Internet Radio Advertisers: Get Ready to Spend More Money - eMarketer

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Internet Radio Advertisers: Get Ready to Spend More Money

As time spent with digital radio rises, ad loads, rates follow

May 1, 2015

According to February 2015 research by Rain News in conjunction with XAPPmedia, internet radio ad loads and spending are set to increase as consumers spend more time listening to digital music.

Expected Change in Internet Radio Ad Loads* According to US Music Industry Professionals**, Feb 2015 (% of respondents)

Fully 55.0% of US music industry professionals said ad loads during ad-supported listening would grow moderately over the next two years, and an additional 27.0% expected them to increase significantly. In all, ad loads were expected to rise nearly 15% over the next two years, from an average of 2 minutes, 41 seconds to 3 minutes—the maximum amount of time for the best user experience, according to industry leaders, and one that many services avoid going over.

In order to avoid interrupting too much listening time and still drive revenues, services will likely raise the cost to advertise on internet radio. Nearly eight in 10 music industry professionals believed internet radio ad rates would increase significantly (21%) or moderately (58%) over the next three years.

Expected Change in Internet Radio Ad Rates According to US Music Industry Professionals*, Feb 2015 (% of respondents)

In all, Rain News estimated that audio streaming listening hours would grow 42.7% over a three-year period, from 30 billion in 2014 to 43 billion in 2017. eMarketer forecasts that digital radio will account for 12.7% of US adults’ daily time spent with media in 2015, at 43 minutes on average—compared with 11.1% share and just over 30 minutes two years ago. However, ad expenditure certainly has plenty of room to catch up, as digital radio ad spending will account for just 4.7% of total US digital ad dollars this year, at $2.75 billion.

In research released in March 2015, Edison Research and Triton Digital put the number of weekly digital radio listeners at 44% of the population ages 12 and older, up from 36% in 2014 and 33% in 2013. eMarketer’s estimate for US weekly adult digital radio listeners is similar, at 43.4% of the population ages 18 and older this year, or 51.0% of adult internet users.

As consumers spend more time with internet radio, advertisers are following suit. However, to avoid irritating listeners, they’ll need to add more dollars than seconds.

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