Terrestrial Radio Operators Find Strategies to Compete with Streaming Services

Consumers only have so many hours in the day to devote to media but that detail doesn't deter promoters of newer formats, like streaming music services. New media is gaining market share and while traditional radio operators are watching the progress of players like Pandora, radiogoodmany reps believe they still have a strong advantage in selling their media to marketers.

Pandora just released strong sales estimates for 2013. The company expects to generate revenue of between $615 million to $635 million. Most of the revenue stems from ad sales though the company is getting more successful at signing consumers to ad-​free subscriptions.  The streaming music sector is about to get more competitive as Google and Apple are rolling out their competing products this year.

Terrestrial radio operators are taking a pragmatic view of the changes in their industry. When asked whether Pandora poses a serious threat, reps noted their expectations as follows:

  • Serious threat 28%
  • Medium threat 39%
  • Small threat 22%

Reps do concede that the format could be a bigger threat in the future. However, streaming radio currently lacks one big feature that listeners like – local DJs and local content, in general. Other reps note that many marketers are accustomed to using 60-​second copy for their radio ads and this is a capability that Pandora lacks.

Radio operators concede that marketers are beginning to explore advertising on Pandora. When they spend money on the format, the existing radio budget is the source of funds for 45% of these ads. Otherwise, 8% of marketers are moving money from their digital budgets and 13% are spending new ad money.

To maintain marketer loyalty, radio sales reps should be promoting the benefits of their format. They can do this by emphasizing information about Heavy Radio Listeners which can be found in the Audience Interests & Intent Report available at the Research Store on ad​-ology​.com.

[Sources: Pandora Subscriptions Climb. Investorbusinessdaily​.com. 23 May 2013. 4 Jun. 2013; Fitzgerald, Toni. Readers: Pandora’s not a huge threat. Medialifemagazine​.com. 21 May 2013. Web. 4 Jun. 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.