The digital audio space is really just beginning to hit its pace and so this is a perfect time for the Interactive Advertising Bureau (IAB) to come out with its authoritative A Digital Audio Buyer’s Guide developed by IAB’s Digital Audio Committee (on which BIA/Kelsey serves).

The digital audio market felt a seismic rattle with the news yesterday of Spotify’s expected $400 million capital raise which would bring its valuation to $8.4 billion more than twice that of leading competitor, Pandora, who closed out yesterday with a $3.55 billion market cap.

As BIA/Kelsey noted in a digital audio report we released last year (sponsored by XAPPmedia), “The Internet radio revolution has been brewing for some time. Streaming audio has gone mainstream for audiences and advertisers. This revolution is foundational, meaning that new business models are forming around new audience behaviors supported by technology advances.”

IAB’s Digital Audio Buyer’s Guide is a comprehensive but very digestible 26 page educational and reference document that lays out in a clear fashion everything from “what is meant by ‘digital audio'” to sizing the digital audio market, providing best practices and digital audio ad samples to providing insights around planning and buying.

“Digital audio” is defined as comprising broadcast AM/FM stations online, pureplay online radio stations, streamed audio content with selections influenced by consumer input, and audio-on-demand (i.e., podcasts). With over 50% of the U.S. population as current monthly users of various digital audio services, IAB cites eMarketer data showing this will grow to over 190 monthly digital radio listeners by 2019.

In BIA/Kelsey’s updated forecast for broadcast radio, we’re estimating that the advertising revenue from AM/FM stations streaming online will double from $1 billion in 2014 to $2 billion by 2019. That’s a significant growth component for an industry that otherwise won’t see much revenue growth. And we see a lot of new competition both for listeners and in selling access to local audiences.

In the pureplay digital audio world, Pandora will be releasing its latest earnings report on April 23, 2015. We’ll see then how it stacks up in its drive to increase local ad revenues and how Spotify’s raise may impact its share price. Since Pandora beefed up its local sales force presence, it managed to grow its local ad revenues by 155% to over $150 million in 2014.

It appears that the local digital audio market is no longer so sleepy as it may have appeared as social, mobile and video digital advertising claimed all the headlines.

The post IAB’s New (Free) Digital Audio Buyer’s Guide – Informs a Breakout Category appeared first on BIA/Kelsey - Local Media Watch.

The digital audio space is really just beginning to hit its pace and so this is a perfect time for the Interactive Advertising Bureau (IAB) to come out with its authoritative A Digital Audio Buyer’s Guide developed by IAB’s Digital Audio Committee (on which BIA/Kelsey serves).

The digital audio market felt a seismic rattle with the news yesterday of Spotify’s expected $400 million capital raise which would bring its valuation to $8.4 billion more than twice that of leading competitor, Pandora, who closed out yesterday with a $3.55 billion market cap.

As BIA/Kelsey noted in a digital audio report we released last year (sponsored by XAPPmedia), “The Internet radio revolution has been brewing for some time. Streaming audio has gone mainstream for audiences and advertisers. This revolution is foundational, meaning that new business models are forming around new audience behaviors supported by technology advances.”

IAB’s Digital Audio Buyer’s Guide is a comprehensive but very digestible 26 page educational and reference document that lays out in a clear fashion everything from “what is meant by ‘digital audio'” to sizing the digital audio market, providing best practices and digital audio ad samples to providing insights around planning and buying.

“Digital audio” is defined as comprising broadcast AM/FM stations online, pureplay online radio stations, streamed audio content with selections influenced by consumer input, and audio-on-demand (i.e., podcasts). With over 50% of the U.S. population as current monthly users of various digital audio services, IAB cites eMarketer data showing this will grow to over 190 monthly digital radio listeners by 2019.

In BIA/Kelsey’s updated forecast for broadcast radio, we’re estimating that the advertising revenue from AM/FM stations streaming online will double from $1 billion in 2014 to $2 billion by 2019. That’s a significant growth component for an industry that otherwise won’t see much revenue growth. And we see a lot of new competition both for listeners and in selling access to local audiences.

In the pureplay digital audio world, Pandora will be releasing its latest earnings report on April 23, 2015. We’ll see then how it stacks up in its drive to increase local ad revenues and how Spotify’s raise may impact its share price. Since Pandora beefed up its local sales force presence, it managed to grow its local ad revenues by 155% to over $150 million in 2014.

