Presentation Transcript

1. August 27, 2013

   BROADCAST RADIO vsPandora

   USA
2. 2 Radio is America’s Companion Delivers Massive Reach in Real Time Engages and Influences Listeners Digital Technology Enables Expansion and Interaction Is Very Different From Pandora Thriving
3. 3 Radio’s Assets Drive Its Mass Reach 4 emotional triggers that listeners value…. 1 3 4 2 A radio on while they work An escape from pressures of everyday life A feeling of companionship Gets them get in a better mood Source: Jacobs Media TechSurvey 9; Based on 1264 stations | 12 radio formats | 78,111 radio listeners / January 29-February 19, 2013
4. 4 today’s radio audience 242 Million Making it the fourth largest country in the world Listening for an average of 2 ¾ hours each day Source: RADAR 117 June 2013, Arbitron (Persons 12+, Monday-Sunday 24-Hour Weekly Cume Estimates and Daily Time Spent Listening),
5. Nearly Everyone Uses Radio. In Real Time. Every Week. Radio reaches over 90% of virtually every segment of the population. That has been true year after year and remains true today. All of them spend more than 2 hours a day listening to radio. 5 Source: RADAR 117 June 2013, Mon-Sun 6A-Mid
6. 6 Radio’s Weekly Reach of Adults 25-54 Is Greatest of Major Media Adults 25-54 Weekly Media Exposure Source: Scarborough USA Plus - Release 2 2012 12 Month Adults 25-54 (Sample Size: 86,420)
7. 7 Radio’s Weekly Reach of Young Adults Is Greatest of Major Media Adults 18-34 Weekly Media Exposure Source: Scarborough USA Plus - Release 2 2012 12 Month Adults 18-34 (Sample Size: 28,781)
8. Radio’s Share of Audio Usage Dominates Throughout the Day % Share of Audio Usage by Source Average Weekday – Adults 18-64 Source: 2013.1 MBI USA TouchPoints Note: AM/FM Radio includes radio station streams; Music Streaming Service includes iHeartRadio, Pandora, Rdio, Slacker, Spotify, etc.
9. Myth vs Fact: Does Pandora Replace Radio Pandora claims to take listeners away from AM/FM radio Fact: the number of people using radio has increased as the number of people streaming has increased¹ Fact: 95% of monthly Pandora users listen to AM/FM radio in a week² Fact: 97% of monthly Pandora users in Nashville listen to AM/FM radio in a week³ Fact: Pandora listeners spend more time with AM/FM radio than non-Pandora listeners both nationally and in Nashville Pandora is different from and additive to AM/FM Radio, not in place of it. Sources: 1 - Arbitron RADAR Winter/March reports M-Su 6A-Mid and Arbitron/Edison “Infinite Dial” Research for Internet/Online data; Weekly listeners for Broadcast Radio; Weekly listeners for Internet Radio
10. Digital Listening Augments Broadcast Radio With the digital revolution’s impact on media, new forms of audio enter the marketplace regularly. As the Infinite Dial:2013 confirms, heavy usage of other media forms does not detract from use of Radio. 19 million new listeners (+8%) in the last decade Decade of growth of Broadcast Radio vs. Internet Radio # of users in millions Broadcast Radio Internet Radio 66 million new listeners (+330%) in the last decade 2013 Sources: Arbitron RADAR Winter/March reports M-Su 6A-Mid – note, methodology for RADAR changed in 2007 to include PPM market transitions so trends may not be consider completely comparable until 2011; Arbitron/Edison “Infinite Dial” Research for Internet/Online data; Weekly listeners for Broadcast Radio; Weekly listeners for Internet Radio
11. How Can Broadcast Radio and Music Players Co-Exist Without Cannibalizing One Another? There’s More To Share. Combined Time Spent per Day With Radio, TV, and Internet Gained More Than an Hour Since 2003 Self-Reported Average Time Spent per Day With Today’s Three Biggest Media: Radio, TV, Internet (Hours:Minutes) Base: Total Population 12+ Source: Arbitron Inc and Edison Research, Infinite Dial 2013
12. Radio Dominates Pandora in Top 50 Markets Remember this compares a month of Pandora to a week of Radio Adults 18+ Source: Scarborough Release 1, 2013 6 month survey, Adults 18+ M-Su 6a-mid Metro Area
13. 5% only Pandora 95% listened to AM/FM in the past week Pandora users also spend more minutes/day listening to AM/FM radio Source: Scarborough Rel 1 2013 Aug 12-Mar 13, Adults 18+, Top 50 Metros weighted, “Internet sites/apps visited (mo), Pandora, Listened to Radio (wk) M-Du 6A-Mid” and “AVG Daily Time Spent with AM/FM Radio”.
