• by Gavin O'Malley  @mp_gavin, January 17, 2005

Americans do not listen to Internet radio as often as they surf the Web or tune in to traditional radio, but signs point to an increasing interest on the part of marketers and analysts.

Consider that tomorrow, the American Marketing Association plans to go live with the first segment of a new weekly Web radio show, Marketing Matters LIVE!, hosted by Tim Riesterer, an industry veteran and principal partner for Customer Message Management.

The show will be Webcast on wsRadio.com, which also streams eBay radio. wsRadio.com's site is supported by companies like Monster.com and WeatherBug.com. Marketing firms including Avitage!, iCentera, and the SAVO group are sponsoring the show, which wsRadio.com will archive and offer free for future use.

Listeners who tune in will not only hear interviews with AMA insiders like Nancy Costopulos, director of marketing and sales, but insights on the future of Internet radio itself.

"There are plenty of questions our listeners are asking, and will want answered about Web radio," said Larry Albus, business director of the AMA, and the man behind Marketing Matters LIVE!. Albus ran down the list: "Is the market worth advertisers' time and money, yet? Are the promises being made about Wed radio's potential real, yet? Is there a local market? Is the traffic and analytic data just now being collected sufficient to answer these questions?"

Industry wonks are just beginning to sort out the answers.

Advertisers' faith in Internet radio faded four years ago when the new medium didn't deliver. But today, thanks to broadband's proliferation, better tracking services, and a pooling of resources by advertisers and broadcast networks, the industry is increasingly upbeat.

Today, most observers agree that about 95 percent of Americans are exposed to traditional radio on a weekly basis, while Internet radio reaches about 10 percent. Top Web radio networks drew about 4.2 million listeners, 12 and older, during an average broadcast week in November, Arbitron and comScore Media Metrix reported last week. MSN's Internet radio audience is about half that of the audience for Yahoo! or AOL. Traffic numbers appear to be growing 5 percent a month since October, but that figure does not yet take seasonal ebb and flow into account.

Notably, Arbitron and comScore only track the large networks-Yahoo!'s LAUNCHcast, America Online's AOL Radio Network, and MSN's MSN Radio and WindowsMedia.com. Some see this as an insult to smaller stations, but industry pragmatists believe the big players will pave and then widen the avenue for the little guys.

Eric Ronning and Andy Lipset, two New York radio consultants who rep the three big networks and the smaller Live365, are being credited with "normalizing" the use of Web radio broadcasters in the traditional media mix-their stated objective for some time. This standardization has been achieved, they said, by convincing the big three to pool their ad space, and getting large companies to believe again in Web radio.

"Four years ago, advertisers were made a lot of promises about the magic of online radio, and when it didn't deliver the advertisers got out," said Andy Lipset. "So, Eric and I sat down with the major conglomerates and figured out exactly what they expected if they were to get back into the game."

Eric Ronning explained: "Agencies need credible and accurate numbers if they're going to make this part of their plans."

Two factors exist today that were absent a year ago, according to Bill Rose, senior vice president of marketing at Arbitron. "The industry is poised to take off because major advertisers are finally organizing themselves to sell, and they now have the ability to monitor the impact of their efforts."

Evan Harrison, the new head of Internet business at Clear Channel Communications, the broadcast radio behemoth that owns 1,200 stations across the United States, believes Web radio has a huge potential to reach local advertisers.

"Our whole strategy is to go local," said Harrison, hired away from AOL in November. "Anyone who tells you that we can't, doesn't appreciate Clear Channel's strength and reach." Harrison sees his company's 1,200 stations as unique gateways into a network of online services such as music videos, and Internet Radio channels that can be fitted snuggly to individual users' tastes. "It's our future," Harrison added.

So, does a future for Internet radio mean history for traditional broadcast radio? Kurt Hansen helped establish AccuRadio.com, which offers a range of genres to Web listeners, and was ranked in the top five among Internet stations by Internet rating service Webcast Metrics-part of Ando Media. "Most listening to broadcast radio will eventually happen via Internet delivery," said Hansen, "just as most viewing of broadcast TV channels now happen via cable and satellite delivery."

Don't believe the hype, cautioned Arbitron's Bill Rose. "There's a tendency to get caught up and to assume that the latest medium will inevitably replace what's current," he explained. "Each medium is a distinct and added opportunity to reach a very diverse audience."