The "On Demand" Era

New developments in technology have been increasingly leading us to become an "On Demand" entertainment culture. Music is emerging as something we can purchase from almost anywhere. “For the customer it’s an instant gratification,” said Ken Lombard, president of Starbucks Entertainment. “You’ll hear the song, be able to identify what it is and download to the device.” This feature has been introduced in 600 Starbucks locations in Seattle and New York City- however many other cities will be offering the service later this year. The purchase of these songs will show up on either the user's iTunes account, or their phone bills. The charge per song is 99 cents. According to Starbucks, they are the first of any retail outlet to offer this type of capability.

One of the concepts behind this type of marketing is to get consumers to buy on impulse, while they have the impulse. The longer a consumer has to think about a purchase, the more uncertainty can start to seep in. This development is much like the tagging feature that is being offered on HD radio. Receivers and appliances that use HD radio allow users to mark songs they hear on the radio for download. Apple also has a hand in this development. The company has really emerged as a pioneer for advances in devices, software, and conceptual developments in audio technology. "When a song plays on your HD Radio that you like, a simple push of a button will tag it and later give you the chance to preview, purchase, and enjoy it with iTunes and your iPod," said Greg Joswiak, Apple's vice president of iPod Product Marketing.

At first, the iTunes tagging feature will not be used by all HD radio broadcasters. A formal announcement of all stations that will be participating will be released soon- the National Association of Broadcasters convention that was held last week dealt partially with this issue. Already strongly on board is Clear Channel Radio, which will be broadcasting all of its FM stations in HD and will employ the tagging function. They are even urging other major broadcasters to embrace the new technology.


Devices such as this Polk, iPod player/HD radio receiver have a tag button right in the center of the console. The consortium of radio broadcasters known as the HD Digital Radio Alliance are extremely excited about the new iTunes feature, and have announced that they are planning "a multi-million dollar advertising campaign focusing on the JBL and Polk" receivers later this year. Polk says that its new products, such as the I-Sonic Entertainment System 2 will clearly indicate which digital radio frequencies have songs enabled for tagging. All tagged songs will be saved and transferred to an iPod when it is docked. Afterwards, when the iPod is attached to a computer, the users iTunes software will automatically show the information about the songs and allow purchases. All of these songs will be added to a "tagged" playlist. It will be interesting to see the numbers of songs that are purchased in light of the tagging feature- because each one will represent a product that a consumer would not have purchased without this advancement.

Sources:
NY Times
Apple Insider

More Auto Companies Installing HD

This week, a Ford Motor press release announced that it will be installing HD radios on demand, and in nearly all product lines. The product lines include not only Ford models, but also Lincoln and Mercury as well. This new feature can also be purchased for previously purchased cars from 2005, 2006, or 2007- this is available nationwide. “We believe HD Digital Radio will be an important part of Ford's commitment to delivering innovations with mass appeal,” says Kim Irwin, Vehicle Personalization and Accessories manager for Ford. “We're helping our customers stay connected by supporting the features and functions they want in their vehicles. The dramatically improved audio, text and data features of HD Digital Radio – along with its hundreds of new radio stations – create a compelling combination at the right price.”

To advertise Ford’s HD product launch, the Digital Radio Alliance will be airing a 13-week long radio-marketing campaign in partnership with Ford. The two organizations are exchanging the product installation option for complimentary advertising, which is a pretty interesting marketing circumstance. The tag line for promoting HD radio in general is"HD- Discover It!" which is a good approach to marketing, because there is still little knowledge of HD among the general public. There are two options for Ford's new feature, one is the standard HD set, and the other adds iPod connectivity- which I imagine will be very popular. The first option is priced at a suggested $279, while the latter is $299. Installing these radios takes about a half hour and adds on a $50 fee.

This is a significant step for HD radio because it will boost awareness and sales of the new audio format. Ford, which composes a huge portion of the country's auto sales could be the largest promotion that HD radio has incurred thusfar. Afterall, it was not untill auto companies began embracing satellite radio did it really take off- so perhaps the same will happen for HD radio. Ford is not the first company to begin installing HD radio, however. The pioneer for this option was BMW.

Their HD option is available for factory installation of all new models across all product lines. The HD option costs an additional 500 bucks. Other automakers following the HD bandwagon are Jaguar and Mini-Cooper USA. "We are pleased to offer our customers the high-quality sound of HD Radio broadcasting in the new MINI Cooper and Cooper S hardtops." says Rich Steinberg, the head of MINI USA product strategy. "HD Radio broadcasting now offers our customers an additional level of choices when it comes to premium, in-car audio technology." It seems as though common themes of innovation and customer options are the driving force behind offering this new feature. Adopting HD installation is also a way to assocaite innovation with your brand, not to mention press coverage and the buzz it creates through word of mouth. Figures from BMW group predict that HD radio stations will exceed 3,00 in the next few years. You can view an updated list of HD radio stations & multicast stations at www.hdradio.com. HD Radio™ is a trademark of iBiquity Digital Corporation.

