November 2006

1
Exploring the Future of Radio
BBY Telecommunications, Media Technology
Conference Mark Neely Commercial Manager,
Austereo Interactive mark.neely_at_austereo.com.au

• November 2006

2
Overview

• Medias challenges
• Key challenges for radio advertisers
• How will the Internet impact radio?
• The potential for digital radio
• Future trends developments
• Conclusions

3
Medias Challenges

• There is a growing profusion of content.
• The boundaries between traditional and emerging
  media are blurring.
• Passive consumption is on the decline.
• New technologies are enabling new consumption
  habits.
• Economic model shifting away from distribution
  scarcity.
• Context cannot be assumed.

4
What Isnt Changing

• The media sector is still an attention economy.
• Advertisers follow audiences.
• Technology remains an enabler, not the
  experience.
• Audiences are co-creaters of the media
  experience.
• Consumption patterns shift.
• The New New Thing isnt.
• 2/10 technologies weak signals.

5
Key Challenges for Radio Advertisers

• Market Proliferation
• Evolving ROI Models
• Customer Insights

6
What is driving proliferation?

• Multiple forces at play in driving proliferation
• Better customer information management (CRM)
• Explosion of customer segments (and aligned
  growth of brands product extensions)
• Pricing point complexity
• Multiplying sales/distribution touchpoints
• Continuous partial attention
• Marketers are becoming increasingly sophisticated
  at identifying, prioritising and allocating
  resources to target the most attractive consumer
  segment(s).
• Challenge is to build a cohesive (and coherent)
  campaign around these opportunities and deliver
  using appropriate communication channels media
  partners.

7
How is Austereo responding?

• Austereo has responded to this new environment
• Greater granularity in audience profiles
• New audience segmentation models (aggregate
  show-based)
• Broader research in media consumption habits
  beyond radio (including new technologies)
• Establishing nurturing audience relationships
  beyond traditional radio channel
• More flexible programming/content integration
  across our media channels

8
Evolving R.O.I. Models

• Digital media channels are conditioning marketers
  to expect more accurate targeting, tracking and
  post-campaign reporting.
• This has driven substantial innovations in ROI
  models.
• - e.g. Cost per Acquisition models
• This mindset is influencing traditional media
  measurement approaches.
• - Change to direct audience measurement
  technologies
• - Evolution of traditional reach frequency
  orthodoxy
• - Corresponding revaluation of audience away
  from scale and demographic criteria towards
  consumer interests, behaviour and targetability.

9
How is Austereo responding?

• Austereo has responded to this new environment
• Growing preference for true partnership
  approach to major clients.
• Increasingly sophisticated briefing process
• Understanding brand drivers
• Understanding investment objectives
• Critical success factors
• Earlier and more proactive involvement in
  marketing strategy development
• Strategic offsite
• Broader stakeholder representation
• Underlying objective is developing integrated
  solutions across traditional emerging media
  channels.

10
The Importance of Customer Insight

• Over 75 of new products fail.
• Given the crowded marketing product
  environment, sales and new product success is
  increasingly reliant upon a deep understanding
  of
• Customer Needs
• Customer Behaviour
• Unarticulated / Future Needs Behaviours
• Marketers increasingly seeking to match data
  points from an array of sources
• Traditional Market Research
• Segmentation Models
• Channel Category Data
• Want to view their customers via multiple lenses

11
How is Austereo responding?

• Austereo has responded to this new environment
• Clear shift culturally technologically away
  from one-to-many broadcast environment.
• Our audience is increasingly comfortable engaging
  with us across multiple communication channels
  (telephone, email, SMS, Web sites etc.).
• Creates a data trail which de-anonymises our
  listeners
• Developed Privacy and Opt-In policies to ensure
  our clients benefit from this increased, off-air
  interaction.
• Grooming new tools that provide greater
  opportunities for clients to leverage our
  audience to co-create or design optimal
  product/service solutions
• Community Tools
• Interactive Games

12
What are the benefits of this approach?

• Positions Austereo to tap into growing online
  budgets in a manner that complements our existing
  sales processes.
• Keeping our eyes on both main games
• Leverages our core competitive advantage our
  national broadcast footprint to drive audience
  to new channels.
• Growing our share of consumers attention
• Creates scope for moving between revenue models
  so as to optimise revenue outcomes.
• e.g. Podcasting sold at premium CPMs levels
• Reduces the risk that our interactive offerings
  will be commoditised or face irrational
  competitive pressures from online natives.

13
How will the Internet impact Radio?
14
How will the Internet impact Radio?

• The only media predicted to grow audience
  revenue
• Provide complementary rational emotional
  benefits.
• Radio Online are social connectivity media
• Combined usage enhance brand interactions
• 67 have listened to radio when online
• At any given time, 20 of users are listening to
  radio
• 57 checked something after hearing it on radio
• 39 in response to an advertisement

Source Using Radio with online How radio and
online combine to fulfll brand interactions IAB
UK 2005
15
The Potential for Digital Radio

• The building blocks for a successful launch are
  in place
• Industry has a united approach to regulation
  technology
• Australia has the benefit of lessons from other
  markets.
• Improved sound, integration of text/visuals at
  device level
• Not yet clear what will be the killer app for
  digital radio.
• Proposed technology offers an array of
  opportunity for marketers to interact with
  listeners on- and off-device.
• Industry is keen to work with advertisers to
  refine the content experience end-product.

16
Conclusions takeaways

• iPod was not a radio killer impersonal
  technology
• Podcasting will be seen as a 2/10 technology
• Early harbinger of on-demand constituency
• Radio remains the most personal of media
• Interactive, live, local, human and omnipresent
• Radio well positioned to
• Address intense competition for consumers
  attention.
• Ride on the shirt-tails of growing online
  budgets.
• Industry is stepping onto the front foot with
  digital radio

17
Finish/Questions