To Simulcast, or Not to Simulcast, That Is the Question.
September 26, 2013
There is an ongoing discussion in the industry about the pros and cons of simulcasting your broadcast content on your internet stream. With apologies to Mr. Shakespeare, we thought it would be helpful to explore some of the issues in detail to help you make this important business decision.
So why would you simulcast?
- Higher AQH Ratings
When you simulcast, Arbitron adds the ratings together for each station or stream in the simulcast before they are rounded. Many streams that have listeners do not get reported in the Arbitron book because they do not have enough reported listening to meet Arbitron’s Minimum Reporting Standard (click here for more information). In short, your stream can have up to a 0.0499 AQH rating but it will not show in the book on its own. Let’s say your station’s broadcast has a 0.3 AQH rating for middays. That rating is rounded and the actual rating is somewhere between a 0.2500 and 0.3499. When you simulcast, Arbitron will essentially add the unrounded broadcast and streaming audience numbers together. This makes it very possible that your stream, which may not even be reported in the Arbitron book on its own, will increase your AQH Rating by at least 0.1 rating points. It may not seem like much, but if your stick garners a 0.3 rating and the listening to the simulcast stream makes that a 0.4, you just increased your potential revenue for that daypart by 33%. While this technically works the same in PPM and Diary markets, the impact is more automatic in a PPM market because the meter actually knows that the listening occurred on the stream. In a diary market, the diarykeeper has to actually write that they were listening to the stream. In the diaries we review they do not do that very often for broadcast radio stations. The “Internet” identifier shows up more frequently for digital pure plays.
- Cleaner sounding product
At this stage the technology that inserts content on the digital stream does not sound as clean as the over the air content. There are timing issues where the ad starts too soon or ends too late. There are issues of frequent repetition or of commercials that don’t sound good, play at different volumes, or are just inappropriate for your audience. You expend so much energy perfecting the listening experience on your station. If you don’t have the same level of control over the content of the digital stream, you are accepting the possibility that your listeners’ experience will be less satisfying and therefore you will drive them away from the station to a cleaner streaming experience.
- You don’t need to sell the digital inventory separately
Whether you have a separate digital sales staff or not, there is a tangible cost involved with selling the extra digital inventory. This is eliminated when you simulcast.
What are the downsides of simulcasting?
- Talent fees
The additional talent fees for “new media use” of the commercials are higher than the fees for just broadcasting the same ads. These are typically paid for by the advertiser but it does increase the overall cost of the campaign.
- Lost revenue from the streamed inventory
Your separate online audience could generate more revenue if different, more targeted ads are able to be sold. You need a sales process that moves enough of this inventory to justify the cost of that sales staff and to cover the potential lost revenue due to lower ratings than might have occurred with a simulcast. We can visualize a day when streaming CPMs will be higher than broadcast CPMs due to better targeting capability (geographic and demographic) and higher accountability metrics. Simulcasting eliminates the possibility of separate monetization of the streaming audience.
- Stealing from the future
In the future it is very likely that more listening will take place on your stream. If you simulcast now, you will not be perfecting the technology and the sales processes required to unlock the potential value of that streaming audience. This is the area where digital pure plays are way ahead of broadcast radio.
- Out of market listening
Some advertisers do not want their ads heard in other markets. For example, maybe a fast food restaurant is promoting a test product in one city. You don’t want people coming into stores in Detroit looking for that new menu item that is being tested in Cincinnati.
Ultimately this is a business decision. Does a clean sounding product that is 100% under your control and that can potentially increase your AQH Rating for a given daypart outweigh the direct costs attributable to simulcasting? How does it compare to the opportunity cost of lost revenue that might be realized if you sold the digital stream separately? Or the opportunity cost of being less prepared for what happens next?
We’d love to hear what you think. Have you figured out a way to maximize streaming revenue today while preparing for the future?
-Marc Greenspan, Partner