Despite all the hype about streaming music and Pandora, digital radio only accounts for about 3% of total radio listening. At Ad Age's Digital Conference today, Clear Channel Chairman Bob Pittman said this represents the radio industry's biggest opportunity.
"We have work to do. We actually have to make the digital revolution come to radio," Mr. Pittman said. "This allows us to get in front of it, not let it happen to us but let it drive us. There are real benefits to the radio business and to our listeners."
A co-founder of MTV and the former chief operating officer of AOL, Mr. Pittman has a vested interest in the future of radio. Last fall, he purchased a minority stake in Clear Channel and joined the company as chairman of its media networks. After helping fund a variety of startups such as Thrillist, Next New Networks and Zynga, Mr. Pittman was looking for the next undervalued property to place his bets.
Citing statistics from Edison Research and Arbitron, Mr. Pittman noted that radio's overall listening and role in the average consumer's daily media consumption is not reflected in its portion of media ad spending. If TV is America's hobby, radio is America's companion, he said, with 3.1 hours a day spent watching TV and 2.1 hours spent with radio. That's more than the internet (1.9 hours) or newspapers (0.5 hours.) And yet the cost-per-thousand viewers on radio is significantly lower than other media, with radio averaging $5.35 compared to $12 on TV.
Mr. Pittman is betting that a larger investment in digital will help bridge that gap for Clear Channel. Last month, the company acquired streaming-music service Thumbplay to compete more directly with Pandora, CBS' last.FM, Spotify and other online radio players. Local stations have also started to phase out their antiquated phone-request lines in favor of Facebook, in order to find young listeners where they're actually living (and perhaps dispel any suspicion that the company's Premiere Radio Networks hires actors for such call-ins).
Mr. Pittman also stressed the importance of the local ad market. "When I was at AOL, we tried to spend a lot of time getting to local. That was our nirvana. Radio is our nirvana. Not only is it targeted to specific audiences that hang together in a lot of characteristics, there is an emotional attachment to radio. Four in five listeners will be disappointed if their favorite station was no longer on the air."
With the web, Mr. Pittman said, "We have brand permission to give them more than things in the audio stream. Replays, new parts of the show, coupons, access to artists. ... It's the power of being local. We have a social connection, which adds a whole other layer. Radio really does have a tribe that wants to talk to each other."