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Ad-Supported Audio Presents a Compelling Opportunity

3 minute read | February 2020

Audio is fundamentally different from video in a number of ways, and business models need to reflect them. And as streaming becomes ubiquitous, it’s important for audio providers to embrace the fact that consumers are more apt to gravitate toward free options. After all, that’s where the advertising opportunities are. 

A special Nielsen survey into U.S. consumer sentiment toward streaming platforms found that in the video world, the vast majority of streaming users (more than 90%) subscribe to at least one paid streaming service. Juxtapose that with audio, where more than half (53%) of consumers use free, ad-supported streaming audio services (27% subscribe).

Consumers have always had access to free audio entertainment, so it’s not surprising that Americans are more reluctant to pay for it. Regardless of how we listen, consumers have come to expect that music streaming services and radio are free and available, and that’s a striking difference from the video streaming sector, where content providers are segregating distinct programming into specific services as a way to attract subscribers.

Based on what we know about the enduring impact of radio in the audio landscape, what we’re seeing in the streaming space isn’t head-turning. Ad-supported, free audio has been the norm since the advent of the medium. There’s no denying the ongoing love affair between audio lovers and radio listening, which has been the foundation of the total listening experience since radio first hit the airwaves. This explains why radio remains one of the centerpieces of the media universe, reaching 92% of U.S. adult listeners each week, more than any other platform. 

These insights aren’t lost on the advertising world: Big billion-dollar brands are (re)awakening to audio-based ad solutions. They know that reach matters; it’s a fundamental component of successful ad campaigns and a necessary ingredient when building awareness and moving products off the shelf. Ad-supported audio (and specifically, radio) offers a compelling opportunity to reach consumers en masse in today’s highly fragmented and streaming-crazed world. While video streaming tends to dominate the media headlines, audio streaming is also quickly becoming a staple of U.S. consumers’ media diet. Audio offers a unique, intimate experience for listeners and the advertisers aiming to reach them. And as detailed in the latest Nielsen Total Audience Report, ease of use, variety of content and cost rank highly among audio streamers.

While different business models have varied pros and cons, the ad-supported model has the advantage of uncapped earning potential. At some point, even the most successful subscription model will face growth challenges as its subscriber pools fill up. That’s not the case with the ad-supported model. Yes, it’s tempting to get swept up in the fanfare around the latest subscription video services, but in the audio world, the focus for broadcasters, podcasters and creators is unchanged: Develop quality content that keeps audiences coming back regardless of platform or ad model—just as it’s been since the dawn of radio.

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