Digital Radio Ad Market Continues to Grow

Radio has long been the perfect medium to reach consumers who are captive in their cars – commuting, carpooling or running errands. But an increasing number of consumers are discovering Internet radio and listening in a wider range radiodashboardof venues. As this audience grows, marketers are taking notice.

Over 40% of the U.S. population is listening to Internet radio on a monthly basis. That’s a big jump from just 30% in 2010. By 2016, eMarketer analysts believe the number will rise to 53.7%. When online only users are considered, about 60.1% of these folks tune in to Internet radio and by 2016, that number will stand at 67.4%.

This year, marketers are expected to fund $970 million in Internet radio ads. The growth rate over the next several years should resemble this:

  • $1.1 billion – 2014
  • $1.19 billion – 2015
  • $1.31 billion – 2016

The radio advertising market overall is expected to grow between 1% and 2.8% annually during the next few years. However, the Internet radio ad market will experience double-digit increases nearly every year between now and 2016. Despite the rapid growth, digital radio ad revenue will comprise only 7.5% of the industry total by 2016.

Analysts say that Internet radio is attractive to marketers because it’s easy to associate their brand with a specific artist or genre, the format is ‘driven primarily by ads’, and consumers aren’t able to avoid the in-stream ads. The advertiser interest may not be enough to keep some of the ventures afloat, however. The business model is likely to undergo changes, especially with respect to the high costs they face for licensing the right to play music. If these media companies can develop an additional way to engage more profitably with advertisers while growing their audiences, the digital industry may grow more quickly than expected.

To learn more about Internet Radio Listeners, check out the Audience Interests & Intent Report available at the Research Store on ad​-ology​.com.

[Source: Internet Radio’s Audience Turns Marketer Heads. Emarketer​.com. 6 Feb. 2013. Web. 20 Feb. 2013
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.