The Latest on HD Radio

In light of its advantages regarding content and audio quality, HD radio has been gaining ground across the country. HD radio, also known as digital radio, is different from standard terrestrial radio in that it transmits not only an analog signal, but a digital signal as well. This allows the radio reciever to pick up adjacent frequencies, which are also higher in overall audio quality. Allegedly, the audio quality of an AM station becomes that of FM station, and the quality of the FM station becomes the quality of a compact disk.




With benefits such as these, many are wondering why it hasnt become more popular, more quickly. It has lagged far behind satellite radio in its rollout- and the advantages are quite similar. The answer lies in the heavy marketing that XM and Sirius Satellite have implemented, as well as the high cost of a new trnasmitter for radio stations. For a radio station to broadcast in HD, they have to purchase a new transmitter that costs approximately $150,000. We are seeing that the only stations that can afford these transmitters are stations in bigger cities. A radio station in a more rural area would most likely not have enough income to afford the transmitter.

There are just over 11,000 commecial radio stations in the country, and only 700 (roughly 6%) of them are currently broadcasting in HD. Radio stations are not the only ones who need to pay their way to get to HD audio, consumers need to buy an HD reveiver (much like satellite radio). Also like satellite, the real turning point for HD's growth in popularity will probably be when auto manufacturers begin putting the receivers into their cars standard. This feature could be a unique selling point for brands that realize the benefits of HD radio. Some pressure for this to come about will most likely come from wall street. iBiquity, the company that headlines the HD radio effort would love to see their product become popular in the auto world in order to gain profits for its shareholders.

One unique feature of HD radio that marketers may find enticing is the ability to have text messages appear on the HD receivers. Every HD receiver has a screen that allows the song and program titles to appear. Marketers could now not only send out audio messages, but now visual as well.

The newest development regarding HD radio is the concept of "tagging." The idea was put together via a joint effort from iBiquity and Apple. Basically a song that a listener hears on his HD radio receiver can be tagged and marked for download on the user's iTunes account. This would allow instantaneous purchasing of music due to a connection between the reciever and the user's computer or online account. Initially this feature will be available on HD receivers at home, but it is predicted to be ready for car receivers early next year.


Sources:
http://www.betanews.com/article/HD_Radio_to_Debut_iTunes_Tagging/1189193594
http://www.jacobsmedia.com/articles/tech3_hdradio.asp
360 Degree View Podcast
http://www.hdradio.com/how_does_hd_digital_radio_sound.php

Check out the ManhattanService Network for website promotion.

Sirius / XM Merger: An Expensive Endeavor

One of the most closely watched developments of the radio world is the proposed merger of Satellite radio giants XM and Sirius. We are all anxiously awaiting the FCC's response to the "Consolidated Application for Authority to Transfer Control" which was filed by the companies this year. As the situation progresses, CEO Mel Karmazin of Sirius and Chairmen of XM Gary Parsons are finding themselves spending hundreds of thousands of dollars in their efforts to have the merger approved. In a recent article, BusinessWeek reports that XM had spent $580,000 on lobbyists in the first half of this year, while Sirius spent $650,000. In total they have hired 13 different lobbying firms this year.

Surprisingly, this much capital is only a fraction of what the opposition has put on the table. The NAB (The National Association of Broadcasters) has spent $4.3 million in the same time frame. The NAB represents the nations traditional tv and radio stations. Obviously these groups would be threatened by the merger. The companies claim that the merger will result in a variety of benefits for consumers, which include a wider array of programming content and lower prices. Not surprisingly, the NAB is arguing that the merger would create a monopoly in the market, which would result in harm to radio stations across the nation.

What would this merger mean for marketing? If they can pull it off, it will most likely lead to a conbined increase in advertising revenue. I feel as though the union will lead to a synergistic aggregation of market share. Once the cost goes down and people start buzzing about the merger, more and more people will begin subscribing: and a larger audience = a more appetizing prospect for marketers. Basically the merger would mean bad news for traditional radio, but great news for the two companies. Many believe the FCC won't allow the merger due to the precedent of their ruling regarding It'll be exciting if it happens, but for now all the companies can do is nervously anticipate a government ruling, which should be made early next year.


This chart from Wikipedia shows the increasing number of consumer subscriptions to both Sirius and XM Satellite radio (the y axis is in millions). Both companies have promising futures, and if these trends continue they will slowly eat away at traditional radio's market share. Advertisers will, theoretically at the same rate, stray from traditional radio as well- and flock to either XM or Sirius (or the merger they create). If allowed, the merger would be huge news for the world of marketing, financial markets in the US, and obviously everyone associated with these companies. However, if the merger is shot down, all of these swelling lobbyist expenses will have gone to waste. We'll just have to wait to see how it all unfolds.

XM Satellite Radio: An Overview

XM Satellite radio is a pay-for-service set of radio frequencies that offers more music, news and sports channels than standard radio stations. The service provides 39 news, entertainment and sports channels, 21 regional traffic/weather channels and 23 sports channels. The music stations are typically ad free, yet the remaining channels avergae eight minutes of advertising per hour. This effects radio advertising in that it enables more specific targeting. The expanded set of channels results in more detailed content based on topic or region. Advertisers can now reach listeners who are more specifically in tune with their target market, such as the women's programming channels that XM currently offers.



