Music Listeners Pump Up the Volume on Digital Radio

The digital radio space is undergoing expansive growth in usage, revenues and access modes.

Radio listeners are tuning in to digital stations on an increasingly broad set of devices, including desktop and laptop computers, smartphones, tablets, in-car systems, and other consumer electronics gadgets. Marketers are tapping into this opportunity by attaching their brands to digital radio services in traditional and novel ways, according to a new eMarketer report, “Digital Radio: Usage Grows, but Lack of Scale Remains a Challenge.”

eMarketer estimates there will be 159.8 million digital radio listeners in 2014, and that figure will grow to 183.4 million in 2018. Digital radio listeners are now at mass-market proportions, representing just more than half of the population and nearly two-thirds of internet users.

As the US digital radio landscape matures, several trends are taking hold, including:

• Strong demand for two dominant listening modes: personal stations that serve songs based on users’ preferences, existing digital music collections and prior listening activity, and digital extensions of over-the-air stations
• A shift toward nondesktop devices, such as smartphones, tablets, in-car systems and other consumer electronics embedded with digital radio apps
• A mix of monetization models that ranges from free access on an ad-supported basis to premium tiers that cost up to $10 per month for ad-free, unlimited listening

Like any segment in the midst of a steep growth curve, digital radio offers abundant opportunities for marketers. Many companies that are marketing through digital radio use 15-second audio spots, some tailored to specific services. Advertisers are also creating branded playlists and sponsoring launch events, contests and festivals. Some are creating ads that keep the listener within the streaming app, while others opt to send users to a browser page with product information or purchasing options. Yet despite a generally positive outlook for digital radio, scale and pricing consistency challenges—also typical of a rapidly growing market—remain.