It appears that the local digital audio market is no longer so sleepy as it may have appeared as social, mobile and video digital advertising claimed all the headlines.

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Native advertising — the insertion of contextually relevant advertising amidst other content — is viewed with suspicion by much of the ad community, which sees it as unscaleable, and perhaps the opposite of its drive towards programmatic (automated) sales.

During the Summary Panel today at the IAB’s Annual Leadership Meeting in Palm Desert, one hypothesis by moderator Terry Kawaja, CEO, LUMA Partners, playing devil’s advocate, was that “agencies cannot create the volume and quality of native content necessary to populate every native ad.”

New York Times Executive VP of Advertising Meredith Levien. rising to the bait, strongly disagreed. “Good native advertising puts the onus on the reader to decide whether to engage or not,” she said, noting that The Times, Buzzfeed, Forbes (her former employer) and others have set up native ad areas that are clearly differentiated from other content, and highly successful. “It’s not like we have (columnist) Thomas Friedman writing for Pepsi,” she said.

Facebook VP of Ad Products, Monetization and Atlas Brian Boland, a keynoter at BIA/Kelsey’s ILM show in December, vigorously defended native advertising — not surprisingly, since Facebook is banking heavily on it. Native advertising, when combined with personalization, provides “unprecedented value,” he said. “People are going to a place where they want to discover what is important to them. It creates an opportunity for people to be excited about what they see.”

Boland noted that Facebook has recently been criticized for pushing the envelope with native advertising by having video ads. But critics should have done their homework, like Facebook has, Boland said. He noted that Facebook did reams of testing and research, and the feedback has shown that the video ads are totally engaging viewers.

Going forward, Facebook is developing a set of formats to enable people and advertisers to express themselves via native advertising on every platform — especially mobile. Boland acknowledged, however, that such formats are better suited towards larger media concerns. A handful of publishers will similarly see how things evolve, he said. But it remains “a challenge for mid-sized publishers.”

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Digital change comes as much from inside the marketing organization as from end users, noted two leading CMOs, who were interviewed at the IAB’s Annual Leadership Meeting today in Palm Desert. The CMOs were Wells Fargo‘s Jamie Moldafsky and Adobe‘s Ann Lewnes.

Moldafsky said that the key to digitizing the staid Well Fargo culture and the company’s 370,000 employees is “to ground everyone in customer insight.” With six billion transactions a year, Wells Fargo has really had to focus on the most important aspect of the digital era: “how real time we need to be thinking,” says Moldafsky. “The hardest part for us is that notion of speed.” The emergence of digital — especially omnichannel — has enabled marketing to “take some risks in the spirit of learning,” she added.

Lewnes said that Adobe made the decision five or six years ago to move as much of our money as possible to digital. “We now spend seventy-four percent of our marketing on digital,” she noted. “Every marketing employee has a ‘digital first’ mentality with no excuses.”

The change over has coincided with the company’s move to an all digital, subscription-based business model. But “the biggest need was the amount of change needed inside the organization,” she said. The data constitutes “a think tank of Web analysis” — and is “the “single point of truth” for the whole company. It has lead to making more changes in the last two year as than the prior 50 years combined. “The only thing I can convince people is that the quantifiable side of marketing is what people want to see.”

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Digital change comes as much from inside the marketing organization as from end users, noted two leading CMOs, who were interviewed at the IAB’s Annual Leadership Meeting today in Palm Desert. The CMOs were Wells Fargo‘s Jamie Moldafsky and Adobe‘s Ann Lewnes.

Moldafsky said that the key to digitizing the staid Well Fargo culture and the company’s 370,000 employees is “to ground everyone in customer insight.” With six billion transactions a year, Wells Fargo has really had to focus on the most important aspect of the digital era: “how real time we need to be thinking,” says Moldafsky. “The hardest part for us is that notion of speed.” The emergence of digital — especially omnichannel — has enabled marketing to “take some risks in the spirit of learning,” she added.

Lewnes said that Adobe made the decision five or six years ago to move as much of our money as possible to digital. “We now spend seventy-four percent of our marketing on digital,” she noted. “Every marketing employee has a ‘digital first’ mentality with no excuses.”

