For many years, the radio industry remained largely true to its original business model, offering content to consumers via the airwaves. As this article illustrates, all that has now changed in a dramatic and exciting way. Thanks to major advances in technology and copious entrepreneurial endeavors, the radio community is actively reinventing itself in order to remain relevant and competitive. These latest developments are not only fascinating, but provide for many charter and alternative marketing opportunities.

The following provides brief overviews of satellite, high definition, Internet and cell phone radio, as well as timely options and implications for marketers.

Overview
Marketers undoubtedly have read or heard about the decline or even impending “death” of radio. Moreover, they may be under the impression that radio is somewhat of a stepchild to other media, especially television. While Empower MediaMarketing would agree that the radio industry has taken some blows - corporate consolidation, fragmentation, and limitless consumer choices – we are confident that changes in the radio field are positive ones. Today’s listeners are increasingly mobile, busy and over-stimulated, and radio executives must adapt in order to continue reaching, engaging and retaining audience. Fortunately, the industry is not resting on its laurels and continues to demonstrate it is addressing these challenges head-on.

What this means for marketers is that there are creative and impactful ways of not only reaching the traditional radio user in non-traditional ways, but methods of impacting demographics that have historically been difficult to find. Importantly, these new venues may, ultimately, help advertisers maintain communication with an audience that is migrating away from terrestrial radio. And, because many of the new radio-like industries are fledglings, there are options to get in on the ground floor and negotiate charter deals at attractive price points.

Satellite Radio
Over the past 24 months, this medium has not only garnered much attention in the press, but also enjoyed a marked increase in growth. The two primary players, XM and Sirius tout subscription bases of 6 million and nearly 4 million, respectively. Sirius struck gold late in 2005 when the company penned a 600+ million dollar deal with Howard Stern. And XM recently contracted with Major League Baseball, adding breadth to their roster.

Satellite radio imparts numerous benefits to the consumer – hundreds of niche or vertical channel offerings and 100% static-free reception that can be heard across the country without interruption. Distribution includes automobiles, mobile handsets, in-store (Starbucks, for example), in-room at hotels, in-flight, online, and through satellite TV.

The medium allows advertisers to connect with a consumer who is upscale, educated and fairly affluent. The user profile skews toward the younger male listener, making satellite an optimum environment to reach this hard-to-find demo. And satellite listeners tune in for long periods of time – about 23 hours per week. Compare that with the average weekly TSL (time spent listening) of 17 hours on traditional radio and the allure increases.

Presently, a large portion of the channels are commercial-free, an obvious attraction for listeners. However, both companies have aggressive plans in place to cultivate their advertising revenue in the next 24 months.

In our experience with these companies, EM2 has explored a myriad of viable options for advertisers, and both are able and willing to develop programs highly tailored to an advertiser’s need.

In addition to selling traditional media buys, both companies offer customized integrated packages, exclusive sponsorships, and in some cases, regional and/or local traffic updates.

HD (High Definition) Radio
In a nutshell, high definition radio technology allows traditional AM and FM stations to transmit their signal in a digital versus analog format. Unlike subscription-based satellite radio, HD is free; that is, once the consumer purchases an HD receiver. At the time of this writing, those units are an expensive $300-$500 apiece, but are expected to drop to a more palatable $200 by year’s end.

For the consumer, this shift translates into a number of advantages, including FM radio with CD-quality sound. AM radio sounds as good as current FM analog and both transmissions have little or no hiss or static.

From a marketer’s standpoint, the most interesting and appealing benefit that comes with HD radio is what is referred to as “multicasting,” which means a station can broadcast two or more channels on the same FM frequency (does not apply to AM). For example, KISS-FM in Cincinnati is a CHR station, while its HD counterpart is an old school rap format. An excellent reference on this subject, including a list of stations already broadcasting in HD, can be found at hdradio.com.

