Streamies: An Advertiser’s Dream
Another highly touted feature of in-stream advertising is its ability to get personal, unlike any form of marketing media seen before. While banner ads are simply miniature electronic billboards, which may or may not be seen by the user, a targeted in-stream ad has the makings of a one-on-one conversation, where brand building is most effective.
And according to Arbitron, so-called "streamies" — those who listen to or watch online webcasts — are much more likely to make a purchase online than Web surfers who don't stream regularly. In fact, Arbitron says that two-thirds of "streamies" believe that commercials are a fair price to pay for free content. So a targeted ad to a ready and willing buyer should be as good as gold for advertisers.
"Clearly, this is what the Web was meant to be," says Steve Von Der Haar, senior analyst with the Yankee Group, referring to targeting specific ads at specific users. "But right now, there's just not a big enough broadband audience out there to justify such high CPMs in the advertising market." In addition, Von Der Haar points out that ad agencies also might be apprehensive about the cost of creating a dozen different ad spots for a dozen different demographics.
And still another sticking point for agencies is uncertainty about the accuracy of Internet radio listener numbers. Longtime market research firm Arbitron has provided information on terrestrial radio listeners and has extended its presence as a third-party measurement service for online radio. But a set of newcomers, including Measurecast and Next Audit, have entered the measurement services fray attempting to become the equivalent of a Nielsen ratings standard for Internet radio.
"We provide a set of numbers for agencies to determine where they should be advertising," says Bill Piwonka, vice president of marketing for Portland, OR-based Measurecast. "Because when it comes down to it, no agency will entirely trust self-reported numbers from the broadcasters themselves."
Big Boys Want To Play
Although the early adopters — dedicated ad-insertion companies like Hiwire and CLBN — are still in the position of convincing agencies to come on board, the targeted ad-insertion field appears on the verge of an explosion. Well-known, well-funded streaming services and software companies are getting ready to throw their hats into the ring, with names like iBEAM, Activate, Real Broadcast Network (RBN) and (gulp) Microsoft.
RBN announced its in-stream ad solution strategy toward the end of last year. Independent radio group, Local Media Internet Venture (LMiV), said it will use Real Broadcast Network's webcasting services for its 190 stations. LMiV's member stations reach more than 37 million people over the air in the United States and Canada.
However, RBN's system currently utilizes ad-insertion technology, but not targeted ad insertion. For example, the system strips out local on-air commercials and inserts Web-only spots, giving local stations the opportunity to bring in national advertisers. At this point, though, the system does not provide targeted ads because, according to RBN, it's just too early.
"We're all about working with radio stations in concrete terms and building a significant online audience," says Michael Leo, senior product manager with RBN. "There are a bunch of outrageous claims being made about targeted-ad strategies that count on CPMs in the hundreds of dollars range. If that's what your business model is built on, it sort of boggles the mind."
iBEAM has been directly involved in providing on-demand ad insertions for nearly a year now, working with companies such as Profit and StarGuide and providing in-stream ads for such sites as MTVi, AtomFilms and MSNBC. It claims to have streamed over 20 million ads so far. Yet, the company has been leery of jumping into the live, in-stream targeted ad-insertion market.
As if the market weren't crowded enough, another part of the Web radio picture is represented by the stand-alone Internet radio devices coming on the market, like those offered by Sonicbox and Kerbango. The aim of these companies is to increase the listener base by aggregating stations on their tuners. But radio stations must also be aware of rising bandwidth and infrastructure costs that come with each new listener added. That's why Sonicbox (now called iM Networks) started its ad-insertion technology, which lets radio stations gain listeners but also helps them to create new ad revenue.
Activate is also working to partner its way to a full ad-insertion solution. Currently, Activate works with Engage and AdForce for marketing and selling; RCS for broadcast automation support; and Microsoft for providing the streaming software.
Still, Stew Chapin, Activate's senior vice president of marketing, has no illusions about how far along his company, or the entire industry, is at this point. "We're barely at the starting gate," says Chapin of proven streaming media business strategies. "The cable market took 10 years to build, so we still have a long way to go."
What's missing so far, says Chapin and others, is a success story of a streaming webcast that provides targeted ads to an audience of significant size — maybe 100,000 listeners/ viewers or more. That type of reach will definitively convince advertisers that the Web really is a bastion of consumers who are leaning forward, remembering brand names, and just one click away from a purchase.
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