• by May 24, 2002

Streaming
Net Radio Ad Sales
by Ken Liebeskind, MediaPost Staff Writer The major problem with selling advertising for Internet radio so far has been audience size. With small audiences, it’s hard to sell advertising and radio stations tend to not sell it at all, leaving ad sales to the streaming providers who do it in addition to streaming the signals.

“The cume on the Net is a small percentage of what they have on air,” says Joseph Rozenfeld, senior vice president of product development for Chaincast Networks, a radio streamer that acquired StreamAudio earlier this year. “If the cume reaches 5-10% of what they have on air, they can increase revenue through Internet delivery, but until that happens they won’t do advertising themselves, so we do it.”

The fact that streamers like Chaincast sell the advertising becomes an integral part of the business model. “If stations put their own ads on, we’d have to charge them more for streaming,” Rozenfeld says, noting that Chaincast earns its revenue from streaming fees and advertising.

The way streamers like Chaincast have worked so far is to sell advertising to mostly national advertisers across their entire networks. “The only model that makes sense is the aggregate model,” Rozenfeld says. “When you have 600 stations, you have an interesting audience.” But Chaincast only has 600 stations by adding the stations from all its customers.

“Ads could be targeted to formats, but there’s not too much demand, because the audiences are too small,” Rozenfeld says, noting that audiences can be in the hundreds and a couple thousand is the largest so far. “Targeting will happen later, so the majority run across the entire network.”

In the few cases when radio stations sell their own Internet ads, there are revenue sharing deals with the streaming companies, Rozenfeld notes.

Companies like Chaincast work with ad rep firms like MediaAmerica who sell the ads and place them through Chaincast. MediaAmerica has won large buys from Warner-Lambert, Budweiser, and other companies who buy gateway and instream ads, which are the ad models that have been used so far. Gateways run as a station loads, with instreams running like regular radio ads during broadcast. Both models have worked well so far, according to Steve Goldberg, president/CEO of Hiwire, another major streamer. Hiwire, which streams for more than 50 Clear Channel stations, has been running ads for AT&T, Council Travel, and the Vermont Teddy Bear Co., Goldberg says. It’s running two dozen campaigns now.

Loudeye Technologies, which produces radio formats, including one for Classmates.com, sells mostly instreams, according to director of radio sales Ed Bruno. Advertisers include Microsoft, Amazon.com, and Hewlett-Packard. At Classmates, twelve 30-second units per hour run in three sets of four spots. That’s 6 minutes of ad time per hour, which compares with 18 for a traditional FM station.

Loudeye’s ads have a benefit you don’t find on FM, though: click buttons. Buttons on the player can be clicked to take listeners to a web page or elsewhere in association with an offer. An ad for Folgers that offered free samples took listeners to a registration page where they could sign up for coupons.

Email
Compatibility Issues
by Jessica Patton, MediaPost Staff Writer Incompatibility with the myriad combinations of hardware and software in use by businesses and consumers can hamper clear communication between email marketers and their customers. Bill Nussey, CEO of Silverpop, believes this is the core issue facing email marketers, yet it isn’t often addressed. This provider of sales and customer communications software recently announced the general availability of Silverpop Dynamic Messaging (DM) 2.0, an end-to-end email marketing solution that helps enterprises and agencies find, acquire, and retain customers. Its interface quickly imports almost all forms of media including images, video, HTML, Flash, and interactive data. In addition, Silverpop DM 2.0 readily integrates into existing email environments, so business users and their customers gain access to advanced messaging functionality without changing or replacing their existing email platforms.

According to Nussey, Silverpop developed DM 2.0 in its quality assurance lab, in which they test hundreds of email configurations across every existing platform. He refers to the common but problematic use of “sniffing” in email campaigns—when the first email sent is text-only but reports back if the recipient has HTML.

“This is well and good for future contact with that one recipient,” says Nussey, “but what if a campaign goes viral, which is the hope for any email campaign, but the next recipient doesn’t have HTML? We built code that massages HTML, revealing the way that HTML works with every client in every environment that exists. Other firms have one or two people manipulating messages manually and for a high fee; we offer this in a software email campaign solution.”

MindShare Design provides distribution and list management services with its patent-pending technology for high-volume email delivery. Marketing manager Kevin Sheridan estimates they send 7.5 billion emails annually, for customers including New Line Cinema, Pioneer Electronics, Schwinn bicycles, and the American Red Cross. “We haven’t had much of a problem with incompatibility,” says Sheridan.

