• by Erik Sass  @eriksass1, January 20, 2006

D-Day has finally arrived for the terrestrial radio business: D for digital. Radio's Big 3--Clear Channel Communications, CBS and Great Media--Thursday each said they flipped the digital switch in key markets throughout the United States.

CBS began multicasting in 60 stations serving 17 markets nationwide--including Atlanta, Baltimore, Boston, Chicago, Dallas, Houston, Los Angeles, New York, and Philadelphia--while Clear Channel lit up 25 stations in five markets with multicasts, to be followed by 82 stations in 20 more markets over the next two weeks. For its part, Greater Media, which already multicasts in Detroit, lit up digital multicast stations in Boston and Philadelphia.

To push the new multicasts, radio stations are reaching for traditional promotional tricks, including contests and HD radio set giveaways. Generally, consumers are expected to react positively to the arrival of their favorite obscure sub-genres of music and entertainment previously ignored by monolithic programming, and press releases from the big three also made much of the fact that the programming was commercial-free.

Of course, radio insiders expressed skepticism that it will remain commercial-free. Dave Newmark of Bid4Spots, an online radio ad sales agency, said: "At the present time most of the HD channels are going on the air without ads, and there's nothing official that commercials will be put on any time soon. But I'm speculating that there are plans for making these into commercial environments in the near future, because terrestrial radio is championing itself as a no-fee alternative to satellite radio."

The HD Digital Radio Alliance--composed of CBS, Clear Channel, Greater Media, and other big names--has indeed positioned the medium as a major competitor against satellite radio, offering the same quality audio and choice for no charge, and indicating that multicasts will have commercials sooner rather than later.

Vicki Stearns of HD iBiquity, the company controlling digital radio technology, speculated: "At first they're going to be commercial-free, but I would guess they're going to come up with creative business plans some time in the next 18 months."

Asked what direction radio advertising might take on the multicast channels, Stearns noted: "The underlying technology provided by iBiquity has a range of capabilities, including radio set text-display and even interactive 'buy button' type-stuff, so you'll be seeing all kinds of new stuff. It's really in the hands of the creative teams at the ad agencies and radio stations right now."

Meanwhile, according to Newmark, multicasting is naturally appealing to advertisers: "It's very good news because it provides additional inventory and demographic and psychographic targetability for advertisers--provided that there are adequate measurement systems in place to identify demographic and psychographic information." On this last subject, still a point of contention between radio ratings measurement firms, Newmark cautioned: "That's still an open question."