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Ad Insertion Technology Disappoints Broadcasters

8-24-2012

(by Ed Ryan) A "significant representation" of the radio industry using ad-insertion for their online streams is seriously considering abandoning the technology and replacing it with their over-the-air signals. The announcement that Apple has a patent that may eventually be able to remove ads from a stream may push these groups to decide to make the switch sooner rather than later, but that's not the only reason. Streaming has become a very hot topic among many broadcasters and that is sure to continue at the Radio Show in Dallas next month. Here's what we know about what's being discussed now.

While broadcasters know they need to be everywhere consumers want them to be, losing gobs of money to be there is not something they signed up for. They say when ad-insertion technology is used it degrades the sound of their radio stations, turning off consumers. Streaming has become a very expensive cost of doing business and the reward for doing so has not yet paid off. For most, the fees paid to SoundExchange and the cost of bandwidth alone make streaming a losing proposition. When you tack on the cost of the technology paid out to make ad-insertion a part of a radio station stream, it adds to the financial headache.

All of those expenses add up before local salespeople or a rep firm even pitches a digital package. And, let's face it, in the grand scheme of things, the online listening numbers for an individual station don't even compare to over-the-air broadcasts. Radio's biggest listening numbers still remain in the car, in the home and through a traditional signal. And, as we've written before, until a reliable, easy-to-understand, and easy to pitch ratings system is invented for all of radio, online numbers, for most, are just a guessing game. Radio reps need to be able to easily present a combination of numbers to advertisers and that's what broadcasters are waiting for. "Here's what you get over-the-air. Here's what you get online. Here's the price."

A large number of broadcasters, meeting informally about once every month, has a list of concerns about ad-insertion technology that's pushing them closer and closer to flipping the switch to their over-the-air signal. The transitions are clunky and often the levels do not match when a stopset concludes and the music starts. When stopsets are not filled with paid ads they have to be filled with something. Smokey The Bear has been making a big comeback online. Nothing sounds worse than 7 minutes of Public Service Announcements in a row. And, the revenue is just not there yet. Despite being bullish on digital, and broadcasters touting big revenue percentage increases, that number is still small. At the local level, it's nearly impossible to know for sure if a digital dollar is a real digital dollar or if that dollar would have been spent over-the-air anyway.

Years ago, the issue of running a full stream of programming including commercials had to do with concerns over AFTRA talent fees (Read Broadcast Attorney John Garziglia's Blog on Streaming HERE). That concern seems nearly non-existent today and broadcasters believe they can work that out so their stations sound cleaner online.





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