Outlook 2020

Procter & Gamble more than doubled the number of spots it aired on radio last year, making the parent company of brands like Tide, Charmin and Vicks radio’s second highest volume advertiser. As one of the largest and most innovative advertisers, the CPG giant occupies a major leadership position in the marketing world and. Will other large advertisers follow its cue and make radio a bigger part of their media mix in 2020?

“In 2019 we saw P&G increase their local investment as well as network spend and believe other advertisers will certainly follow their lead,” Katz Radio Group President Christine Travaglini tells Inside Radio. “The continuing increase in investment from P&G is a powerful statement to the marketplace on the performance of radio.”

Brad Kelly, Managing Director of Nielsen Audio, says he often gets asked by other big brands, “What does P&G know that we don’t know?” And while he’s hardly in a position to explain their strategy or media choices, he notes that the world’s largest advertiser leaves nothing to chance when it comes to marketing. “Their decisions are informed by exceptional diligence and high-end data analysis,” Kelly says. And based on its financial performance, it looks like P&G’s data-fueled decision making is paying off. In October the company said its net sales rose 7% to $17.8 billion, topping expectations of $17.4 billion.

In a blog post, Cumulus/Westwood One Chief Insights Officer Pierre Bouvard said the fact that P&G’s personal care brands like Prilosec OTC, Sinex, Pepto-Bismol, Metamucil, and NyQuil/Dayquil are already major network radio advertisers is not lost on other pharmaceutical brands. “There is a lot of interest among other pharmaceutical brands to use AM/FM radio to complement and supplement network television,” Bouvard said.

It’s more than just CPG and pharmaceutical brands taking notice and rediscovering radio. Retail and financial institutions are showing a healthy uptick in engagement in audio. Over the last several years, Capital One has increased its audio exposure and investments to support multiple products by using broadcast, streaming, podcasting, satellite and events like iHeartMedia’s fall Music Festival, its country equivalent and the holiday-themed Jingle Ball tour. “Many brands are either rediscovering audio or refining their approach by embracing additional platforms and tactics across the entire audio ecosystem beyond traditional broadcast,” says Lauren Russo, Executive VP, Managing Partner Audio Investment & Promotions, at ad agency Horizon Media.

Hitting The Attribution Accelerator

While some broadcasters and digital audio services partnered with attribution providers as far back as 2016, the industry hit the accelerator in demonstrating its impact last year. Russo says her shop is “already seeing positive results” against various client key performance indicators from broadcasters that are using these services. Not only are those efforts expected to pay dividends in 2020, but attribution will get more sophisticated in the new year. “Advertisers are hungry for metrics which map out the cause-and-effect linkage between ad exposure and consumer action,” Kelly explains. “We’ll unquestionably see adoption widen and sophistication improve in 2020.” Although Nielsen’s emphasis has so far been on customized solutions for big brands, look for the measurement giant to expand its offerings this year. “Expect to see us active in this space with syndicated-type attribution solutions for media and marketers in 2020. We recognize the need the marketplace is expressing, and are allocating resources accordingly,” Kelly says.

Attribution work that Katz performed last year will pay off for the industry in 2020, says Travaglini. “From the strides we made in 2019, we have powerful case studies in our toolbox showing advertisers across multiple verticals, including automotive, retail, energy, and DTC that radio delivered campaign success,” she explains. “At Katz we are committed to using these tools to bring in new revenue in 2020.”

Working with its broadcast partners, Katz is offering new advertisers the ability to tap into the rep firm’s “Audio ABC’s” of attribution, brand lift, and creative impact tools to leverage their new investment in radio.

At the same time, the fast growth of podcasting and smart speaker adoption has put the sexy back in radio and is contributing to both audience and revenue growth. The latest eMarketer report forecasts 78.9 million Americans will listen to a podcast in 2020. That’s 2.5 million more than consumed on-demand programming last year. “Voice activation and smart speaker adoption continues to grow and are reshaping how we listen and engage with audio platforms,” Russo observes. In fact, some audio publishers have created unique audio ad products that allow advertisers to run brand messaging specific to the “connected home” environment, opening up more opportunities for growth.

Podcasts, smart speakers and streaming audio are “natural brand and platform extensions of radio, and they are on the lips of many marketers right now,” Kelly notes.

At Katz, digital business “will continue to grow at a faster rate as online consumption grows and we evolve our offering to deliver more advanced targeting tools,” Travaglini predicts. In fact, she’s starting to see separate budgets for audio from digital agencies and programmatic trading desks. “Podcasts are a perfect extension to radio that will also bring new advertisers to audio,” she adds. “It’s an exciting time to be in the audio space. For sellers, not only is audio hot – but it’s also measurable and momentum is building as we have more proof of the results radio produces.” – Paul Heine