14. Pandora Doesn’t “Replace Radio” for 95% of the people in the USA. 5% only Pandora 95% listened to AM/FM in the past week Pandora users also spend more minutes/day listening to AM/FM radio Source: Scarborough Rel 1 2013 Aug 12-Mar 13, Adults 18+, Top 50 Metros weighted, “Internet sites/apps visited (mo), Pandora, Listened to Radio (wk) M-Du 6A-Mid” and “AVG Daily Time Spent with AM/FM Radio”.
15. Pandora Listeners Report Spending 50% More Time Listening To AM/FM Radio Than Non-Pandora Listeners Average Tuning to Broadcast Radio = 50% more than non-Pandora listeners Don’t listen to Pandora Pandora Listeners Sources What Pandora Means for Radio, Vision Critical, November 2012; Base: American online adults, aged 18+ ; Sample: 1,017 American adults; of these, 323 identified themselves as Pandora users (used an Internet-only audio service in the past month; and at least sometimes use Pandora) 15
16. Myth vs Fact: Is Pandora a Radio Station? Pandora claims to be radio ... but has virtually none of the traits of radio Fact:Pandora is a music player that offers individualized playlists and streams of music similar to that on iPods/MP3 but also carries a four or five commercial per hour spot load. Fact: Pandora has NO personalities to interact with listeners and create virtual neighborhoods Fact: Pandora cannot do advertiser endorsements or live copy Fact: Pandora cannot place copy near relevant content Fact: Listeners can’t call into or show up at Pandora or events and engage with personalities Source: 1 -- 3 – Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013 / ²Scarborough Rel 1 2013 6 month 50 metro markets, 18+,M-Su 6A-Mid Pandora monthly users; ³ -- Vision Critical Study November 2012 16
17. People Expect Personal Connection From Radio 82% A personal, para-social interaction with their favorite Radio personality 75% Describe their favorite station as comfortable, friendly, informed* 79% Listen longer to a radio station because their favorite personality is on the air 70% Consider radio personalities to be a good or best friend or companion** This relationship carries over to advertisers who become a part of these “Virtual Neighborhoods”. Sources: USC, Annenberg School for Communication & Journalism, PSI Study released June 2012, Woodley, P. and Movius, L. People With a Favorite Radio Personality in Los Angeles; *Mark Kassof & Co October 2012 survey of 732 adults 18-64 online * **Alan Burns “Here She Comes” 2012 online survey of 2,010 women 15-54 in May 2012
18. Radio’s Local Connection is Key 55% Listen to their favorite personalities on computers or mobile devices when away from a Radio 70% Follow their favorite personality/Radio station on social media 72% Talk to their friends about their favorite personality or program content 66% Agree that their favorite radio stations reflect who they are as a person* A key difference between Broadcast Radio and Pandora is the need for music vs. the need for connection. Sources: USC, Annenberg School for Communication & Journalism, PSI Study released June 2012, Woodley, P. and Movius, L. People With a Favorite Radio Personality in Los Angeles; *Latitude Research, Open Mind Strategy May 2013 study of 1000+ participants;
