• by Kate Kaye , March 8, 2004

Before advertisers took broadcast radio seriously, Ken Dardis would get laughed out of the room when pitching a 10-second radio spot to agencies. "I'm seeing the same exact resistance now," says Dardis, president of Audio Graphics, a radio and TV ad production company. This time, it's online radio that he believes advertisers have failed to recognize as a viable medium.

In findings from its newly released report, "Radio Online, It's All About the Audience," Audio Graphics' streaming radio network division RRadio Network wants to show media buyers that online radio attracts affluent, educated audiences.

The report reveals that 42.6 percent of respondents have an annual household income of more than $50,000, and 60.4 percent have a college degree. The audience is growing, too--nearly half of those measured have been listening to online radio for less than a year.

The report was released on the heels of Arbitron's decision on Feb. 27 to revamp its Internet Broadcast Ratings division and halt monthly and weekly MeasureCast ratings of online radio audiences. Dardis contends that MeasureCast reports, which tracked total time spent listening and total number of unique listeners, "don't mean anything to advertisers." The RRadio Network measures online radio user demographics, usage, and purchase habits, as well online advertising acceptance. A total of nearly 26,000 streaming radio listeners have participated in 22 brief surveys that began in April 2002.

The report shows that online radio listeners are a pretty loyal bunch. More than 43 percent listened to streaming radio five to seven days per week, and over 50 percent listen to the same station all day. On average, more than 47 percent of online radio listeners tuned in for at least three hours per session, and over 40 percent stuck around for between one and three hours.

It appears that the number of at-work listeners is rising slightly. Compared to a survey conducted a year earlier for the report, when 32 percent said they listened at work, a more recent RRadio Network survey found that more than 35 percent of respondents listened exclusively during work hours. Studies by the Online Publishers Association have shown that at-work Internet users are a desirable demographic, and are otherwise a difficult group to reach during the workday.

One goal of the report is to isolate potential vertical markets. The surveys found that more than a third of participants plan to buy a car in the coming year, and 80 percent will purchase a CD in the next 90 days. About 30 percent spend at least $250 on business clothing each year. In addition, over 57 percent have purchased three or more airline tickets via the Web.

The majority of these online radio listeners--nearly 78 percent--are willing to admit that online stations need advertising to survive. Their preferences--in terms of products they'd like to see advertised through the medium--reflect their buying habits. In addition to movies, which came in at around 16 percent, participants gave the Autos, Home Improvement, and Clothing categories nods. Music was by far the most interesting product category for listeners. More than 46 percent said they'd like tracks and artists to be advertised in conjunction with online radio.

"The record and label industry wants to ignore online radio," Dardis laments.

But they're not the only players neglecting the nascent medium. Spending on online radio ads is relatively nonexistent. The Internet Advertising Bureau doesn't even include it in the format breakdown in its online advertising revenue reports.

"I think it's a viable medium once it reaches critical mass and standard delivery," maintains Matthias Wolf, associate media director at interactive ad agency itraffic. Not only can advertisers use traditional GRP (Gross Ratings Points) models when buying streaming radio ads, he suggests that "there's more accountability with online radio than with network radio."

Dardis thinks critical mass is here, citing a 2003 Arbitron/Edison Media Research report that estimates the weekly Internet broadcast audience at 30 million, or 13 percent of Americans. Whether or not it's perceived as a worthwhile medium, one of the most significant barriers to the adoption of online radio by advertisers is its lack of a home department at agencies.

Comments Alan Schanzer, managing partner at The Digital Edge/Outrider North America: "We don't do online radio advertising. We just haven't decided what to do with it."