Since emerging from Chapter 11 May 1 on firmer financial footing, iHeartMedia has embarked on a three-pronged strategy to grow its revenue by taking advantage of new opportunities on an ever-evolving media landscape. On Thursday, Chairman and CEO Bob Pittman walked investors through the game plan during a Q&A session at the Goldman Sachs Communacopia Conference in New York.
The first step is to grow iHeart’s share of broadcast radio dollars, in a space that it already dominates. The radio and digital giant’s unmatched size and scale, and the ability to be “digitally nimble and sell in a digital way gives us the opportunity to do that,” Pittman said. Central to that thesis is better monetizing its array of assets. “Multiple platforms give us more opportunities to connect with that consumer and stay connected with them and serve their needs,” Pittman said at one of the year’s biggest media-focused conferences. And that opens new doors for advertisers. Yet some media buyers aren’t even interested in radio and will latch onto one of the company’s eight benchmark national events, Pittman explained on the eve of its iHeartRadio Music Festival in Las Vegas. “And before long we’ve got them into our bigger ecosystem.” For example, personal genomics company 23andMe initially bought a social influencer package from the company before investing in podcasting and then branching out into broadcast radio.
Secondly, the company aims to tap into pools of ad dollars that traditionally have been allocated to TV and digital. Nielsen research shows 44% of persons 18-49 fall into the light and non-TV viewer group and that has major advertisers scrambling to connect with this harder –to-reach segment. “We’re a nice solution for that piece of the business,” Pittman offered, noting that radio reaches 90% of this group. At the same time, advertisers are looking for greater “efficiencies,” meaning they want to cut costs. A marketer that currently allocates 100% of their budget to TV could reduce their spend by 10% and go with an 80-20 TV-radio mix while significantly increasing the campaign’s reach and frequency. “We’re a solution in times when people need to make marketing cutbacks. That winds up being an opportunity for radio to finally convert people in,” the CEO told investors.
The message Pittman and other industry leaders have been hammering is that radio is undervalued by advertisers and its share of the ad pie isn’t commensurate with its share of media usage. That also applies to the ROI it delivers, Pittman argued. “Today TV has triple the CPM of radio yet the impact of TV and radio is about the same at the same weight level. We have a lot to grow into.”
Playing In Digital Ecosystem
Thirdly, iHeart wants to become a bigger player in the digital media business, which continues to enjoy double-digit growth. U.S. digital advertising revenues reached a landmark high of $28.4 billion in first quarter 2019, according to IAB figures released in August. That was up 18% for its strongest Q1 on record. In March 2017, iHeart introduced its SmartAudio digital data advertising product, as the latest feature of its programmatic offering. That’s allowed it to play in the digital ecosystem, where the language spoken is impressions and cost per thousand, not spots and cost per point. The iHeartRadio app reaches about one third of the audience of most of its broadcast radio stations, Pittman said, and that allows it to project the attributes of those digital listeners onto the other two thirds of the station audience. As a result, sales reps can talk to digital ad byers in their native language and offer digital-like targeting and data matches, as well as attribution.
Ad agencies, meanwhile, are working to break down their internal silos that separate media platforms from one another, with an eye toward buying across platforms holistically. “We think we’re well set up to play in that game and be an important part of it,” Pittman said, adding that agencies are only in the first inning of this transformation.
To illustrate how its multiplatform assets are paying off, Pittman spoke of a big brand marketer that ran a spot in a recent Super Bowl telecast. The unnamed advertiser had a longer form version of the spot it wanted consumers to see. “Instead of paying Google to boost it on YouTube, they paid us to talk about it and to get people to go to YouTube to look at it. They got tens of millions of views,” Pittman recalled. “The world is moving away from I want rating points to I want a solution.”