As states adopt new privacy laws, Apple pulls back on mobile ID access, and Google prepares to phase out cookies, marketers are girding for a new advertising reality where one-to-one marketing gives way to targeting audience cohorts based on their affinities and propensities. This shift, which is expected to occur slowly over the next two years, could play in radio’s favor, according to the heads of radio’s largest company.
“One-to-one marketing is going away,” iHeartMedia Chairman and CEO Bob Pittman said Monday. “As a matter of fact, even Google, that has led one-to-one marketing, has said they're going to cohorts. Well, we built SmartAudio around cohorts. That we can do and do as well as digital and in some cases better because we've got this enormous scale.”
Digital’s advantage in ad targeting suffered a major blow when the tech titans decided to change key elements in identity graphs used in targeting. In what some call the “cookie apocalypse,” marketers are evaluating their digital targeting options.
Speaking at the Bank of America Securities 2021 Media, Communications & Entertainment Conference, Pittman and iHeart President and Chief Operating Officer Rich Bressler suggested that one-to-one marketing will give way to one-to-an-informed many ad model, in which marketers target audience cohorts. Bressler likened it to how radio formats and brands have always built audiences around coalitions or tribes. “That's radio. It's a club. It's a group of people that are of likeminded interests, that want to kind of hang together,” Bressler said. “If you look at the way the world is going in advertising, whether it's digital or broadcast and informed datasets, we have that [ability] to capture the advertising demand.”
Pittman reiterated the point that he and other senior execs have been saying about the declining reach of television. “The advertiser has been deprived of a great mass reach medium to support their ad campaigns,” Pittman said of eroding TV audiences, calling radio “the last one” of the large reach media. Another upside for radio companies that have invested in digital analytics is the ability to penetrate the $160 billion digital media marketplace. “We only have to take a little bit of that for it to be very good news for radio,” Pittman said.
The two C-suiters also elaborated on how the modernization initiative iHeart introduced in January 2020, coupled with COVID-prompted cutbacks, allowed them to reduce costs by $300 million. Beyond the cost savings, they said these modernization efforts freed up programmers to focus more on what happens between the records. “Just in terms of music selection, think of all the programmers we have that thought their job was to pick the music on the radio stations and put it together, and that consumed most of their time,” Pittman said. “Well, today we have 3,500 inputs. When we make a music decision, we're now using AI to assist us in making those decisions. And it frees up our programmers to do what they should be doing, which is trying to add the magic to the radio station, focus on the personalities, the contests, the promotions, the imaging, things that make the radio station the radio station. So I think it is not only got a cost advantage to us, but it's got a quality advantage.”
On the sales front, the iHeart execs said advertisers are returning – even some who are experiencing supply chain issues. “They’ve all realized that it is a lot more expensive to acquire a customer than it is to hang on to one,” Pittman said. “So unless they intend to be out of business in the future, which they don't, it's cheaper for them to keep advertising.”
They also delved more into the company’s sales model, which allows any of its 2,000 account execs to sell anything the company has to offer. “We, years ago, began to build out the strategy of any seller anywhere can sell anything, that's really been the core of the multi-platform sale,” Pittman said. “And the future is we don't want to sell an advertiser just one thing. We want to figure out how we bring them into the universe of the products we have, for their benefit, as well as ours.”
In other news to come out of the Q&A with Bank of America Managing Director Jessica Reif Ehrlich, Pittman said the company is bringing back bonuses for executives this year after they were cancelled in 2020 due to the COVID-triggered economic downturn.