Key ad categories to watch in the coming year:
- Pharmaceutical: This could be the major AM/FM radio story of 2020. AbbVie and Pfizer are now active. There is a lot of interest among other pharmaceutical brands to use AM/FM radio to complement and supplement network television. The fact that P&G’s personal care brands like Prilosec OTC, Sinex, Pepto-Bismol, Metamucil, and NyQuil/Dayquil are major network radio advertisers is not lost on other pharmaceutical brands.
- Tier one auto: There was a rediscovery of network radio in 2019 among tier one auto brands. Look for a greater focus on network radio as a means to supplement declining TV deliveries and introduce real reach to counteract digital fraud.
- Direct-to-consumer (DTC): DTC brands are getting priced out of Google and Facebook as cost per acquisition costs soar. The cost per acquisition for a $100-dollar product was $15 to $20 three or four years ago. Now it’s $40 to $50 to acquire that customer. Given this paid social inflation, brands are turning to AM/FM radio realizing that it can drive both sales and build a DTC brand.
- Consumer packaged goods (CPG): At the moment, P&G is driving the entire category on AM/FM radio with no end in sight. In 2020, look for Unilever to bring more brands to AM/FM radio. As other brands wake up to what P&G is doing and see the success they are having, more CPG brands will flock to AM/FM radio.
- Local TV Q3/Q4 political sellout could push other categories to AM/FM radio: There are not enough local TV ads to satisfy the political demand that forecasters are predicting. If political eats up the vast majority of local TV inventory in the last half of the year, brands will have to take a look at AM/FM radio (both local and network) to replace and generate the necessary reach.
Events to watch for:
- Demographic trend – shift to Boomers: Marketers are taking note of the immense spending power of Boomers. Targeting persons 25-54 misses the 41% of spending represented by persons 55+. The number one new car buying demo is persons 55+. Age targets are shifting older. In their book How Not To Plan: 66 Ways to Screw It Up, Les Binet and Sarah Carter, marketing effectiveness and strategy gurus, observe: “Older people outnumber Millennials, have more cash and more time to spend it. The bigger the price tag, the more important they are.”
- Hollywood strike: There is potential for a Writers Guild of America, Screen Actors Guild-American Federation of Television and Radio Artists, and Directors Guild of America strike. Normally the movie and TV directors guild finish their deal ahead of the writers. This year, that’s not the case. There could be a major entertainment strike impacting TV and film production in 2020. The issues are focused on streaming video. The last strike in 2007/2008 caused an erosion in television ratings. Brands could utilize AM/FM radio to replace the lost reach due to the strike.
- Nielsen Media Impact (NMI): The introduction of audio into Nielsen’s media planning optimization “NMI” platform is already causing brands to discover AM/FM radio. P&G is a massive user of the NMI platform. The NMI platform consistently reports significant reach growth when 20% of a television budget is reallocated to AM/FM radio. Look for agencies to add the audio data to their NMI tool. As awareness and usage of NMI spreads, more media planners will put AM/FM radio into the plan.
- First “ZoneCasting” pilot for AM/FM radio: New technology from a firm called GeoBroadcast Solutions permits over-the-air broadcasters to have multiple zones where different content and ads can be aired. The technology works using the existing AM/FM radio broadcasting tech platform and will work on all existing consumer radios. Advertisers have expressed a huge interest in this new geo-targeting capability.
- Marketers will create the sound of their brand: The rise of smart speakers and voice search will cause brands to develop their “audio logo” or “sonic brand.” Nielsen reports only 40% of TV ads have consumer “eyes on glass.” Thus, most TV ads are “heard rather than seen.”
- Among U.S. 18-34 Millennials, time spent with linear AM/FM radio will continue to approach time spent with linear television: Deloitte has found that in Nordic countries, time spent with AM/FM radio has already surpassed linear television among 18-34s. As non-ad-supported video services (Netflix, Amazon Prime, etc.) command a larger share of video time spent, AM/FM radio has become an increasingly important advertising platform for brands.
- The Golden Age of Radio Attribution is upon us: AM/FM radio can now prove its impact. Firms like LeadsRx, Analytic Owl, Veritone, and C3 Metrics now quantify how AM/FM radio ads drive search and website visitation. Hundreds of brands measure the brand lift impact of their AM/FM radio campaigns on awareness, brand consideration, perceptions and purchase intent. Nielsen can quantify the sales effect and return on advertising spend for retailers and consumer packaged goods brands. Creative testing firms Veritonic and ABX are testing thousands of radio ads.
2020 will be another big year for podcasting:
- Audience milestones: Last year, monthly podcast audiences surged from 26% in 2018 to 32% according to Edison. Will monthly audiences surge another 6 points to 38% this year?
- Brands rush in: Last year, IAB/PwC reported that brand spend in podcasts grew at 5X the rate of direct response. Still, direct response podcast spend was slightly greater than brand investment. When IAB issues their podcast revenue report this year, could podcast brand spend pull past direct response?
- Possible technology innovation scenarios: Facebook creates an audio product that makes it possible to share and consume audio content into your news feed. Android makes it easier for the half of America using Android devices to listen to podcasts. Google makes audio a bigger component of voice and text search.
- Podcast platform shifts: According to Morgan Stanley’s just-released 6th Annual Audio Entertainment Survey, Spotify has surpassed Apple Music as the #1 platform for podcast consumption. This further validates findings from Westwood One and Audience Insights Inc.’s Podcast Download: Spring 2019 Report that revealed how consumers who recently began listening to podcasts use a more diverse group of platforms instead of sticking to an Apple Podcasts default.
Podcast measurement arrives: Think podcasts are unmeasured? Think again. There are major developments in podcast audience measurement:
- Edison launches a sales network audience measurement service: The new service measures the weekly podcasts consumers listen to. These are rolled up to the sales network to report actual listening.
- Nielsen debuts Scarborough podcast study looking at what listeners buy and where they shop: Over 100+ major podcasts are profiled for their audience purchases and shopping behaviors.
- Triton launches podcasts listening service: The leader in audio streaming measurement has just launched an audience service. By directly integrating with podcast hosting platforms and content distribution networks, Triton’s Podcast Reports seek to eliminate inconsistent measurement practices and self-reported data.
- Five firms now measuring podcast search and site attribution: Chartable, Barometric, Podsights, LeadsRx and Analytic Owl measure the degree to which podcast ads drive search and advertiser site visits. These firms add a small, fast redirect between the podcast player and the episode through the RSS feed to anonymously identify the listener. When the podcast listeners visit the advertiser site they are identified.
- Nielsen and Audience Insights Inc. measure podcast brand lift: Both firms have conducted dozens of podcast brand lift studies for marketers and agencies.
2020 will be an exciting year for AM/FM radio and audio!
Pierre Bouvard is Chief Insights Officer at Cumulus | Westwood One.
Contact the Insights team at [email protected].
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