Radio Redux: Apple Takes iTunes Radio Local, Targets Competition

The audio channel remains under-appreciated by advertisers and probably under-utilized on mobile platforms. Sure, Pandora and Spotify are booming relative to their small starts. To some limited degree, podcast advertising got a refresh with mobility. But all of these gains are still slivers in overall advertiser attention and spend compared to time spent with mobile audio and the sheer impact the medium can have.

That may change, as the downloadable music category begins stalling and the scramble is on to capitalize on alternative revenue channels for a platform that no one denies is central to many consumers’ media habits. While Apple’s recent acquisition of Beats focused on subscription audio services, the free stream is where the real action may be, especially as in-car audio kicks in. Apple gets it. Its iTunes Radio advertising team will be cultivating local markets in coming months, according to a report at The Information (via Apple Insider). While the initial rollout of iTunes Radio advertising focused on big national brands and high-priced deals, Apple will turn on local targeting later this year as well as integrate iTunes “house ads.”

The local targeting piece is directed precisely at Pandora’s business, which has been effectively recruiting local businesses into its internet radio advertising for years. The Information reports that Apple is also cultivating relationships with local radio stations in order to help penetrate local markets.

To that end, Apple is bringing 42 local NPR stations onto the iTunes Radio platform, according to a report from 9to5Mac. Anchor NPR outlets in major markets like New York Public Radio, WAMU in Washington, D.C. and KQED in San Francisco will be among the fleet offered in the Apple service.

On a less local note, Apple will also add programming from ESPN to its mix, including signature properties like SportsCenter All Night and Mike & Mike.

In both the Beats acquisition and the expansion of iTunes Radio advertising into local markets, Apple clearly is responding to a dip in digital downloads for its core iTunes business. It appears to be trying to build an ecosystem where the free stream not only generates revenue through advertising but also helps merchandise the paid download and now subscription services it offers. Which is to say that Apple is behaving more an more like a traditional media company, looking for synergies among its multiple revenue streams and using larger portions of its own ad inventory to move people around its channels.

Within the mobile channel, audio advertising really should get more attention than it does. The format avoids many of the pitfalls of other digital formats. It is not skippable or easily ignored. It works very well with frequency and is eminently memorable when well executed. And because an ad can linger in the Internet radio interface long after it is heard, the user can act on the ad at her convenience.

We are exploring the role and evolution of digital audio advertising at the July 22 OMMA Premium Display show in Los Angeles: “Radio Revenge: How Should Marketers Ride The Digital Audio Stream?”

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