The digital audio space is really just beginning to hit its pace and so this is a perfect time for the Interactive Advertising Bureau (IAB) to come out with its authoritative A Digital Audio Buyer’s Guide developed by IAB’s Digital Audio Committee (on which BIA/Kelsey serves).
The digital audio market felt a seismic rattle with the news yesterday of Spotify’s expected $400 million capital raise which would bring its valuation to $8.4 billion more than twice that of leading competitor, Pandora, who closed out yesterday with a $3.55 billion market cap.
As BIA/Kelsey noted in a digital audio report we released last year (sponsored by XAPPmedia), “The Internet radio revolution has been brewing for some time. Streaming audio has gone mainstream for audiences and advertisers. This revolution is foundational, meaning that new business models are forming around new audience behaviors supported by technology advances.”
IAB’s Digital Audio Buyer’s Guide is a comprehensive but very digestible 26 page educational and reference document that lays out in a clear fashion everything from “what is meant by ‘digital audio'” to sizing the digital audio market, providing best practices and digital audio ad samples to providing insights around planning and buying.
“Digital audio” is defined as comprising broadcast AM/FM stations online, pureplay online radio stations, streamed audio content with selections influenced by consumer input, and audio-on-demand (i.e., podcasts). With over 50% of the U.S. population as current monthly users of various digital audio services, IAB cites eMarketer data showing this will grow to over 190 monthly digital radio listeners by 2019.
In BIA/Kelsey’s updated forecast for broadcast radio, we’re estimating that the advertising revenue from AM/FM stations streaming online will double from $1 billion in 2014 to $2 billion by 2019. That’s a significant growth component for an industry that otherwise won’t see much revenue growth. And we see a lot of new competition both for listeners and in selling access to local audiences.
In the pureplay digital audio world, Pandora will be releasing its latest earnings report on April 23, 2015. We’ll see then how it stacks up in its drive to increase local ad revenues and how Spotify’s raise may impact its share price. Since Pandora beefed up its local sales force presence, it managed to grow its local ad revenues by 155% to over $150 million in 2014.
It appears that the local digital audio market is no longer so sleepy as it may have appeared as social, mobile and video digital advertising claimed all the headlines.