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In-stream audio advertising an untapped marketing opportunity: Forrester

With many music-streaming services following freemium and ad-supported models, and the majority of United States adults unwilling to pay to access these services, marketers would be wise to take advantage of this market, according to a report by Forrester Research.

According to the study, 28 percent of U.S. online adults and 17 percent of European online adults stream music on their desktop or mobile phones. Only six percent of U.S. online adults are willing to pay to access streaming online radio services, and 5 percent are willing to pay to access streaming on-demand radio services.

?The advertising relationship for in-stream audio is permission-based,? said Anthony Mullen, analyst at Forrester, New York. ?Online display pretends like it is permission-based, but consumers have to jump through a lot of hoops to block in advertising in browsers.

?With audio platforms consumers sign up to a freemium or ad-supported model, and they can't avoid the advertising, it's also a guaranteed impression unlike the display world,? he said.

?Finally, from an interaction standpoint, audio advertisements are only played one at a time in serial unlike Web pages which present multiple messages in parallel which dilutes the awareness effect.?

Untapped opportunity
In traditional over-the-air radio, marketers can only roll out blanket campaigns that cannot target specific demographics. With online streaming, however, marketers can now measure and target ads in the audio domain.

The digital audio audience is fairly diverse, with a balanced gender split, half married, almost half with children, a little more than half owning homes and 22 percent earning an household income of $100,000 or more.

Online streaming sites let users share or recommend via social networks.

Many online streaming sites use a freemium model, so consumers are aware that they will be receiving ads in exchange for not having to pay to listen to music.

Additionally, only one in-stream ad is played at a time, so marketers have the full attention of their audience.

There are currently around 500 licensed digital music services, which means there is plenty of room for advertising.

According to the study, 55 percent of respondents stream music on Pandora, with the runner up at 22 percent being their local radio station online.

Thirty-one percent of respondents stream Internet radio on a mobile phone, and ten percent stream on a tablet. Nineteen percent stream Internet music on demand on a mobile phone, and 11 percent on a tablet.

Push mobile advertising problems
Traditional push advertising is having some difficulty connecting with consumers.

According to the report, 83 percent of U.S. online adults and 85 percent of European online adults mistrust ads on Web sites. Consumers often choose to block online advertising with tools such as AdBlocker.

Consumers also may not like the clutter of ads on their Web sites.

In a Burst Media survey, 52.4 percent of respondents had a less-favorable opinion of an advertiser when an ad appeared on a cluttered Web page. Additionally, 29.9 percent said they would immediately leave a site if they thought it was cluttered.

On mobile, these issues are even more pronounced since the screens are smaller and ads take up more space. Consumers are also more likely to click on unwanted ads.

With in-stream audio ads, many of these problems are solved, according to Forrester. In-stream audio ads do not affect the device?s screen since they are purely audio.

Additionally, users are more aware that they will be receiving ads in exchange for free streaming, so the ads come as less of a surprise.

According to Mr. Mullen, marketers should approach mobile in-stream audio advertising differently than desktop in-stream audio advertising.

?On mobile, consumers will typically not have a lot of real estate to play with and their streaming player may well be in the background while they do other things, running, walking, commuting et cetera, so their ability to respond to complementary display advertising will be lower than on desktop,? Mr. Mullen said.

?So, for mobile, brands should run with audio-only advertising to begin with, on desktop they could explore audio and complementary banners,? he said. ?Some smarter solutions detect if the consumer is interacting with the device - i.e. transport controls of the player - and only serve complementary display ads if they know the consumer is looking at the device.

?Finally, mobile users will have useful contextual data like location, so that can help narrow which ad is right to serve them.?

Final Take
Rebecca Borison is editorial assistant on Mobile Marketer, New York