Radio Advertising Set to Become the Next Frontier of Programmatic

Programmatic ad buying in general, is big, and it’s only getting bigger.

The methodology that uses data, algorithms and demand-side software to strategically and automatically buy online ads is expected to snag 67 percent of the digital display ad market in the U.S. this year, representing 69 percent of the mobile display ad market. Next year programmatic digital display ad spend is expected to reach nearly $27 billion, a 24 percent increase over this year.

One of the next big frontiers in programmatic is radio advertising. A summary:

Q: Who are the big players in radio?

A: Some note radio has been slower to embrace programmatic at the local levels that account for most radio ads; one Medialifemagazine.com story claims less than 1 percent of all radio buys are now made programmatically. But Jon Mansell of Magna Global predicts more than half of radio buys will be handled programmatically within a few years’ time.

“There are dozens, possibly hundreds … of vendors rolling out programmatic buying exchanges across different media,” the story reports. “(But) the industry is still so young there isn’t any one brand that’s emerged as the industry standard.”

Some companies announcing programmatic projects in the last year include:

  • California-based Jelli recently launched a programmatic platform called “SpotPlan for Advertisers” that encompasses the entire ad inventory of iHeartRadio.
  • Xaxis, the world’s largest programmatic media and audience platform, recently launched Xaxis Radio offering inventory from more than 90 local broadcasters and internet radio players including MediaCorp, Astro and iRadio networks.
  • Music streaming giant Spotify is working with Rubicon Project, The Trade Desk and AppNexus to make its mobile audio inventory available in real time.
  • Katz Radio Group is rolling out Expressway from Katz, an industry-wide spot exchange for the 4,400 radio stations it represents.
  • Marketron is enabling programmatic for the 6,500 or so broadcast radio stations using its revenue management software.

Q: How much revenue is generated by radio ads? 

A: Jelli CEO Mike Dougherty noted last year radio was generating about $16 billion of revenue, virtually none of that from programmatic. But he predicted growth of $10 to $20 billion by the end of this year.

Q: What percent of marketing budgets go to radio? 

A: A survey this year shows U.S. companies plan to spend 4.1 percent of their marketing budgets on radio this year. Total marketing spend that includes all venues is slated to hit $1.34 billion.

Q: Challenges in rolling out programmatic buying? 

A: Because the process is so new, many publishers are concerned their media inventory may be undervalued when released into an auction atmosphere, says Ashwin Nayak on Mobilemarketer.com. And some perceive programmatic to involve undersold or remnant inventory. Others mention a lack of standards and a difficulty in measuring ROI, since U.S. audiences often stream on non-IAB compliant software or download (rather than stream) content.

Q: Who stands to benefit? 

A: Revenue projections aside, agencies are starting to see digital audio as integral for targeting on mobile, reports Alison Weissbrot on Adexchanger.com, noting it allows for diversification of audience buys and the opportunity to reach multiple customers. Other advantages include programmatic’s transparency and immunity to ad blocking.

“Audio combined with mobile becomes particularly powerful in programmatic,” observes Spotify exec Jana Jakovljevic. “Buyers can target someone based on the time of day, their location and Spotify’s own data.”

Contact Thumbtack for more information about pursuing a strategy in programmatic.

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