19. Pandora Isn’t a Radio Station Fact: Pandora cannot provide local information like gossip – news – traffic - weather - opinions – events - opportunities and more Fact: Pandora provides no community support and involvement with the charities people care about locally and information about disasters or other critical community news on the spot Fact: Even Pandora users consider those differences to be drawbacks.¹ Fact: Even listening to Broadcast station streams has a completely different entertainment experience expectation from that of Pandora
20. Community and Connection Are Top Radio Benefits Per Listeners—Values Music Players Cannot Provide Latitude Research and OpenMind to survey more than one thousand respondents "The State of Listening in America, May 2013
21. Is Pandora Radio? No. While Pandora calls itself radio, as it tries to compete for local radio ad dollars, it and other online music services remain notably different experiences to terrestrial radio, not to mention the marketing opportunity terrestrial radio offers to brands (which goes well-beyond audio ads in-between songs and annoying pop-up display ads on Pandora). Richard GreenfieldAnalyst for BTIG Source: Richard Greenfield, Seeking Alpha, August 22, 2013 http://www.btigresearch.com/2013/08/22/why-we-remain-skeptical-of-pandora-lowering-estimates-raising-price-target-to-10-reiterate-sell/#ixzz2cnnB6EIK
22. Difference Between the Local AM/FM Station’s Internet Radio Streams and Pandora Local AM/FM Internet Radio Streamsare online/mobile simulcast versions of the local market’s AM and FM Radio Stations. Delivers same “virtual neighborhoods” to the streaming listeners Creates the same emotional connections and listener loyalty Utilizes the same social media and digital connections Station Streams incorporate advertising and advertisers into every part of their every day programming, like a Broadcast Radio station does – because they are a broadcast radio station, just on a different technological platform. Radio isn’t going anywhere. It’s going everywhere. 22
23. Myth vs Fact: Is Pandora the Preferred Source of New Music? Pandora claims to be a better, bigger source of finding new music Fact: People name FM Radio as their first choice to find new music by a 15x margin. ¹
24. New Music & New Artist Discovery FM Radio is the first choice for new music and new artist discover – 15 times more than Pandora One choice only – among those interested in new music Source: Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013.
25. New Music & New Artist Discovery Even among very young Gen Z, FM radio is the #1 source of discovering new artists and music – 6 times greater than Pandora One choice only – among those interested in new music Source: Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013.
26. Myth or Fact: Pandora Trends Show Users Like What They Are Doing Fact: Increased numbers of commercials seem to be getting in the way of people’s satisfaction with Pandora as audio entertainment Fact: Pandora is now doing multiple spot stop sets Fact: Pandora is up to 5 spots an hour Fact: Pandora removed the 40 hour listening cap but lowered the allowed # of skips Oh, listeners are going to love that. Here’s what they had to say about it.
27. Pandora’s Major Drawbacks 0% 10% 20% 30% 40% Among those who stream & use Pandora Source: Jacobs Media’s “Digital Generations” Techsurvey9; Based on 264 stations, 12 radio formats, 78,111 radio listeners gathered online from January 29-February 19, 2013.
