An app that would allow smartphones to receive FM radio signals like a transistor radio has been hailed as a way to help stations recapture listeners who fled to Web-based music streaming services.
But the CEO of the company that developed the NextRadio app says its ability to also receive digital coupons on a smartphone could be one of the most lucrative aspects of the technology to be unveiled later this year.
“We think coupons could be the biggest of all,” Jeff Smulyan, CEO of Emmis Communications Corp., said at the company’s annual meeting July 10.
Smulyan for well over a year has been hailing NextRadio as a “game changer” for the struggling radio industry. Radio advertising revenue last year of $14 billion was down considerably from a 2006 high of nearly $20 billion.
Advertisers are migrating away from traditional media to any number of new digital media. Millennials are thumbing noses at commercial radio for Internet streaming services such as Pandora and Slacker.
The radio industry has attempted to stem the drain by creating such services as iHeartRadio, which allows a listener to stream a favorite local station over the Internet.
But executives at Indianapolis-based Emmis think they have the magic technology.
The NextRadio app will allow a phone to pick up over-the-air FM signals for free, unlike an iHeartRadio, which can burn up data minutes on one’s wireless phone plan.
Much of the NextRadio development was the handiwork of Emmis’ chief technology officer, Paul Brenner, who has achieved celebrity status in the radio business.
Launching NextRadio requires more than clever technology, however. Emmis and other radio groups needed to strike a deal with at least one wireless phone carrier, and earlier this year Emmis and a consortium of radio broadcasters struck a nonbinding pact with Sprint.
Curiously, most wireless phones are capable of receiving FM broadcasts. But in the United States, wireless carriers have insisted that phone manufacturers disable the FM-reception function because they wanted to maximize revenue from data charges such as those racked up through radio streaming.
Emmis has been cagey as to exactly when this year NextRadio and Sprint will launch the service. Smulyan declined to elaborate at the annual shareholders meeting.
But the broadcasting trade press has been piecing together details of how the arrangement is likely to be structured.
Earlier this month, Inside Radio reported that 55 radio groups have signed formal agreements to raise $45 million over the next three years for Sprint. Much of that will come by essentially donating some of their on-air advertising inventory for Sprint’s behalf. Inside Radio reported that operators are being asked to commit $10,000 per station per year in inventory toward getting Sprint to activate FM on 30 million phones in its network.
Talks are also under way with other wireless carriers, according to trade publications.
Lost in all the buzz over deal-making is radio’s potential to generate additional cash through NextRadio, including digital coupon delivery.
A radio advertiser could elect to also have a coupon transmitted over the FM signal that would pop up on the smartphone’s display—say at the very moment the radio commercial is airing.
That coupon could be in the form of a code that can be scanned at the store with a UPC or QR code. As an example, Emmis shows a simulated QR code displayed on a smartphone that would entitle a recipient to free assembly of a grill he buys at Home Depot.
A radio advertiser also could pay a little more to have a static version of the ad sent to the phone’s display, or even a map showing the nearest store.
An instantaneous mobile coupon or QR code related to radio ad content would be “very relevant” to many radio listeners, said Michael Hanley, director of the Institute for Mobile Research at Ball State University.
“From an ad sales standpoint, being able to send a coupon/QR code very near the moment of ad exposure can be a very effective sales tool, as other forms of mobile advertising have shown.”
It also would allow stations to increase the cost of ads, “or, more likely, add an additional cost for the delivery of a targeted incentive,” Hanley added.
Tom Denari, president of Indianapolis-based ad agency Young & Laramore, said one of the greatest strengths of radio has been its ability to drive promotions—an event, a discount, a Web address or a phone number.
“If NextRadio can add to that capability by efficiently delivering these things tangibly to a smartphone in real time, it will provide a set of promotional tools that marketers will be very attracted to,” at least “once the listening audience using the technology grows to a significant size.”
That, of course, is a big question: Can Emmis and its radio partners get enough smartphone users to use such an app, not to mention convince enough wireless carriers to enable FM reception?
Too much clutter?
So many new marketing technologies have come on the scene in recent years that David Cain, president of Carmel-based ad agency Magnitude, is reluctant to handicap NextRadio’s chances.
“The world is getting cluttered,” Cain said. “Everybody’s trying to find new and unique ways to deliver content.”
Cain noted that digital coupon delivery appears to be on the upswing, though.
New York-based research firm eMarketer said just 16.3 percent of U.S. mobile phone users redeemed a mobile coupon last year. But the firm expects that to “increase substantially” in the next few years—projecting the number of U.S. mobile coupon users will rise to 53.2 million next year from 12.3 million in 2010.
It pointed to the rapid adoption of smartphones.
“Mobility is not just a trend. It’s a critical issue for any content company to address as the consumer take-up of tablets and smartphones continue to increase,” said Dave Arland, president of Carmel-based Arland Communications, which specializes in consumer technology.
The NextRadio concept “allows broadcasters to reach their audience at the very moment that listeners hear an offer, much the same as billboards along a highway might encourage you to try out a station on the radio as you’re driving,” Arland observed.
One caveat would be “clutter,” he said, noting that consumers already have hundreds of thousands of apps to chose from. He said the ability to get good deals will need to be heavily promoted to listeners and potential advertisers.
Of course, not all advertisers are pizza shops and shoe stores that would find a coupon relevant, noted Amy Mitchell, vice president and media director at Indianapolis-based Hirons and Co.
The advertising firm buys ads on such new media channels as Pandora, however, for clients such as the Indianapolis Symphony Orchestra and Indianapolis Zoo.
“It will be interesting to see how it all works and how it’s priced,” she said of NextRadio’s advertising component.
Emmis is the nation’s ninth-largest radio conglomerate by number of listeners, owning 22 stations in New York, Los Angeles, St. Louis, Indianapolis, Austin and Terre Haute.•