Streaming my be the future for distributing music, but radio is still a big player in making hits. While so much about how music radio works seems dated, the fact is that people still listen, and advertisers still support it. Surprisingly, that’s not so much the case with online radio, and it all revolves around the data.
While everyone is up in arms about the safety of their data and privacy issues these days, the fact of the matter is at least some of it is important when it comes to advertiser-supported services, of which radio is one, as is the free tier of many streaming sites. Terrestrial radio has long figured out how to measure who’s listening and for how long so its advertisers can target specific genders and age demographics. The way this has been done is through either a paper or electronic diary system, or the system used by rating agencies like Nielsen called the Personal People Meter. The PPM collects inaudible tones emitted by the radio stations that participants are listening to that allow the ratings agency to determine who was listening to which station when. The problem is that something similar hasn’t been happening with internet radio.
With online radio the station collects the number of streams from its server logs, but that gives it little of the demographic info that advertisers want. That total number of collections is of no use to an advertiser as it wants more specific information before it pays for a ad spot. Yes, there are stats that can be collected, like unique listeners, number of listening sessions, average number of listeners, average time spent, geolocation (country, state/province, city), the type of device used, but that’s only part of the picture and not complete enough for a high-quality ad spend. The measurement is devices, not people.
Online radio stations are now resorting to cookies like the streaming services do in order to learn about their listener’s age, gender, and preferences, and Apple and Android smartphones been using ad IDs that are unique to each user. These still have to be checked against a listener’s profile with of third-party data provider to provide age and gender data to advertisers.
The big picture here is that as radio begins to move more and more online, it’s influence will continue to decrease without advertiser support, and that won’t happen unless it solves its data collection problem.