Pandora Isn’t Gaining on Radio’s Grip In The Car

15

(by MaryBeth Garber) With the average urban commuter spending 42 hours a year stuck in traffic jams, a recent commuter study by Edison Research provides insight into how Americans deal with their daily commute.

Not surprisingly, 90% of them tune to AM/FM radio to be their companion during their daily trek. And while AM/FM radio has been joined by many choices over the years — such as streaming and personal music collections — multiple nationally-representative research studies show that AM/FM radio remains the undisputed first choice and dominant source of audio entertainment in the car.

Given AM/FM radio’s firm hold on its in-car audience, it’s easy to see why streaming services, such as Pandora, want to break AM/FM’s connection to its listeners — but they remain unsuccessful.

Recently, Pandora issued a piece on in-car listening claiming that consumers are not listening to radio ads, and as new connected cars slowly become part of the picture, favorite audio sources while driving are likely to change. However, to support this claim Pandora had to selectively isolate excerpts from two pieces of Edison research studies —an online survey, and a fairly small unrepresentative sample of 101 drivers using Go Pro cameras installed in cars — rather than presenting the whole picture of what American consumers want.

Pandora claims that favorite audio sources while driving will change as more connected cars slowly become available. But a research study by Ipsos — with a nationally representative sample of over 1,000 respondents — found that while consumers do use new streaming services, virtually all consumers – 99% — are comfortable with their current AM/FM in-car radio operation. And 91% of consumers say they want the way they operate their car radio to remain unchanged and would not want it changed into a dashboard app. Overall, the Ipsos study makes it clear that in spite of consumers’ new love of apps and digital products, they have a strong attachment to their AM/FM radio and an overwhelming desire to keep it as it is.

Pandora also claimed research indicated that consumers are not listening to radio ads, but the data they provided doesn’t support that assertion. While Edison’s study does find an AM/FM listener switches the station an average of 22 times per commute, while listeners to other platforms switch an average of 9.3 times — Pandora fails to mention the percentage of time spent listening to each of these audio sources. A previous Edison study, “Share of Ear” Q4 2015, places time spent listening in the car with AM/FM radio at 72%, Sirius/XM at 15%, owned music at 10% and all streaming online content at 4%.

Pandora also neglects to point out the Edison study recorded what happened when commuters listening to AM/FM radio heard ads: 48% of consumers listen to some commercials; 29% didn’t switch at all during commercials; and only 23% switch, but after 15 seconds. Importantly, most of the AM/FM switches happen while music is playing.

What Pandora doesn’t provide in their issued whitepaper is any information about exactly where those switchers went. A recent study by Nielsen/Media Monitors/Coleman Research in November 2015 noted that 82% of listeners who tune out return to their favorite radio station after consuming different content on another station, for example news, traffic or a different song.

An earlier N/MM/CR study from September 2014 also used PPM data to digitally analyze 17.9 million commercial breaks, concluding 93% of the audience level is retained throughout the break when radio spots air, providing further evidence that consumers are tuned into radio — and listening to advertiser’s messages.

And not only are consumers listening to radio ads — they are enthusiastically responding to them as well. A plethora of recent studies by companies like Nielsen and Katz Media Group prove that radio provides an $8 to $1 return on ad spend — clearly demonstrating that ad campaigns are significantly more effective when radio is in the media mix.

Notably, the Edison Commuter study does not, in any way, come to the conclusion that “consumers are not listening to radio ads. Also not appearing in Edison’s research is any data confirming Pandora’s claim that drivers know radio stations often play 10 or more commercials in a row, and that ads and repetitive playlists cause them to switch stations.

What the Edison study does clearly show is that AM/FM radio remains American’s number one choice in cars — and the audio source consumers connect with and spend more time while with in the car — than any other.

Mary Beth Garber is EVP of Media Strategy for Katz Media Group and can be reached at [email protected]

15 COMMENTS

  1. So that’s what happened to DG Systems-the magic box that had spots on it every morning. When our station didn’t get a time buy-just the spots-I would use the ads locally in a presentation to the local outlets and get him to buy.
    To think at one time we had a special receiver hooked up to a solo phone line just to get what are now email attachments. DG Systems receivers replaced cart machines as boat anchors.

