Programmatic Radio: The Next Frontier

programmatic radio
William Li

Programmatic is dramatically changing all forms of ad buying, including advertising on one of the original forms of broadcast media: radio. Technology has already begun transforming radio, including how content is created, stored and utilized by radio stations and streaming services. Now, it’s poised for an even bigger change with the integration of programmatic radio buying.

What is Programmatic Radio?

For years, radio advertising operated via the “mass media” approach: Blast a message on a popular radio station and hope that the intended audience is listening. Nowadays, marketers know a lot more about their radio audiences.

Yet, directly honing in on that audience was a lot harder before programmatic. Targeting in the past was only based on contextual/interests targeting and audience measurement. While this did allow marketers to target to an extent, it also meant that there was an enormous amount of waste. The contextual targeting approach typically includes a much larger audience than what truly needs to be targeted. Now, programmatic is positioned to benefit the non-digital ad inventories of TV and radio.

Programmatic radio is twofold. It includes the following:

  • Online streaming: The newer radio formats that include Spotify and Pandora, and includes the magnitude of user growth and advertising ability. More and more users are rapidly transitioning to online streaming platforms because of its convenience and the ability to “program” their own radio stations. In turn, these streaming services are becoming viable channel options for reaching target audiences.
  • Terrestrial (traditional) radio: including targeted ad delivery and real-time reporting.

Unlike the online streaming services (which can take advantage of the digital technologies), terrestrial radio lacks ad technology. Therefore, the technology has to catch-up to the needs before it can really reap the benefits of automated buying – but that doesn’t mean that marketers aren’t trying.

The major player in the terrestrial radio space is Marketron. Marketron is creating a platform (called Mediascape) that allows stations to “see their sell rates and inventory avails, and then select those avails and publish them to Marketron’s cloud-based supply-side platform”.

The online streaming space is also looking to break into programmatic. Recently, iHeartMedia announced that they will be collaborating with Jelli, a programmatic advertising platform. The solution allows advertisers to programmatically purchase ads on iHeartMedia radio stations. This would eliminate the headache of trying to manually buy inventory on the best radio stations at the best times.

Barriers to Programmatic Radio

Like programmatic TV, programmatic for terrestrial radio isn’t fully programmatic. Real-time bidding isn’t completely possible, and marketers can’t do impression-level targeting as one can with digital programmatic media buying.

Another issue is for terrestrial radio advertisers is proof of performance, which affects forecast impressions and reach. Since publisher agreements are no longer in effect and marketers are competing directly with others for the same media spots, they may not win as many bids. In the past, they had a guaranteed number of times when their ads would be heard. Now, it’s based on the open market and real-time bidding.

Finally, there is fear that cost per mile declines could occur, especially if broadcasters have a lot of unsold inventory that they want to unload. To prevent this, inventory controls would have to be put in place to ensure revenue streams are maintained.

Programmatic for streaming radio is a bit easier since it can take advantage of digital buying technologies. Yet, it still faces many of the same barriers as terrestrial radio. Marketers must have proof of performance. Radio advertisers also need to overcome their fear of programmatic: They remain more comfortable with the traditional buying and selling methods.

What is the Future?

Despite some major obstacles, programmatic is primed to expand beyond digital into other platforms, including radio and television. While the technology still has some evolving to do, programmatic media buying will revolutionize how radio advertising is bought and sold.

Marketers need to understand the benefits of an efficient and data-oriented campaign approach in radio. Once programmatic radio is fully optimized and running, marketers will be able to tap into real audience information, including how they interact with radio stations, what tickets they’re buying and for what they are opting in. Being able to use this type of data in radio ad campaigns will ensure success and improve overall ROI.