As Online Radio Grows, Rival Ad Sellers Merge

Two companies that sell advertising for online radio are joining forces, highlighting a bright spot in an otherwise dismal advertising climate. TargetSpot, which sells targeted local advertising for online-radio stations, acquired BasilBiscuit's Ronning Lipset Radio, which sells national advertising for big companies like Procter & Gamble and Orbitz Worldwide. The online-ad companies, both based in NY, didn't disclose terms of their deal. U.S. advertising revenue in general will probably shrink 0.8% this year, says a Wachovia analyst. The radio industry seems on track for an even worse performance. Local spot radio advertising revenue, the medium's bread-and-butter, has declined every month this year compared to a year earlier, with August's drop reaching 11%, according to the Radio Advertising Bureau. Last week, CBS Corp., one of the nation's largest radio-station owners, revised its full-year business outlook due to declining advertising. But online radio advertising, much of it the audio ads listeners hear when they tune into a station on the Internet, is rising at a double-digit pace. Last year, radio sold $21.3 billion in advertising, including about $1.7B in the "off air" category that is chiefly online advertising. A Procter & Gamble spokeswoman said about its online-radio advertising that they're always looking for new ways to connect with consumers. Marketers like online radio because it reaches targeted groups and online ads are easy to track. If listeners hear an ad online, their computers take note. Then if the listeners visit the advertiser's Web site, the computer alerts the company the listener just heard its message. Regular radio can't compete with that type of detail and speed, despite the rollout of new electronic technology to measure some radio audiences. TargetSpot offers ability to target adv by ZIP Code, said the CEO, making it attractive to businesses like restaurants that want to advertise on radio, but don't want "geographic waste" of reaching consumers miles from their locations. The company's major backers include CBS, Union Square Ventures, Oddcast and Milestone Venture Partners. Many radio companies are boosting their online presences. CBS Radio streams 150 of its stations online through a partnership with Time Warner Inc.'s AOL. CBS is also making Last.fm, an online radio service it bought last year, available on some of its CBS station sites, and adding some CBS stations onto Last.fm. Clear Channel Communications Inc. is streaming almost 800 stations and has an online radio ad-sales network through its Katz unit. Clear Channel's eclectic eRockster and CBS's Philadelphia-oriented hearPhilly, are among those stations that listeners can catch only on the Internet or HD Radio, a technology that requires the purchase of a special radio to hear them. Indianapolis-based broadcaster Emmis Communications Corp. recently spun off a unit, Emmis Interactive, to help broadcasters boost their Web offerings, including advertising. For rights reasons, ads playing on a station's online stream generally aren't the same as those a listener is hearing on an over-the-airwaves broadcast by the same station.