The change over has coincided with the company’s move to an all digital, subscription-based business model. But “the biggest need was the amount of change needed inside the organization,” she said. The data constitutes “a think tank of Web analysis” — and is “the “single point of truth” for the whole company. It has lead to making more changes in the last two year as than the prior 50 years combined. “The only thing I can convince people is that the quantifiable side of marketing is what people want to see.”

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Clear Channel Entertainment CEO Bob Pittman, speaking today at IAB’s Annual Leadership Meeting in Palm Desert, said that radio has been able to leverage its undiminished strength with digital providing a new channel and new listeners for the medium.

Pittman, a legendary industry figure who was one of the early leaders at MTV and then a leader at Six Flags over America, Century 21, AOL and Time Warner (and a BIA/Kelsey keynoter at ILM 2011), noted that “digital was the obvious way to go” for reinforcing Clear Channel’s value when he took the company’s helm a few years ago. “My entire career since the early 1970s has been about trying to find new ways to connect to the home,” he said. “But now we have reversed it,” with the latest trends — driven by mobile — about doubling or even tripling out-of-home usage.

While digital is a great enabler, it is still not the centerpiece of marketing, Pittman stressed. “You want a product strategy.” With Clear Channel, his team has built out “I Heart Radio” with an annual, in person concert that leverages the company’s relationships with on air talent and musical artists. The concert is now the anchor of the company’s marketing, and has helped raise awareness of the digital channel to 70 percent (along with what Pittman described as millions of dollars worth of on air advertising).

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Google VP of ad products Susan Wojcicki told IAB’s Leadership Meeting yesterday that “the display industry is one of the most innovative parts of the Web right now,” and “will be one of the largest ad markets, if not the largest. It has to be,” she added. “Everything is moving online.”

Video, social and mobile will each play a major role for the growth of display ads in Wojcicki’s vision. “Every campaign will have desktop, mobile, video and social elements,” says Wojcicki, a core member of the Google leadership team since the company’s inception, and a leader behind the integration with DoubleClick, which was acquired two years ago for $3.1 billion. She also noted that all display should be integrated with other ad types across the board to boost yield management.

“Video….will be one of the largest industries for us,” adds Wojcicki. “It could be one of largest segments for display. And social too. Over time, everything is social. We haven’t even figured out how social will play in different ad segments across [the] Web.”

Indeed, Wojcicki notes that “ad models aren’t clear in the new online world.” But she expects volume for display to grow astronomically, in part, as Google moves buying to its auction process. Using auctions have boosted display sales by 130 percent, she claims. Ad syndication will also be vital for publishers, as we have seen with projects such as Citysearch’s CityGrid. “Rather than having everyone come to your site, it will be your content and your ads everywhere.”

Google is also working to create a seamless purchase process. “The buying process for display and online inventory is really difficult,” she notes. “Inventory should be frictionless when you are buying it. Everything should be online. All creative should be checked automatically. With these principals in place, “there should be hundreds of thousands of display advertisers,” she says.

Along those lines, DoubleClick has rewritten its buying program for publishers using Google technology. “It is one of the largest integrations between Google and DoubleClick,” adds Wojcicki. “It is faster and fixes a lot of issues.” The program has also been well tested, with more than 500 hours of User Interface time to “get it right,” she says.

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The default strategy for many start-ups is to plan to be acquired by Google or Microsoft. But the M&A scene is much more complex than that. Jordan, Edmiston Group Co-President Tolman Geffs, speaking today at IAB’s Annual Leadership Meeting in Carlsbad, California, joked that Google is set to buy Oregon, Washington and Canada “just to mess with Microsoft.”

Speaking more seriously, he noted that “we don’t need Google and Microsoft to buy everything.” Incumbent specialist firms would find higher value in a number of areas. These include marketing analytics, consumer data, cable and entertainment, Web delivery, infrastructure, major agencies, large display ad networks and performance advertising (such as Demand Media).

Geffs noted there is currently a vibrant deal environment, with 178 deals made in the second half of 2009 worth $13.3 billion. This was a major change from a “dead” first half when just 129 deals were completed, he said.

Still, there has only been a “partial recovery from previous levels for online plays. Classifieds is the only sector of advertising that was down,” he said. Especially hot areas include online media, interactive marketing, video and infrastructure plays.

