What are the issues for advertisers in the online audio space?
What are the issues for advertisers in the online audio space?
A view from Stuart Aitken

Think BR: Advertising in an online audio environment

What are the the key challenges and opportunities for the online audio sector, asks Stuart Aitken, editorial manager, IAB.

How do consumers feel about advertisers in an online audio space? What is the business opportunity in this rapidly evolving sector? What business models are working? What challenges lie ahead?

These are just some of the questions that we at the IAB have been exploring in some depth for the last year or so as we try to get to grips with a very complex sector with a range of key players providing services which are in many ways similar - but the more you scratch the surface the more differences appear.

The online audio sector has long been feted as an area to watch for the future. But with IAB market share estimates suggesting that the display advertising revenue figure for the online audio sector in 2011 was less than 1% of total online adspend, this suggests that either the sector is punching above its weight in terms of national press column inches - or there is still work to be done to deliver on the promise of an ad-funded online audio model.

With this in mind the IAB carried out a piece of qualitative research to assess what the issues are in relation to consumer acceptance of advertising in this space.

We also wanted to gain an insight into the importance of creativity in advertising within this environment, whether there was a preferred mode or length of advert, and whether we could begin to make recommendations to improve existing advertising models to suit consumers’ evolving needs.

The results of the research have been compiled in a new report Advertising in an Online Audio Environment - The Consumer’s View. The report outlines some of the key issues to be faced by streamed audio players, and traditional radio players who are increasingly embracing the digital model.

From a consumer perspective what emerged was the fact that this is a very personal medium, so if advertisers want to communicate in this space, they have to do so in considered and creative ways - shouting at listeners to buy windows is clearly not going to work! 

The report concludes that adverts need to be "like better people" - and be able to be more responsive to the particular moment in which an audience finds themselves.

So how possible is this?

To answer this question and to explore more of the key issues at play in the market, the IAB hosted an event as part of Internet Week featuring a range of speakers from Spotify, We7, Last.fm, Absolute Radio, the BPI and audio creative specialists Red Apple Creative.

The speakers were each asked to present what they felt was the key challenge for the future of the online audio sector - and the key opportunity. Following the presentations, the assembled audience of around 80 industry experts then voted for what they felt was the key challenge and opportunity.

The ability to mix the best that the broadcast one-to-many model offers with the possibilities of the connected one-to-one emerged as the key opportunity for the majority of the audience, with 35% of respondents selecting the motion put forward by Absolute Radio’s content director, Tony Moorey.

Mobile was also a key opportunity highlighted by several speakers with Spotify’s David Cooper and We7’s Gareth Reakes choosing to focus on the diversity of devices as a key trend to watch in 2013.

Meanwhile, 41% of the audience agreed with the BPI’s Keith Jopling that music consumption patterns and monetisation models drifting apart presented the biggest challenge for the sector.

Other key concerns centred around the challenges for online audio publishers to retain distinctiveness, customer loyalty and an advertising premium; and ensuring that advertising formats are suitable and effective given the increasing numbers and types of devices used by an increasing number of consumers.

What was clear from the event - and from the IAB’s research - is that consumption of digital audio will only grow in the coming years.

As the BPI’s Keith Jopling pointed out: "CD trays are disappearing all the time - soon they won’t feature in computers or cars for example." Equally as Last.fm’s commercial director, Chris Wistow noted: "online streaming is no longer a trend… it’s becoming a behaviour."

Clearly there is a vast amount of opportunity here for brands to communicate with a hugely engaged - and growing - audience. This is an area that we at the IAB expect to grow - much as we have seen rapid growth in the online video and gaming sectors. Stay tuned…

Stuart Aitken, editorial manager, IAB