  2. Thank you, Robin, for taking the time and making the effort for clarity.
    My main premise has always been: There is a body of methods, strategies and approaches available that go BEYOND the standard model-of-radio-communications to which we have all become accustomed and have been applying for, like – forever?
    “Creativity” is an element that, while necessary, is not a part of the program. That is to say: Better communications across the board are available. “Creativity”, wherever it can be found, makes everything that much better.
    Even so, “creativity” can be further enhanced by also applying the techniques to which I have been referring for the last 160 Radio Ink blogs. (Work, work, work.) 🙂
    The struggle to inform continues.

    • Thanks Mr. Robinson. Creative problem solving is what I mean. Such as when I suggested earlier that commutes may become more than music, news and weather. Especially if you don’t actually have to drive the car. In my experience I’ve found that creative solutions can eliminate a portion of that workload you refer to.

  3. Current hub-bub??? Settles down??? @ Ronald Robinson because you directly addressed me, I will take this opportunity to introduce myself with this. I use my real name and pic so that anyone can easily find out who I am. Briefly, my biz team now comprises the exact same individuals that invented the company DG Systems Inc. in 1990. We all have backgrounds in radio: on-air/production/selling and advertising. DG was named after one founder, Mr. Ron Denman, a longtime San Francisco ABC manager who later started his own radio ad company called The DENMAN GROUP (yes, we were first in the industry to use those familiar initials, DG (except for Dolce & Gabbana). DG was the very first National, digital delivery network business in the world. Then 2 years later, the guy our venture group sold the company to completely dominated the radio spot delivery business (later, the TV spot delivery business) for 23 years before selling DG and retiring the ticker symbol, DGIT in 2014. Btw, DG Systems was *not* that complex a system to invent but it was very expensive to launch and launch then. The process enabled the company to have an 85% profit margin taking 50 cents of long distance telephone time and turning it into 10 dollars.
    We have a new company now that has built a more intelligent system than before using our very own, advanced software as well as many of the latest developments in the tech industry. Amongst other current and future products, we make delivering syndicated radio programming from producer to air completely automated. Better, faster, and offering more value than satellite or ftp. Because of this, we have a vested interest in the success of terrestrial radio and radio advertising. So that’s what I’m all about.

    Now, about the opinion or question (?) you posed to me (?). I believe that I stated in my comment directed to Ms. Garber what my views were regarding helping the broadcast industry, i.e., using creativity to solve challenges and I’ll add collaboration and why not also throw in transparency. Allow me to elaborate for more clarity. Although one radio consultant very recently stated that he doesn’t agree with what I’m about to say, I still believe it true. Brainy Quotes attributes these words to Albert Einstein, “We cannot solve our problems with the same thinking we used when we created them”. Meaning that future solutions must come from a fresh perspective and more than likely it will come from outside the industry. Remember that broadcast was first blind-sided by what had been developing for years (internet) and some smaller groups preceded to follow the “big guys” and reduce operations (only after the CC acquisition of 2006 (or 2007?), did they begin the corporate pillaging) and ignore some of the challenges (read Millennials) that were coming down the pike. And speaking of following the big guys, now with Iheart leading the way to “a dollar a holler” advertising, it is reducing radio time to a commodity and that isn’t good for anyone. Yes. Today is good. Car radio is still king…but it is losing listeners through attrition and advertisers to (promised) harder metrics.

    It is difficult to plan and make good decisions in a panic. This should answer questions about the industry’s ability to see into the future, let alone acknowledge and solve the problems of the present. Believe me, I’ve had plenty of time to think about it as my company approached industry influencers with this, our same solution, several times in the last two decades. I know! Talk about tenacity, but I digress. It wasn’t until the industry lost 1/3 of its revs and began to panic in 2008 that anyone would stop to listen and actually think about what changing–in the world and within the industry–and start to think what to do about it. Does this tell you anything about the persons that inhabit the top of the industry and whether they can help themselves? Starting a new business or a new movement and getting people to change is VERY difficult and 8 out of 10 attempts at ventures tried will fail. That’s just (Tom Peter’s) business reality. The question is, who is equipped to step up with well-thought out ideas and strategy that isn’t just a reactionary flame up to panic. Who can come up with and share, solid plans which help the broadcast industry stay relevant in the future instead of like this week, publishing bogus studies and citing spun research? Oh, and my personal favorite of the week: the copy-cat businesses that surround themselves with purloined press release hype instead of (cough, cough) actually having real working products today, as they purport. So there you have it. I’m not perfect but I continue trying to be a better human.

