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IQ News: Radio Waves Sizzle Online

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Internet Radio Services Are Closing The Advertising Loop.
Say you run Josephine's Pizza in Toledo, Ohio. You advertise on KXYZ Radio in the afternoon drive time slot, the theory being people are at their desks or in their cars, hungry, listening to the radio, where your ad will make them think, "Pizza sounds good for dinner." But will they swing by your pizza parlor or call your phone number? Not necessarily. After all, pizza is pizza, right?
But what if they were still at their desks, thinking about driving home, maybe stopping on the way home for a pizza. Now, if you could just eliminate that "maybe." That's where Internet radio services think they can help, by making that pizza so easy to order you'd be hard-pressed not to. "When you talk about Internet radio, there are two categories," explains Brad Porteus, vice president of business and marketing for Imagine Radio, Brisbane, Calif. "There's radio on the Internet and radio for the Internet."
The first is traditional broadcast radio stations that also have an Internet presence, whether it's streaming audio in sync with the broadcast, or an auxiliary Web site used for promotions and branding. The second is radio-like music programs created solely for delivery over the Internet. Imagine Radio falls in the second category. Imagine listeners can program their own channels or listen to 20 pre-programmed channels.
Both kinds of Internet radio offer distinct advantages in terms of reaching and serving listeners, and meeting advertisers' needs. Ads can be in any number of online ad forms, including banners, rich media and banners tied to audio announcements. Any of the above can be coordinated with broadcast ads, or "buy it now" buttons tied to audio content. For example, when users hear an ad for Josephine's Pizza, they might see a button on their monitors connecting to Josephine's Web site or be able to print a coupon on the spot. "Audio on the Internet is a more powerful connection," insists Jan Andersen, senior vice president of sales and marketing for Minneapolis-based Netradio Network, "because it can reach out and send impulse messages to you."
Netradio, launched in 1995, is a full-time broadcaster of original for-Internet music programming. "In the old-fashioned broadcast revenue model," Andersen explains, "the advertiser hopes you remember the message and react later, whereas we can integrate e-commerce into the listening experience." For example, every song played on Netradio's more than 100 channels can be purchsed immediately through the company's online store.
Some radio-on-Internet companies handle the online particulars for stations, which may be ill-equipped to manage Web spinoffs on their own. "We're enabling radio broadcasters to become e-commerce distribution channels," says James Burke, vice president of Radio Wave.com, a subsidiary of Schaumburg, Ill.-based Motorola, which launched Oct. 2. Radio Wave.com provides technology for radio stations to broadcast over the Internet in addition to other services.
In effect, Internet radio stations can turn desk-bound workers into shoppers, since the streaming audio from the computer can be enjoyed while the users work with other applications. "We're creating the in-office daypart," says Mark Cuban, president of Broadcast.com, Dallas, Tex., a content aggregator offering a network of radio and television broadcasts among other products and services.
The in-office daypart, pioneered by Sunnyvale, Calif.-based PointCast, which currently pushes content and ads to the desktop of 1,200,000 active users per month, could be even more robust for Internet radio companies. Broadcast.com commissioned a study by The Delahaye Group, Portsmouth, New Hampshire, which found that 95 percent of the 500 professionals surveyed had desktop PCs, and 32 percent had radios on their desks.
But with two types of Internet radio, discovering which one better reaches the target depends on who you talk to. "We learned that consumers don't want Internet radio the way people understand radio to be," says Scott Epstein, vice president of marketing and content for Spinner.com (formerly TheDJ.com), Burlingame, Calif., a radio-for-Internet company with 100-plus channels of music. "It's annoying to hear DJs, commercials and interruptions."
Not so fast, say those who develop Web sites for individual stations, including Chuck Ball, executive vice president and general manager for Chicago-based Magnitude Network, which provides Internet marketing services to radio stations. "Internet-only radio lacks the ability to localize advertising," Ball says. Plus, he sees DJs as a positive, not a negative.
On-Internet and for-Internet companies alike flout the doctrine espoused by most Web marketers, that Internet advertising offers targeting unavailable in any other medium. Most believe the traditional radio model of listener profiles is still applicable on the Net. "For us, the majority of people who visit the Web site match the stations' audience," says Paul Campbell, vice president of marketing for OnRadio, Capitola, Calif., a company that provides turnkey services including ad sales for traditional radio stations' Web sites. "Music is so lifestyle-oriented that we know that the listeners of an alternative station are predominantly 18-34, and there's other research data that can further quantify and qualify who the listener is."
And there's more innovation on the horizon. Call it immersive Internet radio, which is coming soon in a joint venture from San Jose, Calif.-based Fujitsu and industry information service New Radio Star, Carmel, Calif. Called NewRadioWorld, the product lets people interact in virtual worlds while they listen. The two companies teamed after a one-time appearance by a WRIF-Detroit disc jockey in Fujitsu's Dreamscape virtual world unexpectedly begat an ongoing virtual community. Radio stations in NewRadioWorld will have graphic representations of a studio, reception room and lounge area where the stations can hold virtual parties and Webcasts.
The stations will be able to sell local advertising--with a twist. As participants travel through the world as graphical avatars, they can accumulate objects which are linked to advertisers' Web sites. For example, in an Absolut promotion already running on WorldsAway's Club Connect, when an avatar approaches the bar and chooses an Absolut martini, she takes a glass in hand. If she clicks on the Absolut bottle, she's offered a recipe or a coupon. If she accepts, a Web browser window opens onto the Absolut site.
So, Josephine could open a virtual pizza parlor in NewRadioWorld and send free virtual pizzas to the DJs. They could hit a button to play "Josephine's Pizza Polka" while they handed out slices to fans, each slice a link to Josephine's Web site. Once there, they could order their favorite pie delivered to their actual door while they remain at the online party. Now, that's advertising.