A real “head scratcher” for Geffs is the $1 billion+ committed by Google ($750 million) and Apple ($275 million) for two mobile ad networks: AdMob and Quattro Wireless. “That’s the entire forecast for 2012 mobile ad revenue” he said, noting that the high prices have led to a stunning $211 million worth of investment in nine other mobile ad nets by VCs.

In fact, Geffs questions whether mobile is even a good ad medium. “They help consumers complete tasks,” he noted. But “is this a great promotional medium?”

Geffs, former president of IBS, a TV station Web site builder and advertising provider, is also critical of “vertically integrated” models that rely on content aggregation and search, such as Citysearch and ReachLocal. Costs are too high.

ReachLocal, for instance, is a vertically integrated play that only leaves 7 percent of its revenues to support its product and platform, after spending 55 percent on consumer traffic and 38 percent on sales and marketing.

He’s more excited about local companies that solve a problem and keep content, audience and sales costs low, such as Outside.in, Datasphere, Triton Media, MerchantCircle, Manta, Yelp and Angie’s List. “We are big fans,” he said.

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Huffington Post CEO Eric Hippeau defended the role of the site in journalism and said it is helping to herald in “a golden age of journalism” that has more content and audience participation than ever before.

Speaking at IAB’s Annual Leadership Meeting in Carlsbad, California, Hippeau noted that HuffPo is publishing 500 pieces of content a day, compared with the 100 pieces published by The New York Times. Each piece is curated constantly with the help of the site’s “hyper-efficient editor.” And it publishes 2 million comments a month.

Much of the content comes from newspapers and other media. But Hippeau argues, “I did not kill newspapers,” echoing the five-word acceptance speech of a Webbie award by site founder Arianna Huffington last fall. Rather, he says the site brings new users to newspaper sites by links, like Google.

In fact, he contends that newspaper sites are actually doing pretty well. It is the traditional print business that is hurting. Basically, it is a coincidence that “our business is soaring while circulation at newspapers is declining.”

“If I was starting a news business today, the last thing I’d do is hire a team of traditional journalists and buy a printing press,” he says.

Hippeau also contends that the site’s success in boosting usage is based largely on successful verticalization. While the site boomed during the Hillary Clinton vs. Barack Obama campaign, it is now only dependent on politics for 20 percent to 25 percent of its traffic. The site, in fact, has just launched its 13th vertical section: colleges. The section enables students to contribute campus-by-campus news for 50+ colleges.

The site also has four local editions (Chicago, New York, Los Angeles and Denver) and has also recently launched a sports site, which now accounts for 10 percent of its traffic. The timing was fortuitous as the launch occurred around the Tiger Woods scandals three months ago. “It is the gift that keeps on giving,” he says.

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The Interactive Advertising Bureau, celebrating its 15^th anniversary, is holding its annual leadership meeting at La Costa in Carlsbad, California. The sold-out meeting, dubbed “Ecosystem 2.0,” has attracted 650 attendees, up 30 percent from last year: a further omen of recovery in the economy. Over the years, we have actively helped IAB develop its leadership tracks in local, so it is good to see the organization on very sound footing.

24/7 Real Media Chairman David Moore, in an opening keynote, noted that 12 percent of ad dollars are now online, but online share remains disproportionately low, considering that 25 percent of viewing time is spent online. The audience’s increasing fragmentation forces publishers to look for new revenue paths, he added.

The clearest path to recovery is to focus on building more premium content, even though it inevitably means that subscriber charges need to be added. “Totally free content is dead,” said Moore. But that isn’t the end of the world. In 1982, cable TV was beginning to add unique networks, subscriptions were $6 per month. Now they may be $100 a month.

If an “EZY pay” system were instituted for content at 10 cents per access, that would be like charging a CPM of $100,” Moore suggested. That would be far more lucrative than what most publishers are getting.

Moore also predicted that digital would be the No. 1 ad medium within the next five years, with online video advertising leading the way. But first, the industry has got to adopt real standards and simplify the workflow for agencies and concentrate on finding new ways to make commercials more interesting to the consumer.

“You can’t be afraid to be disruptive,” added Moore. “You need to be more aggressive. You have to interrupt the consumer experience with ads. But do it in a way that is interesting and targeted.”

IAB President Randall Rothenberg, in his opening comments, said the key to advertiser success was to focus on the year-after-year development of brand building, which is a synonymous effort with charging premium prices, i.e., BMW and Johnson & Johnson. “It is about being a part of, not apart from,” said Rothenberg.

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