28. What Happens As the Commercial Load on Pandora Increases Fact: Lower listening levels and much lower growth rate TLH (Total Listening Hours) is down  by –8% in 2Q 2013 vs. 1Q 2013 ¹ Pandora daily minutes per user have been down year over year by single to double digit % for four consecutive months ( –12% in July 2013 vs. July 2012)² Fact: Increased spot load possibly prompting lower ratings The audio ad load is up about 70% this quarter versus last quarter³ An 80% increase from last year in complaints about commercials by your users⁴ Pandora remains the service most associated with having commercials and pop-up ads: 77% of surveyed Pandora users associate it with commercials while 68% of them associate it with pop-up ads⁵ Source: 1 – Triton Digital Reports and Pandora / 2 -- (Source: Pandora.com) / ³(Source: July 2013, Ipsos Media CT, Base: 18-49 who are Pandora users) / ³Source: Analyst Michael Graham August 18, 2013 CanaccordGenuity Growth Conference / ⁴ource: Jacobs Media TechSurvey 9; 78,111 radio listeners / January 29-February 19, 2013
29. What Happens When Commercials Interrupt Music Playlists "Highly satisfied" percentages have been falling since 2010. Reasons given for less satisfaction are: 1. Commercial Interruptions spoilmood 2. Becoming predictable 3. Song choice is limited 4. Song choice for my taste not as good 5. Diminishing number of likeable songs 6. Repetition of Artists I don't care for Source: Bridge Ratings Inc : "Pandora User Satisfaction Study" conducted between January 3 and March 15, 2012
30. Myth vs Fact – Number Games Pandora claims that their market reach is as big or bigger than top rated local stations Fact: Pandora is combining all its channels and platforms (what they themselves refer to as their Network) together to compete against an individual broadcast radio station Measurement is based on two divergent ratings sources – Triton and Arbritron, which are not comparable and cannot accurately be combined or compared 30
31. The Numbers Shell Game Pandora claims that they have 75% of all Internet Listening Fact: In reality Pandora’s share of Internet listening is probably 1/3 less. ¹ Pandora claims that they reach about 7% of total audio listening Fact: ALL Internet Streaming accounts for only 5% of total hours spent listening to all radio , including digital, broadcast and satellite.² Ask Pandora to source the data they use for this statistic. They can’t. We have cited every existing source for this data. None of them agree with Pandora. Source: 1 -- Scarborough USA Plus Rel 2, 2012 / 2 – USA Touchpointe 2013.1
32. The Vast Majority Of Total Time Spent With Radio Is Done Listening To AM/FM Share of Daily Radio Minutes Adults 18-64 It is IMPOSSIBLE for Pandora to have even HALF the share they claim of total hours spent listening to all radio. Note: AM/FM Radio includes radio station streams; Music Streaming Service includes iHeartRadio, Pandora, Rdio, Slacker, Spotify, etc. Source: USA TouchPoints 2013.1 32
33. The Numbers Game Pandora has about 70 million users per month Pandora has over 200 million registered users 2/3 of Pandora’s registered users don’t use it evenon a monthly basis 243 million people – 92% of all consumers -- use Radio every single week Source: Pandora press releases August 2013; RADAR 117, June 2013
34. Myth vs Fact: About In Car Pandora says it will be in 1/3 of the 2013 new cars It claims to be in over 2.5 million vehicles¹ There are between 13 and 16 million cars sold a year² There are more than 245 million currently registered vehicles² At a pace of 5 million added cars per year, Pandora should reach critical mass (35% of all registered vehicles) in about 30 years Currently only 1 in 5 people use their mobile phones to stream through car stereos – and Pandora is not the only app available³ Radio remains the #1 most used and most demanded in car audio device Source: 1 - Pandora press releases August 2013 / 2 - DMV estimates 2013 / 3 – Arbitron and Edison Research Infinite Dial 2013 and eMarketer Report August 21, 2013
35. Regardless of Age, Radio Listening In-Car Ranks Highest When driving, are you most likely to be…? Based on online survey of 28,753 respondents from 20 broadcast groups and over 200 individual stations conducted March 12 to April 2, 2013.
36. Radio Remains The In-Car Must Have Which in-car dashboard options are a must-have in any new vehicle you may buy/lease? Based on online survey of 28,753 respondents from 20 broadcast groups and over 200 individual stations conducted March 12 to April 2, 2013.
