XAPPmedia CEO Pat Higbie in Q&A with R|O

RADIO ONLINE | Friday, April 15, 2016

Pat Higbie

In a Q&A with XAPPmedia Co-founder/CEO Pat Higbie, he answers questions about how mobile audio can reignite radio revenue growth and that digital marketing is valuable to the radio industry. He also speaks on why digital is a "premium asset" for broadcasters as well as a method to expand and grow audience listening.

Why do you believe that mobile audio can reignite radio revenue growth?

First, you have to understand that broadcast radio revenue has been flat over the past six years and that the advertising revenue component has declined. Even with a presidential election year, revenue is expected to be flat in 2016.

By contrast, U.S. mobile advertising is expected to grow from $29 billion in 2015 to over $40 billion in 2016 because that's where the consumers are spending their time and money. Now consider data from comScore, which shows that 95 percent of all Internet radio listening time is on smartphones and tablets, with 79 percent of that specifically on smartphones. This means Internet radio is a mobile media with a high advertising spend growth rate. It is a revenue source that broadcasters can tap into as they take some of their audience online to mobile apps.

Even if you think Internet radio can only capture 10 percent of mobile ad spending, that would increase the total available ad spending for the industry by more than 50 percent by 2020. So there is a strong economic incentive for every broadcaster to grow their online presence to take advantage of these trends.

Do you believe that digital marketing is valuable to the radio industry? Why?

Yes, but the growth opportunity is in mobile-app based audiences. This is not about giving away website impressions. It is about good old fashioned audio ads served through mobile devices instead of car dashboards. These can be even more valuable when coupled with voice interactivity that command premium rates from advertisers such as interactive audio ads.

Edison Research data shows that 50 percent of the U.S population listens to over 12 hours of Internet radio weekly, which means it is becoming a habit for listeners and it is displacing time that traditionally went to broadcasters. Part of the imperative to go mobile is to retain audience. However, we are also seeing high ad rates that can drive meaningful revenue.

Why is digital a "premium asset" for broadcasters as well as a method to expand and grow audience listening?

This is explained by demand. There is high demand for ad formats that can effectively reach mobile consumers. There is also high demand for mobile ad formats with proven performance like interactive audio ads. These ads enable users to speak in response to ads that interest them. The ads can automatically open up a map, which will give the listener turn-by-turn directions to the retailer or car dealership's nearest location. They can automatically connect a call to an advertiser's call center. They can send a coupon. This all happens hands-free, eyes-free for the listener.

Radio broadcasters have always been able to deliver ad messages to consumers. Through mobile apps, they can now allow those consumers to communicate back and even start interacting with the advertised offers. Advertisers are starting to expect this type of interactivity and performance. Digital channels provide this and can command high ad rates as a result.

Why do you believe that audio should be a core part of every marketer's advertising mix?

Audio is the quintessential mobile medium. It is the only ad format truly accessible to mobile consumers regardless of their activity at the moment the ad is served. Nielsen data shows that 79 percent of all mobile audio consumption occurs when listeners are engaged in other activities that require the use of their hands and eyes. Audio is the only media that can reach these multitasking consumers. When you integrate voice interactivity into the ad, we see conversion rates 20 times higher than visual mobile ad formats. It's hard not to see the effectiveness of audio and the fit for an advertiser's marketing mix with this type of performance.

How easy is it for broadcasters to make mobile audio part of their advertising mix?

It's actually easier than most people think. A company like jacapps can get a radio station up and running on a mobile app in a few weeks for a simulcast. Then you can get more sophisticated and start making some of your content available on-demand for listeners that missed the original airing. This provides you with more opportunities to serve the local audience and to expand listening beyond the tower signal. Mobile app providers can even submit apps to the Apple App Store and Google Play for Android phones. The blueprint for this is already well understood. jacapps and XAPP even have an offering that will take care of mobile ads sales. Broadcasters just need to focus on delivering great content.