By Mark Madler, San Fernando Valley Business JournalMonday, Oct 15, 2012 10:00 AM EST
Triton Digital in Sherman Oaks supports the radio industry with a technological backbone amid rapid change driven by the Internet.
Old and New: Neal Schore, co-founder and CEO of Triton Digital, with antique radio in the company’s Sherman Oaks office.
As the radio industry evolves, Triton Digital has positioned itself to help traditional, on-air broadcasters and emerging digital musical service providers to deliver online content, measure audience numbers, and engage listeners.
Radio industry veterans Neal Schore and Mike Agovino lead the Sherman Oaks company, which was founded in 2006 and is backed financially by two private equity firms. Since the company’s start, investors have poured about $100 million into Triton for acquisitions and to expand the applicability of its technology offerings — strategies that have helped the company to grow.
In the U.S., Triton technology powers many top broadcasters, CBS and Clear Channel Communications among them, as well as music streaming services such as Pandora and Spotify. The company also has a presence in more than 30 countries and is eyeing future expansion abroad. In addition to its San Fernando Valley headquarters, Triton operates offices in four other U.S. cities, plus Montreal, Geneva, Switzerland and Singapore. The firm employs about 270 people and is aiming to increase that number to 300 by year’s end. Revenue in 2011 was $39.9 million.
“This is for the largest broadcasters to the hobbyist — those individuals looking to broadcast from their garage,” Schore said.
Triton is made up of two divisions: one handles streaming audio, coordination of advertising, and real-time measurement of listeners; and the other provides the technology for email communications, games, contests, and rewards programs that build brand loyalty with listeners.
While Triton’s products and services are used by print and television clients, the company has had the biggest impact in the radio industry, which has been slow to embrace the digital future.
“The legacy radio industry has many people that are 30, 40, or 50 years in it and the digital world is frightening to them,” Agovino said.
To the management and staff at Triton Digital, the digital world is full of promise. In 2005, only about 1 percent of the listening public turned to streaming audio for entertainment, according to Triton. This year, that number will reach 8 percent and projected to stay on an upward trajectory.
You are looking at — by the end of 2014 — close to a quarter of listening being purely digital delivered content,” Agovino said.
Dianna Jason, the vice president of marketing for hip hop and R&B station KPWR Power 106 in Burbank, uses software from Triton for the station’s affinity program, Power Points.
Listeners earn points by viewing photos and videos at the station’s website, and participating in contests and surveys. The points can be exchanged for concert tickets, electronic devices, trips and meetings with artists played on Power 106, Jason said.
She said KPWR Power 106 considered other companies for the affinity program but selected Triton because it was responsive to adding new services to keep the platform updated.
“In the digital world what may seem like the item of the moment can become outdated and not the product of choice within weeks or months,” Jason said. “It was important to me to find a partner that would continue to invest in their product.”
Agovino and Schore were acquaintances when they met for lunch in 2004 to discuss the future of the radio industry.
They had worked at competing radio sales organizations until Schore left the industry in 2000 to begin a startup based on advertising in parking lots. Agovino’s employer had been acquired by Clear Channel, and for a time, he ran its national sales company.
The pair recognized there were changes ahead for the radio industry as digital distribution gained traction. From within Clear Channel, Agovino said he saw how that company lacked the investment and vision for putting its content online. If that was true for Clear Channel, Agovino reasoned, it was likely true for competing radio networks.
So the pair decided the time was right to start a company focused on providing the infrastructure for streaming audio that radio broadcasters were missing.
“We thought that if we took our expertise and relationships and combined that with technology the industry would need there was a business in there,” Agovino said.
Schore handled the financing to get Triton off the ground. Having headed up two other companies backed by private money, he had contacts in the private equity world. He met with principals at Oaktree Capital Management, headquartered in Los Angeles, and the firm became Triton’s first shareholder. Later, Los Angeles-based Black Canyon Capital LLC became an investor.
Such financial support, however, is not without its challenges.
Partners at private equity firms can be brilliant investors but often lack the understanding of how a business actually works, Schore said. In recent years, there has been a shift in thinking and private equity firms are actively seeking business acumen among their staffs, he said.
“Oaktree did bring on operations executives that come from that world of running businesses to assess their perspective, which has added value to the (Triton) management team,” Schore said.
Acquisitions have been a key part in Triton’s growth.
Between 2008 and 2010, the company acquired three other businesses to get its audio streaming division up and running. Two acquisitions between 2008 and 2009 provided the infrastructure for the digital applications and services division. Companies Triton has purchased either were not generating revenue, or had a small client base, Agovino said.
Triton’s audience engagement software helps radio clients to build relationships with listeners on an individual basis. Listeners voluntarily opt in to receive emails, participate in special promotions and contests, and to engage with on-air personalities via social media sites.
With its proprietary Webcast Metrics program, Triton provides real-time data collection of listener numbers to its clients. Those numbers are important in getting advertisers to air commercials over stations.
In September, the Media Rating Council accredited Webcast Metrics and Triton’s Monthly Ranker reports of top online audio streaming sites.
Schore said the accreditation shows that Triton demonstrated credibility in how it measures listeners at streaming sites. “It validates further our methods and process,” he said.
Third-party validation may help Triton as it fills in the gaps of the client lineup and brings in radio networks not using its streaming, measurement and audience engagement software.
Company officials say clients overseas offer more growth opportunity. Already in the past two years, Triton has gained traction in Latin America and Western Europe. Today, the company has about 10 percent of its clients outside the U.S., a number projected to rise to 25 percent in two years, Agovino said.
“Building the infrastructure to intelligently deliver content and advertising should be a strong rocket fuel for company growth,” Agovino said.