37. Myth vs Reality: Does Deliver? Pandora claims to be able to target their listeners by location and demographic. Fact: Pandora registration data may not be completely accurate for several reasons: Registrants are never asked to update their data once entered 70%of 18-34 and 40% of 18+ move over the course of three years. 33% of the 18-34 have moved within the past year.1 IP addresses or cell phone area codes don’t necessarily reflect where the listeners is really located. Blue Inc reported that 88% of user supplied information is often false or incomplete.2 Source: 1 -- 2010 Census report on mobility / 2 -- Blue Inc 2012 Study / 3 – RADAR 117 June 2013 37
38. Myth vs Facts: Pandora’s “Benefits” Are Not Necessarily Beneficial Pandora’s Micro Targeting by age/sex/zip presents a twofold problem: Why would an advertiser want to eliminate the majority of its users from receiving ad messages?¹ The target demographic segment for a product/service usually is a minority portion of all its buyers – so eliminating the out-of-key-demo people is actually detrimental to brand growth Why eliminate Incidental Influence? Products generate brand names by influencing people’s opinions.  People are mobile during the day – a business located where someone works won’t be able to advertise to a user who lives across town, when they’d be most receptive to the message. Using Radio Lifestyle Formats Helps Grow a Brand’s Affinity and Advocacy Traits ¹ - GfkMRI 2012 and Scarborough USA+ Rel 2, 2012
39. Micro-Target To Extinction Primary Demos % Contribution to Category Usage Radio reaches the entire brand user group. Pandora eliminates 2/3 to ¾ of them. Source: 2012 Doublebase GfK MRI. %’s are based on Adults 18+ (except for beer, A21+)
40. Radio Influences and Builds Brands Nine Study Average % Lift: Radio-Targeted Consumers vs. Control Groups 17% Awareness 23% Consideration 19% Purchase Intent 38% Affinity / Likeability 37% Advocacy Source: Radio Advertising Effectiveness Program, Ipsos OTX, 2011-13; conducted for Katz Marketing Solutions
41. Radio’s Role is Unique The entertainment experience of listeners to Radio is very different from that of music-only platforms (like Pandora, Spotify, iPods, cds etc.) Radio listeners look for: Connections to personalities, on air and online with two-way communication A place to belong (a neighborhood, a community, etc) Content curated by a program directors who understands the needs/likes/values of “the neighborhood” and will surprise the listener Local information (gossip, news, traffic, weather, opinions, events, opportunities…) Community support and involvement with the charities people care about locally and information about disasters or other critical community news on the spot These are all advertiser and listener benefits that Pandora cannot match 41
42. The Reality of The Facts About Pandora has no personalities, no local presence, no community connections, offers none of the live opportunities Broadcast Radio does. Pandora does not replace radio. 95% of monthly Pandora users listened to Radio in the past week.² Pandora claims that the reach of their network is as big or bigger than top rated local stations ... Not in NashvilleScarborough. Pandora claims that they reach 7+% of total audio listening ... ALL Internet Streaming accounts for only 5% of total radio listening including digital, broadcast and satellite. Their 7% share is unsupported and unsupportable.¹ Pandora claims they can target geographically….In reality, Pandora doesn’t check to see if registrants have moved. Pandoracannot prove that all the people on the site are actually listening to their streams Pandora’s micro-marketing benefits are most likely NOT very beneficial to the advertisers’ brands. BOTTOMLINE: Pandora can’t deliver what it says it does and Radio can. 42 Sources: 1 – USA Touchpoints 2013.1 / 2– Scarborough Rel 1, 6 months 2013 50 markets / 3 –Vision Critical Nov 2012 Study / 4 – U.S. Census 2010
43. Capabilities Comparison of Broadcast Radio vs. Pandora And Spotify 43
44. Capabilities Comparison of Broadcast Radio vs. Pandora and Spotify Sources: Broadcast Radio includes Internet Streams * Can pull zips, gender and age but not eliminate coverage of each – which is value added ^ Doesn’t update zips, 88% of people online use false or incomplete data per Blue Inc 2012; ^^USA Touchpoints 2013.1; **Bridge Ratings March 2012 44

45. If Pandora is “Radio”, why doesn’t it do what radio does?

    Because Pandora can’t give Advertisers what Radio can.