“We don’t handle hosting issues, and the email we deliver through our PMG Services is a multipart message. The recipient will automatically read a text-only message or receive it as HTML, depending on their system’s capability.” Since the vast majority of people targeted don’t yet have DSL, he sees the need to deregulate in hopes of driving its price down as paramount; at that point, email marketing will evolve. Until then, their multipart messages, with HTML no larger than 25-30kb are affective.

MindShare’s clients can also customize their messages by overwriting the MindShare formatting; 10-15% of their clients who send HTML choose to reformat the text messages themselves. Sheridan continues,”We have a full-time QA department that tests everything across multiple platforms, constantly making adjustments. I’d say 99%, at least, of our messages are delivered in the proper format, given the sheer volume of mail and number of bugs we contend with.”

“We have run into compatibility issues with AOL, since they change so much with each version, which can disturb email content...then there’s the factor that many people don’t upgrade. We’re compatible with at least versions 5 through 7.0.” Sheridan concludes, “Overall, the two-part format (text/HTML) is the best way to convey our message...for now.”

Wireless
May We Intrude?
by Adam Bernard, MediaPost Staff Writer Intrusiveness—it’s a word thrown around a lot in the advertising world, especially in regard to wireless. Do people want to view ads on their wireless devices? Not really, but they may be open to it soon. According to two recent studies, people aren’t really fond of the concept of wireless advertising, but there is a large group that seems open to it if done correctly.

The first study, conducted by ARC Group, found that only 24% of respondents were extremely, or very, willing to give personal information in exchange for ads that were relevant to them. However, 41% said they were somewhat willing, so there is a large number of people who, if approached the right way and given the right offer, will put wireless advertising on the map. Another study, this one conducted by Cahners In-Stat Group, had 64% of respondents saying they do not warmly embrace the concept of mobile advertising. They offered up suggestions, though: If the advertiser gives benefits to the user, and uses an opt-in process, wireless advertising can be successful.

What does this mean for potential advertisers? It means this is a make-or-break time for them when it comes to wireless. If they do everything right, it’s a whole new world of advertising for them; if they do it wrong, wireless will be free of ads. Expect a lot more polls and surveys to be done, and a lot of experimentation before wireless advertising truly takes shape.

iTV
Hot Buttons for 2002
Jack Myers Report, MEDIA Exclusive Just two years ago, iTV was the hottest buzzword in television, promising radical changes in the way viewers watch TV and the way advertisers communicate. Today, most of these promises are once again relegated to the back-burner of advertising industry issues. But the back-burner is turned on and it’s generating heat. And while iTV is not boiling hot, it is certainly alive and well.

Throughout 2002, cable television operators will be focusing on expanding their distribution of digital set-top boxes. Video-on-demand and subscription VOD (SVOD) are the major hot buttons for 2002. Digital cable subscribers will be offered an array of current movie titles and movie libraries, plus entertainment, sports, and documentary programming on-demand for small usage and subscription fees. VOD and SVOD applications are not currently designed for advertiser support. Realistically, though, both cable operators and content providers will recognize the need for supplemental revenue streams. VOD and SVOD represent opportunities for marketers to target specific audiences with sponsorship messages. For example, advertisers can be associated with sponsorship of first (TV) run movies and include an advertising message prior to viewing. Subscribers who purchase an SVOD package of “Lucy” episodes can be given an opportunity to purchase video and DVD packages of similar shows, and also receive a promotion for an upcoming theatrical comedy, or a promotional announcement for “The Ellen Show.”

Cable operators’ second priority is the introduction of personal video recording devices. While TiVo and Replay have not sold through to consumers as successfully as anticipated, cable and satellite operators continue to believe in the importance of PVRs for their future revenue growth. Initially, PVRs will be sold as an attachment to current cable boxes, but by 2006, they will be integrated into most digital set-top boxes, and by 2008, PVRs will be as ubiquitous as VCRs are today. The impact on advertising will be great—radically altering the way consumers watch TV and the way marketers advertisers.

Even though PVRs are in fewer than 500,000 homes today, advertisers can begin experimenting with the techniques and applications that they will require in the future. These include the development of long-form commercials and streaming video applications that viewers can download through their computers or PVRs.

These are just a couple of the opportunities that are emerging. Most advertisers and agencies today believe they will catch up to the iTV market if and when it takes off. They’re right. But the innovators understand that they have a window to purchase inventory that has little value today, but in just a few short years will be in high demand. It’s like buying in the suburbs before the shopping malls were built and before the exodus from the cities. Even during this recessionary period, good real estate has value.