Monetising the next generation of car radio
Anthony Ghergetta is lead mobile development strategist at The App Studio in Melbourne, Australia and was one of the originals at 96.9 Wild FM in Sydney in the 90’s.
He has written the third article in a series on the next generation of car radio at his website ‘The App Studio’, and forwarded it to us to share with Radio Today readers.
Radio broadcasters should be salivating at the revenue opportunities in the next generation of car radio.
As the car becomes more interactive, the current approach of legacy broadcasters is looking very much like search engines before Google. Rather than being a gateway to content on the dashboard, old school broadcasters are trying to own it.
Right now no one is reinventing radio.
There are new services like Pandora and Spotify who call themselves ‘radio’ but are more like a mixed CD. Old school radio broadcasters are looking at the success of these services in awe, but rather than creating something new to compete with these services they are repackaging and streaming what they already have and adding nothing new.
iheartradio is a case in point. iheartradio has not reinvented radio. What iheartradio has done is throw together a Pandora style music service with a silo streaming service from each of the Clear Channel radio stations.
Say I like an announcer on a radio station in Los Angeles and the music of a rock station in Florida and I’m driving through Wisconsin and I want local news and traffic. Can I mix it up together? No.
iheartradio has not taken the customization of Pandora and applied it to broadcast radio.
To their credit, what iheartradio has done is move very quickly in this space and is now a major player on the car dashboard.
The next generation of car radio will be customized for each individual listener. It will have the magic of real time content, the water cooler effect on Monday morning and the feeling of being part of a group. How? I’m not too sure, but it will be done.
Customise = Monitise
Let’s talk about the main subject of this article, monitising the next generation of car radio.
Anyone who has spent any time in a successful radio station has witnessed the tension between the sales manager, the traffic manager and the program director. Finding spots to run ads is stressful.
The sales manager is desperate for more space, the program director wants less and the traffic manager sits in a psychotic state in the middle.
Radio stations miss out on a huge amount of revenue because they have to broadcast the same ad to every listener. Smaller advertisers are often bumped to make space for a national campaign.
The next generation of car radio will have a detailed profile of each listener.
There will come a point where almost every regular listener will have to connect to the radio service. This could be to enter a competition, get more information about a subject, download a coupon or access additional services.
It’s important that radio apps get people listening first with no barriers, but once a listener is an established listener, they should be encouraged to connect. As soon as a listener connects, a unique profile can be created.
The listener will either connect using a single sign-in service like Facebook or Google+ or create an account on the platform.
If the listener connects through a single sign-in service, which often just takes one click, the radio broadcaster can access the complete social profile of the listener.
The broadcaster will know the listeners’ name, location, date-of-birth and who their friends are.
Even if the user chooses not to connect we can still create a unique profile for each listener using the device number of the phone.
The next part of the strategy is to start logging the listeners’ taste in music. The music that someone listens to says a lot about the type of person they are. Someone who listens to 70’s rock is very different from someone who listens to One Direction.
The Echo Nest is a music intelligence service that powers a lot of online music platforms, including Spotify Radio and iheartradio. Last year they introduced a new music taste profiling service that radio broadcasters can use to create a music profile for each listener.
To demonstrate this service the developers at The Echo Nest have put together a fun little tool called “what’s your stereotype.” Enter the names of some artists you like and it will return your musical meme. Give it a shot and see if you are an Indie Hipster or a Bieber-stalker! http://labs.echonest.com/stereotypes/
Listeners can now be grouped based on their music profile.
As discussed in the previous article, the next generation of car radio will know exactly where each listener is, where he or she has been or is going.
Over time, this data will generate a unique geographical profile for each listener. We will have a good idea of the route the listener drives to work, where he or she shops, what time they travel and where they go on weekends.
Unlike other apps that use geo-data, radio is in a unique position of being able to collect this data over an extended period of time, as people are moving. It’s not just point A and point B, but all the points between A and B.
Link this information to the listener profile (date-of-birth, friends, interests) and the music profile (hot hits, classical, 70’s rock) and you have a very powerful, very targeted advertising engine.
Know your listener
The next generation of car radio will know who you are, where you are, where you have been, where you are going and what you like to listen to.
Now that we have the profile of each listener we can match this data to real-world locations. This is where geo-fencing comes into play.
Geo-fencing is all about mapping real world locations to help get a deeper understanding of each listener. For example, we can map every McDonald’s and Hungry Jacks car park in Australia to identify listeners who eat fast food – and how often. We can also map every recreation centre car park in Australia to identify listeners who are into health and fitness.
The more times a listener enters one of these zones the more detailed the profile we can create.
Here is an example of a geo-fence around the Bunnings hardware store in Nunawading, Victoria. The geo-fenced area covers the car park next to the store.
If a listener drives into the car park and parks the car for a period of time we can ‘tag’ the listener as a hardware shopper.
If the same person then drives to a nursery, a plumbing store and a furniture store we can probably tag that person as a home renovator. The more data we collect, the tighter the profile.
By this stage we are swimming in data about our listeners. Advertisers will be able to log into the platform and create targeted campaigns that are as tight as any search engine advertising campaign.
An advertiser with a budget of a few thousands dollars will be able to get as good a return on investment as an advertiser with a budget in the millions. Radio advertisers will no longer have to waste money talking to people who won’t buy their product, to reach people who will.
For the listener, this will result in a much tighter service. Rather than ten ads in a row before the news, of which only one or two are relevant, the listener will only be presented with ads that are relevant to their profile.
Yield management will also be automatic. The higher the demand, the higher the price. Just like search engine advertising. The market will decide the value of the inventory.
More than audio
While 30 second radio advertising is incredibly powerful, image if you could enhance the audio ads with interactive advertising such as coupons and display advertising.
Radio advertising now becomes an interactive product that can be tailored for each listener. DAB+ radio is starting to do this in a small way, but interactive radio delivered via the mobile networks, or combined with DAB+ as a mobile back-channel, will open a whole new world of opportunities.
Let’s look at some examples of inventory that will be available for advertisers in the next generation of car radio:
Audio ads will continue to play a big role in the next generation of car radio. However, advertisers will now be able to create different ads for different groups of listeners. A fast, up-tempo ad for young listeners and a more mature ad for the older demographics.
This is where location based advertising will shine. Broadcasters will be able to develop new interactive campaigns such as coupons and competitions that are delivered to the dashboard through the user’s phone or a direct connection.
Say the listener has been tagged as a grocery shopper who parks in the Woolworths car park every Saturday morning. The advertiser can identify this listener and send the listener a coupon late on a Friday night.
When the user heads off shopping on Saturday morning the coupon will be displayed prominently on the dashboard and stored in the phone.
The next generation of car radio will be delivered via the mobile phone or a direct car wifi/data connection, to the big screen in the middle of the car dashboard. When the radio app has control of the screen, it can be used as a moving billboard.
When the interface is idle the space can be used to display targeted location based advertising. If the user drove to the snow last year and was tagged as a winter sports person, we can display an ad for the local ski store when they travel past it on the way to work in the morning.
The future of car radio is interactive
This is the last article in this series on car radio, I hope have you enjoyed them.
The changes that are happening to car radio will see the biggest shake-up in this space since Marconi turned on the first transmitter. DAB+ radio alone is not the future, interactive radio is.
Existing broadcasters are in a unique position to take advantage of the new technology and, as demonstrated in this article, there is a mountain of new revenue opportunities to generate income.
Broadcasters who focus on product will be the winners in this space.
Anthony Gherghetta is the lead mobile development strategist at The App Studio in Melbourne, Australia. You can contact Anthony here and see his personal website here, or the App Studio here.