Radio One execs talk about programmatic and digital

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In a quarterly earnings call, Radio One executives Alfred Liggins (CEO) and Peter Thompson (CFO) answered analysts’ questions about digital audio and programmatic advertising. The discussion highlited the increasing importance of digital ad-selling to radio investors.

The question which started off the conversation referenced the programmatic initiative recently launched by iHeartMedia and Katz, and asked about the perception among some audio sellers that programmatic reduces prices: “Rightly or wrongly there is a perception out there that says programmatic buying equals race to the bottom in terms of pricing. What’s your take on it?”

CFO Peter Thompson fielded the question. “I think is actually very interesting. I don’t know enough about how do you do it and not just have it to be a race to the bottom to the lowest CPM. But I’m optimistic that some smart people can figure out how to do it. Even if it is a race to the bottom, a certain part of the industry inventory is going to move there anyway.”

Advocated for programmatic say that software-based buying, based on targeting data-determined audience segments, is about delivering smarter impressions to advertisers, potentially for higher CPM rates. Proponents also point to efficiency gains that can eliminate the manual labor of adminstering a campaign, and save cost.

Thompson said that programmtic does offer efficiency when disposing of remnant ad inventory. “Right now we do what we call remnant business and its business that’s preemptable, it’s low cost. To the extent you could automate that process, that probably increases productivity and takes cost out of the system. You can have your sellers focus on the clients where you’re getting better rates and doing bigger campaigns.”

Freeing sales resources for premium selling is a theme among programmatic advocates who battle the fear that automated buying will eliminate jobs.

Peter Thompson noted that radio ads are undervalued, no matter how they are sold. He used the Dallas market as an example — there, Thompson noted, station ratings are way up, but billables are down so far in 2015. His point about programmatic is that if radio is already drastically under-priced, the supposed “race to the bottom” has nowhere to run. “It’s not like this is an over-priced medium to begin with,” he said.

CEO Alfred Liggins talked about digital more generally, in context of measureability and ROI. “I was on the phone with media yesterday talking about a big client and they brought it up how the client the client wants to move more towards the digital, because its measurable and has ROI.” The trackable and measurable nature of streaming is widely regarded as a key benefit of streaming audio advertising. (See our whitepaper here.)

“We all know the power of radio,” Liggins said. “How do we make radio more targeted and measurable on ROI? How do we measure its effectiveness?”


Brad Hill