• by Erik Sass  @eriksass1, July 28, 2008

Clear Channel Radio and Katz Media Group are launching what they say is the largest online radio advertising network ever, the companies revealed today. The new Katz Online Network will combine over 1,200 Clear Channel stations and Katz affiliates with a number of independent online radio stations, with a total unique audience of about 5 million listeners per week.

KON gives advertisers access to audio, video, and display inventory on Web sites from all the affiliates of Katz Media Group, including Cumulus, Cox Radio, Emmis Communications, Entercom, Greater Media, Journal Broadcast Group, Nassau Broadcasting, Salem Broadcasting, Saga, and Bonneville. On the pure-play Internet side, KON includes Energy Group Radio, Club 977, Accuradio, Digitally Imported, Fine Tune, Radioio, and SmoothJazz.com.

For its part, Clear Channel Radio has been rolling out a number of new digital offerings in addition to station Web sites--including Erockster, a new socially mediated online radio network dedicated to electronic music that tweaks content according to listener ratings, and a new national Web site, www.Iheartmusic.com, which includes an interactive directory of over 750 of the group's station Web sites.

Ad format options offered by KON members include audio spots within streams, pre-roll audio and video, display and video ads, and synchronized banners; these options can be combined in myriad ways to reach listeners without disrupting their enjoyment of content. Ad-serving and audience measurement are both handled by Ando Media, a third-party company specializing in Internet radio technology that has also done business with CBS Radio, ABC, ESPN Radio, XM, and Westwood.

Meanwhile, the variety of formats and geographic breadth of Web sites represented means that KON--like other online radio networks--allows advertisers to target particular demographics and regions, creating customized lists of Web properties where they want their ads to run. Ad sales for the new network will be handled by special dedicated teams at Katz 360, Clear Channel Online Music & Radio, and Premiere Radio Networks. Separately, Clear Channel Radio has also partnered with StudioNow, an online network of video advertising freelancers, to help local advertisers produce professional-grade video and display ads for Clear Channel station sites.

At launch, the Katz Online Network claims a larger unique audience than the combined network created by CBS Radio Online, AOL, and Last.fm, which have been integrating ad sales under the CBS umbrella since the beginning of the year. In June, CBS claimed 1 million listeners a week, and AOL 1.36 million. Last May, Last.fm claimed about 4 million members in the U.S., and in December it had about 1 million unique visitors per month--but not all of these listen to Last.fm Radio, its ad-supported streaming audio service. Thus, their combined reach for radio advertisers would be no more than 3.36 million--and probably less on a weekly basis, especially when overlap is taken into account (the three online radio services have also begun sharing content).

Nonetheless, the ad networks anchored by Clear Channel and CBS Radio are in the same ballpark in terms of size, and the marketplace for online audio ad networks has been shaping up to be more competitive than the traditional broadcast space (here, Katz Media Group has become predominant at the expense of its main competitor, Interep, which filed for bankruptcy in April).

Earlier this year, Ronning Lipset Radio bulked up its executive team with new hires from XM Satellite Radio and Yahoo Music. Lipset's client portfolio includes AOL Radio, CBS Radio, Yahoo Music's LaunchCast Yahoo Music, Live365, and a network of independent stations, which together reach 4.2 million listeners a week, according to a May report from Arbitron.

Also this year, TargetSpot--an online radio ad service developed by CBS Radio and venture capitalists--has signed up at least 15 new partners, including inTune.fm, a popular audio application on Facebook, Pamal Broadcasting, Capitol Broadcasting, Riviera Broadcast Group, CD101, RadioIO, MaxMedia, New Media Broadcasters, CBM Broadcasting and Mediaguide. However, TargetSpot has not released a total unique audience figure.

In June, Triton Media Group bought Jones Media Group--including Jones Radio Networks, which syndicates content to over 5,000 radio stations, and Jones Media America, an ad sales rep firm. JonesTM, another division of Jones Media Group, syndicates music libraries and ad content for use by radio stations. Earlier this month, Triton bought Radio Companion, a company that creates Web applications and online tools for radio stations. These deals followed Triton's acquisition last year of Excelsior Radio Networks and its two subsidiaries, Dial Global and MJI Interactive, to expand the reach of ads through Excelsior's online network.

Despite all these deals, for most radio broadcasters, the contribution from online sales to total revenue remains small. Several months ago, Wachovia analyst Marci Ryvicker wrote in her roundup after the SNL/Kagan Radio/TV Summit: "We are at least five (if not 10) years away before new media/digital opportunities have any financial significance in the broadcast space." Indeed, one estimate puts Internet radio revenues--including new Web-only companies and combining advertising and subscription models--at just $500 million in 2007. That's just 2% of radio's overall revenues.