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Inside Radio, InsideRadio.com Friday, Nov 11, 2016 12:12 PM EST

Q&A with John Rosso

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As demand for digital streaming grows, radio broadcasters are bolstering their content and innovating with advertising sales. Triton Digital president of Market Development John Rosso, a broadcast radio veteran who worked at Citadel Broadcasting and ABC Radio, helps guide broadcasters and advertisers through the rapidly changing streaming audio industry.

Rosso spoke to Inside Radio about how AM/FM radio can grow its share of digital listening, what Millennials want from digital audio and how yield optimization technology will transform digital audio advertising. An edited transcript follows.

Triton Digital releases monthly tracking on digital audio consumption. What are some of the most exciting recent developments?

The growth of some of our broadcast clients. It’s not universal, but certain broadcasters really stand out and have been growing quite nicely. iHeart, for instance, is growing very rapidly at the moment and has for about the last year. The music royalty structure has caused some broadcasters to sort of re-embrace streaming. They’re talking about it and maybe the audiences are finding it. It could just be the rise in consumption on mobile devices. For a long time, streaming was just being driven by the pureplays, and now the broadcasters are actually contributing to the growth as well. To continue that growth, one of the most important things is to look for ways to offer supplemental content online. That could be streaming. It might be a strategy like CBS’ or iHeart’s. CBS has Radio 2.0, their music channels and iHeart has the iHeart radio custom channels and talent channels. Creating new content for online is a way to attract new audiences and growth. That’s probably the No. 1 thing that these companies ought to be doing, not just leveraging that over-the-air signal.

Millennials are driving a lot of mobile usage and digital audience consumption but according to recent Triton Digital data, they have a preference for pureplays. What can broadcasters do to attract more Millennials to their streams?

The biggest challenge that broadcasters have in attracting Millennials is the high ad load. It might be acceptable over the air but you’ve got young people who are used to not having to sit through long breaks of five or six or seven or more commercials in a row. They’re also used to having some control over the listening experience. The control aspect is very hard to get to, but a reduced ad load is doable. We’re working with a couple of clients to reduce the ad load in streaming and instead add more music. It’s too early to tell you definitively that that has impacted streaming listening, but intuitively I think it will. The two issues are control and commercial load. I think the easier one to solve for is commercial load. It has to be a lot less than the 11 or 12 minutes an hour that runs on that over-the-air music radio. On some digital music services, people are getting used to only hearing two or three minutes an hour of ads. Maybe that’s not the right number, maybe it’s somewhere in between, but it’s hard to believe that anybody would sit through 12 when they can have 2. And, if you’re only running 90 or 120 seconds or even three minutes of ads an hour, you can spread them out. You can do three pods and, before people even think to go change streaming channels, those ads have already run.

Is there a primetime for digital audio listening? Something comparable to morning or afternoon drive for AM/FM radio?

Yes, it is about 10am local time. Unlike the broadcast day, where you see really defined peaks, streaming tends to peak at 10am and then has a longer tail that goes into the night. You have more people listening to streaming at home and on devices, so it tends not to fall off the way broadcast radio does. But it also doesn’t have the drive-time peaks the way broadcast radio does, when people are in their cars in the morning, lunchtime and on their way home. Streaming seems to be complementary and sort of opposite of that schedule. It peaks in middays, mid-mornings, and then also is quite strong in the evening.

How are broadcasters monetizing their out-of-market streaming? Are any particular formats most successful with out-of-market streaming?

Many broadcasters that are simulcasting in-market are actually separately monetizing the out-of-market inventory. In order to qualify for Nielsen’s single-line reporting, you have to simulcast within your home [Designated Market Area]. That means you can take the inventory or the listening that happens outside of the DMA and separately monetize that. To do that, broadcasters are typically plugging into different ad networks like AudioHQ, rather than selling it themselves. We believe that that policy ought to be changed to an MSA [Metropolitan Statistical Area] because radio transacts over the air at an MSA basis. If that rule were changed, it would add a significant amount of new inventory that could be separately monetized and create new revenue for radio.

We do know that stations that are really unique or high profile have a higher percentage of their audience out-of-market. [CBS Radio modern rock] KROQ Los Angeles is a great example. They’re such a well-known station in a format that you don’t find in too many markets. They have a higher-than-usual out-of-market percentage. Another one is “Hot 97” [Emmis rhythmic CHR WQHT New York], which is probably the most well-known hip-hop outlet on the planet, and they have a huge out-of-market audience.

What are growth areas for digital audio advertising? Is it native ads, video or something else?

It’s all of the above. What is going to drive the most growth are new capabilities to do yield optimization. That’s where technology can pick the most valuable ad to serve at any given time. That could be an audio ad or potentially a video interstitial of some kind. If it is an audio ad, is it from a particular sales network or is it a directly sold ad? Is it programmatic? It could be all of the above. That will be the thing that I think moves the needle the most. It will allow you to really optimize the yield from the existing inventory across all different ad types. Right now, it’s nascent. We’re just getting started in fourth quarter of this year doing actual live yield optimization. It is a capability that we are about to bring to market and one that we think our clients are going to benefit from immediately.

For a long time there was enough streaming audio inventory available in the market that a radio group could sort of take everything. No matter who sold it, whether it was Triton Digital or AudioHQ or Target Spot or the station’s own sales force, they had enough inventory that they could clear everything. That’s not really the case anymore. We’ve actually started to get to a point where scarcity is kicking. Once you have scarcity, now you need to do yield optimization, so we are excited about that capability. We are excited that that will help us continue to drive the pricing for streaming audio inventory higher.

So how does yield optimization work? How it will improve digital audio ad sales?

It is figuring out the most important ad to serve you at any given time. First of all, you have to make sure that a listener is eligible to receive any targeted campaigns. Once there’s an impression available, you have to make sure that the most valuable targeted campaign is queued up. It might be that there’s an ad coming in from an ad network or coming in programmatically that is worth more than a locally sold ad. The publisher might decide that it’s more important to get the highest revenue, or they might decide that their locally sold ads need to beat anything else regardless of price. They might need to make sure that they fulfill the local advertiser’s order and they’ll run that first. The way audio has worked to date is really sort of a waterfall, right? Where it will usually start with the publisher’s direct sold campaigns and then after that it will fall back to an ad network or to programmatic like a2x. Then ultimately, if nobody has a paid ad it will fall back to a PSA or something. Now, instead of it being a waterfall where it sequentially goes from one source to another, all of those sources will compete for the same impression simultaneously and the one with the highest bid will win.

You just signed a deal with AudioHQ to represent your ad sales. How does that benefit Triton Digital?

By combining assets and giving them responsibility to sell our inventory, we have significantly greater scale and capabilities. There is also a much larger sales team because AudioHQ hired on the Triton sales team. We’ve scaled up the sales vehicles to cover more ground. This allows us to get really back to our core. We’re a software company. We can focus our energies on innovating streaming technology, particularly in yield optimization. We feel it’s critical to have sophisticated yield optimization capabilities available. This move allows us to free up the resource and focus on advancing technologies.