A Crowded Ad-Insertion Market
Those vying for a foothold in the targeted ad-insertion market — companies like Hiwire, Lightningcast, Radiowave, SurferNETWORK and Coollink Broadcast Network (CLBN) — must cope with all of these issues at once. All are trying to connect radio webcasters with a new inventory of advertisers, while providing a technology that presumably holds it all together.
Hiwire, based in Los Angeles with sales offices across the country, has focused on Internet-only radio stations. The company recently announced a deal with Clear Channel Communications to deliver and sell targeted ads for Clear Channel's flagship Internet radio station, World Class Rock. Hiwire's technology utilizes a three-question opener for radio listeners, whereby it gathers the necessary demographic information for tightly targeted advertising. After users opt in with their gender, age, and zip code, radio stations within Hiwire's network can insert ads that target that demographic.
"At this point, there's no reason to suspect (targeted streaming ads) won't be the dominant model online"
"Our technology provides fine-tuning on the fly for advertisers looking to maximize the demographics of its listeners," says Jim Pavilack, president of Hiwire. But while Pavilack asserts that the number of listeners and customers for Hiwire "grows significantly every week," he is unable to provide definitive numbers of actual targeted ads served.
Tom DesJardins, chief executive officer of Alexandria, VA-based Lightningcast, is confident that the business model of targeted ad-insertion will work. "At this point, there's no reason to suspect it won't be the dominant model online," he says. Lightningcast has announced affiliate partnerships with radio station programming software company, Scott Studios, and DesJardins points to a "number of trials underway." But, like Pavilack, he is unable to provide specific success stories.
Still, DesJardins maintains the numbers will work out in the end, with an advertising pricing structure that is significantly higher than that of traditional radio. That traditional pricing structure varies wildly between markets, but generally falls in the $8 to $15 CPM range. (CPM stands for "cost per 1,000 views"; M is the Latin cypher for 1,000) "Higher CPMs are required to make this industry work," says DesJardins, citing figures of $50 CPMs for audio ads and eye-popping $150 CPMs for streaming video ads.
The technology offered by SurferNETWORK (SN), a New Jersey-based company that aggregates radio stations on its site, requires users to download a Surfer player before listening. Once downloaded, the player provides instant-on listening (no buffering) and displays the name of the song and artist playing. The company has about 50 stations in its network offering targeted ad replacements, ranging from small stations in New Jersey to even smaller ones in Oregon.
For broadcasters, SurferNETWORK pays all the costs to stream their content, and pays them a percentage of the advertising revenue. SN installs a server that connects directly to the station's broadcast automation system.
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