The multicasting feature will allow stations to target smaller, niche audiences, serving new or current listeners, much like cable TV did in its earlier years. Currently, these digital channels are commercial-free but we expect that business model to change to include ad space in the coming year. Herein lies the plus for advertisers – targeting very specific audiences at attractive rates. We also believe there will be opportunity to explore alternatives to the traditional 60-second spot, including 30-second ads, total program sponsorships/entitlements, and possible integration into programming content.

As of this writing, there are nearly 700 stations broadcasting digital signals, but that doesn’t mean people are listening - yet. At the end of 2005, 85,000 HD receivers were in the hands of consumers – a figure that we would consider to be small. However, rapid growth is expected with predictions that sales will increase to 500,000 units by the end of 2006.

Internet/Online Radio
Online radio is a simple concept – radio programming that is transmitted via the Internet versus the broadcast airwaves. Programming originates either from terrestrial stations simulcasting their signal or from web-only stations. Because there is an infinite amount of “space” available, along with the fact that the Internet is not FCC-regulated, it is difficult to estimate how many online stations exist. However, it’s safe to say the number is in the thousands.

Chances are you’ve listened to one of your favorite broadcast stations on your computer and the chances are even greater you’ve tuned into one of the big networks through Yahoo!, AOL Radio Network, Live365, or MSN Radio. A December 2005 study by Arbitron and comScore Media Metrix revealed that more than seven million listeners (cume) tuned into online radio during an average week, the highest number reported to date. A large chunk of those listeners, 4.1 million, are tuning into the “big three” – Yahoo!, MSN, and AOL.

Even though this number is not, in the Internet world, considered critical mass, it’s hard evidence that this medium is vibrant, growing and offers untapped opportunities for advertisers.

Internet radio provides a forum for traditional :60’s as well as less-utilized :30s, :15’s and :10’s, all of which can be scheduled to play in regular commercial breaks or as “gateways” or “pre-rolls,” which run when a listener launches a radio website.

Perhaps more importantly, online stations offer an alternative way to reach the sometimes-elusive 18-34 year old audience. Traditional radio has experienced declines in this demo, whereas the bulk of new online listeners are comprised of this age group. The younger demos are heavy users of online radio via podcasting and we predict they will also exhibit heavy usage via cell phone downloads.

A distinct advantage of online radio for advertisers who purchase traditional radio at very low, run-of-station, or direct response rates is that they are far less likely to have their spots pre-empted. And, like HD radio, this medium offers nearly endless niche targeting possibilities.

Cell Phone Radio
A cousin both to satellite and Internet radio, cell-phone radio is in its infancy, but we expect this area to advance fairly quickly. To date, a number of wireless carriers have begun offering subscription-based radio programming via cell phones.

For example, Sprint PCS customers, for a monthly fee of $6.95, can access 20 commercial-free Sirius Satellite stations via a multimedia handset. And this January Motorola launched its subscription-based digital iRadio with 435 channels, also commercial-free. A true advantage of Motorola’s technology is that it has no bandwidth limitations, which means 100s of targeted options for both advertisers and listeners alike.

Interestingly, Motorola also sells a phone that is compatible with iTunes, which will allow customers to download content from that service.

With over 2 billion wireless subscribers worldwide, it’s clear this is an area that lends itself readily to connecting with a mobile and engaged audience. Like satellite radio, we would anticipate that it’s only a matter of time before carriers introduce advertising into their business model to build and enhance revenue streams. Naturally, this would open up a whole new avenue for traditional or even Internet radio advertisers.

New Opportunities Abound
In this ever-evolving, complex media environment, radio has successfully stayed abreast and continues to explore and invent new ways to remain attractive to consumers and marketers. With HD, the industry maximizes the benefits of traditional radio, while satellite offers similar, but different, advantages. Radio has jumped on the Internet bandwagon and soon will be a force in the wireless cell phone arena. Empower MediaMarketing encourages all its clients to consider their marketing needs and discuss with our planning experts how new radio options might assist in their business success.