XM radio has increasingly become an enticing medium for marketers. Last year XM Radio tripled the number of advertising agencies it works with, which brought in $20 million in revenue. The growing demand has persuaded XM to start advertising on their music channels.

"We can't keep up with the demand," says XM's sales and marketing VP Scott Karnedy. "When we broke through six million subscribers, we saw that as a tipping point [with advertisers]." Advertisers are salivating over the increasing ad space, however we'll have to see how listeners react. The lack of ads on their music channels was a huge selling point for XM. If subscriber rates start dropping, so will the value of the ads everyone wanted in the first place.

Source: http://www.businessweek.com/technology/content/apr2006/tc20060413_150389.htm

Introducing: "Blink" Radio Advertising

Clear Channel, the world's largest radio company is pioneering a brand new take on radio advertising. The industry giant, which owns over 1200 American radio stations is introducing advertisements which last only a few seconds. "Blink" ads will last only two seconds- long enough to play the company's jingle, slogan, or brand name. For example, as one song bleeds into another on your favorite radio station, you may hear McDonald's "I'm Lovin It" slogan. Another similar spot you can buy is an "adlet," which will last 5 seconds.

Even though it will not be able to communicate new offers, products, or really any information for that matter, these ads will build brand awareness and knowledge- part of the marketer's goal is to keep that brand on the top of your mind set. Marketers have always been looking for ways to galvanize radio advertising, which can be a formidable challenge because they are limited to audio.

"It really is to find new uses of radio for advertisers who are continually asking us to demonstrate that our medium can successfully extend brands, can successfully reach the consumer with touchpoints that are new and surprising," says Jim Cook of Clear Channel. The question is, will it work. Will simply registering the brand name to the consumer make a difference in their buying trends? If so, perhaps we have now found the most meaningful part of an advertisement. Perhaps now we can cut out additional information on ads which run up the costs for companies wanting to advertise. If taking the most valuable part out of an ad, and putting it on the radio for a fraction of the price of what a whole spot would be, then really we are maximizing efficiency.

As far as costs, and "adlet" is priced at 20% of the standard 60-second spot, and the "blink" is priced at only 10%. Prices will obviously vary depending on the radio station and market, but to put it in perspective- a top ten station in a major market would usually cost about $800 for a 60 second spot. This means with a blink ad, a company could get their brand name on the air for just 80$. Clear Channel's theory is that more companies will be willing to advertise using the "Less is More" strategy.

Sources: http://www.post-gazette.com/pg/06275/726832-28.stm
http://www.smh.com.au/news/world/a-brand-new-age-of-radio-advertising--blink-and-its-gone/2006/06/14/1149964608136.html

"Consumer 3.0"

Two recent articles from MediaPost.com give opinions regarding how the marketing industry learns about their audience. "On the Record: They Aren't Just Like Us" by Mike Bloxham describes the audience as being very unlike market mavens who work in the field. The consumer is portrayed as being relatively unconcerned or even oblivious to the media world and its trends. The average consumer is merely concerned about last night's game or a game show, and is only concerned with what they want out of the media. Bloxham thinks we should be weary of the hype that the dotcom bubbles ultimately generate. The truth is, not everyone is blogging, watching videos on their ipods, constantly using blackberrys or spending their time in virtual worlds. When those who work in the industry learn about the audience, they have to keep in mind that not everyone is as media-savvy and trend-driven as they are.

In "Consumer 3.0: Survival of the Fittest," Peter Lauria tells of the new breed of consumer that is "as much a creator of content as a consumer of that content." The new wave of internet has become a place where consumer created content aggregates in a hub of mass social networking. Sites like youtube, myspace and wikipedia exist due to the people who edit and contribute to them. The time of RSS and Web 2.0 has spawned what Lauria calls "Consumer 3.0," who is writing, splicing, editing, shooting, and manipulating content on the new media ecosystem. Accorind to a study by the Pew Internet & American Life Project, more than half of children ages 12 to 17 are using sites like facebook and myspace to upload files, %55 of them to be exact. This effects how the industry learns about the audience it can now do so by viewing messages, blogs and videos online. Tapping into these new web-based networks gives us a window into the lives of the consumer. This age group is growing up in the 2.0 environment, which means they will most likely continue to do so as time goes on. As NBC s Alan Wurtzel articulates, "The media you grow up with basically determines the kind of media consumer you'll be."

(Podcasting)

Podcasts present a whole new take on information gathering. It is a more personal and dymamic way to get newsfeeds, information and opinions from experts in a given field. Subscribing to a podcast cuts out the need to search for the information you want, as the subsequent broadcasts are automatically downloaded to your audio library. Getting marketing information has never been easier. There are numerous podcasts that are dedicated to advertising, marketing, new media technology, market trends, etc. All the major players in the industry (such as Ad Age) are currently broadcasting using this medium, which means that professional, insightful and up-to-date information is only a click away. Podcasting also has the advantage of being accessed at all times. We can now listen to informative broadcasts of very specific areas of interest even when we're preoccupied, like when were driving to work. iPods make this possible. These are the advantages that podcasts have over more traditional media such as print.