    • THANK YOU Robin!!
      this is what i mean by solutions…we need to stop the negative words and create positive solutions for the future!
      THANK YOU AGAIN Robin…Ron this is a person that is speaking the truth…not using big words to talk down to us lowly radio folks.

      • You’re welcome SMiller. There is absolutely no reason to treat anyone any differently! I’ve been a jock and a waitress and a hotel maid and factory line worker too. Also everyone should know I’m a female. I don’t futz with Lipstick but sometimes that is often the only way to tell the gender of someone with a neutral name. I am married to the guy who first put a music format on at KFJC-FM out of Foothill College that is famous for it’s Louie Louie a-thons of the 1980’s. We’ve been together and have worked together for 25 years. We work hard everyday, continuing to move forward with innovative solutions to help the industry we both love. I’m proud that we actually are doing something about it on a daily basis.

  4. Mel T,

    You’ll find that Ronald always like to have the last word (post), even if what he has to say completely contradicts all his previous statements. Ronald knows people, at least many people, have short memories and won’t remember his “radio is dead” statements, but I remember. On this one he was really caught flat-footed because he aspires to have the following Roy Williams has and wants to tag along. Not a chance.

  5. Quite so, mel T.
    Before this most recent uproar came along, it has been well-accepted, by anyone paying attention, that radio continues to enjoy a 94% penetration – give or take.
    What a freebie! What a stroke of good fortune!
    And there are reasons for that – none of which include any efforts radio has put forward – with intention.
    There is a brief explanation of that phenomena in my next blog, “Merlin In The Mix” whenever it drops.
    Given that, the real question remains: what are we going to do with this basket full of opportunities?

  6. I’ll just quote an article referred to by Roy Williams in his Monday memo yesterday. You’ve heard of Roy. You agree he might know more than just your dart-board guessing? Good. Roy quotes Audience Insights’ Jeff Vidler-” We see absolutely no change in broadcast radio’s share of in-car tuning in the past 5 years. AM/FM radio is still dominant in-car, representing 66.2% on on-car listening. The growth of alternatives such as satellite radio ans steaming audio appear to be coming at the expense of personal music (iPods, CDs and other libraries), not broadcast radio.
    Roy continues on his own…” Whole categories were swept away by the tsunami (internet). Radio has suffered the least damage of all the major media.”
    If you’re in radio and you disagree with Roy here, please leave the business-today. You will not be missed.

  7. Since Robin presents as an intelligent, well-versed and, perhaps, even a student of the medium, I wonder if she might consider the following:
    After all this current hub-bub dies down, is it still not incumbent on commercial radio to consider the necessity of significantly improving its own game?
    Twenty-five years of slicing, dicing, gouging and gutting its own body parts might have left it with a racked skeleton covered by only so much taut skin as to leave it unable to participate at the levels that are required.
    While I believe this is a circumstance that roars for immediate, massive action. If not today, then certainly so in a not too distant future.
    (This is not a thread hi-jacking. But, I do attract trolls.) 🙂

  8. Hi Mary,
    Yes, we radio people will take all this info with a grain of aspirin, I mean, c’mon We know who does this research. But you must realize that radio, whether in the car or not is at a tipping point for three big reasons. 1) Interruption marketing’s appeal is waning and the advertisers know it (try looking at those numbers). 2) Eight to ten spots in a row is driving people away (including the advertisers that aren’t first in that conga line) and 3) the only way to find a song that you can stand for 2 1/2 minutes or escape the forced laughter fests in the mornings is to SKIP and we do this by punching buttons.

    Radio is still the dominant entertainment source in the dash-right now. And Pandodo is not. That’s a pretty big lead, would you agree? But in a few years, as people replace their cars, there will be a lot more choice in the dash than Pandodo (plus, with no revenue, Pandodo may not even make it) and so it comes down to focusing on what people want to listen to and desire to be engaged with for as long as possible. So don’t drive them away. Yeah, I know. Easier said than done. But at least don’t pretend that skipping 22 times in 20 minutes is ok because it’s music. We’re going to have to be more creative solving these challenges because maybe the future of the car commute isn’t just limited to music, traffic and weather.

LEAVE A REPLY