundrum.
Fast forward a few years, ad insertion software has evolved into a robust ad serving solution by offering ad options that the advertising community has requested, and to a certain extent, requires for national and local media buys, and has proven itself to be a sound method to generate new streams of revenue. However, for streaming to be effective, and to adequately respond to the unasked questions, it requires involvement ? a lot of involvement ? as streaming has now become a requirement by listeners. They want to have their content available when they want it, and wherever they want it ? at home, in the car, at work, on their desktop computer, phone, etc. ? and it has to be great. Just as great as their favorite local radio station!
It occurs to me that as I?m writing this response, I?ve been listening to one of my favorite stations online, 102.9 The Hog (www.1029thehog.com) out of Milwaukee. Yes, it?s one of Saga?s stations. Yes, it?s a client of Liquid Compass. This affords me a unique perspective into the mindset of Ed Christian, Warren Lada and their views about streaming and the need (or lack of) for ad insertion software. After working closely with Saga?s stations over the years, I have learned many things, one of which is that they are passionate about radio. So much so, that ?getting it right? over the air is their #1 priority. As a result, their stations are successful ? even in a tough economy. Streaming on the other hand is a nice-to-have option (and more specifically, ad insertion software), but it?s not a necessity given their growing concern over increasing royalties.
As we discussed upgrading their ad insertion capabilities both in form and function by providing a crisp, clean streaming and ad insertion experience, it was evident that ad insertion was not a priority. Streaming would be used as a tool to support over-the-air, and when the time was right (if that time comes), they may entertain ad replacement in the future. However, for now, their requirement is that streaming must mimic their over-the-air product ? no questions. That?s what their sales people are selling. That?s what their advertisers are expecting. But?they are not giving up on streaming their stations online, or utilizing ?ad insertion? as a tool to build value for their stations.
It?s important to note that although the term ?ad insertion? is commonly associated with ad replacement, ad insertion is a tool used to insert ads. In Saga?s case, they?re using ad insertion software provided by AdsWizz to support their need for video pre-rolls, player takeovers, and banner ads on their media players ? which are all being used to build value for their overall product, on-air and online. They are also broadening accessibility for their stations to build value for their listeners by enhancing the streaming experience. This is being accomplished by providing the latest HTML5 player technology for both desktop and web-enabled mobile players, and also mobile apps.
I feel strongly that ad insertion software will help advance the radio industry?s need to find new and innovative ways to capture revenue that is shifting online. The technology has reached a level of maturity where it can provide an audio experience that we are all hoping for, but rarely find. This statement, and the overall streaming experience are contingent upon broadcaster?s involvement, and the desire for the platform to succeed.
In Saga?s case, it was a matter of economics, not (from my opinion) the technology. Saga is investing in technology to build value for their stations, listeners and advertisers ? which includes streaming and ad insertion software. Should the radio industry follow Saga?s lead? I don?t think Saga is making the statement, ?this is what the radio industry should do?. They are merely doing what makes sense for their business ? today.
Zackary Lewis is Founder and CEO, Liquid Compass and can be reached at zlewis@liquidcompass.net
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