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New Wave

AM/FM not doing it for you? Your customers are surfing the Web now--sooner or later, they'll be listening to Internet radio.
Magazine Contributor
3 min read

This story appears in the June 2001 issue of Entrepreneur. Subscribe »

The prospect of advertising on Internet radio stations may have seemed far-fetched last year; many marketers decided to spend their online dollars on banner ads instead. But given the disappointing click-through rates for mute banners, Internet radio ads have suddenly become more appealing.

Although Internet radio is still in its infancy, it's quickly gaining in popularity. In fact, the results from a recent survey by media research firm Arbitron indicate the medium will get a considerably larger chunk of overall Internet ad dollars in the next three years, given that the number of Americans who've listened to online radio grew from 6 to 20 percent between 1998 and 2000. By 2005, about 41 percent of the population is expected to tune in to Internet radio at least once per week, according to Forrester Research.

Not surprisingly, the steady rise in listeners has attracted the attention of marketers like Shane Jones, 25-year-old president and CEO of Seattle's His project management and collaboration software company's marketing strategy has included running audio commercials on, the online streaming version of Seattle's classical music station, King FM (98.1). Jones believed the station's 272,000 monthly online listeners-mostly young and middle-aged professionals with average incomes of $66,000-were an ideal demographic match for his company's products. He was right: During a recent six-month campaign, his firm signed up more than 75 new users each week and drew customers from 35 states and 18 countries. The cost per acquisition? About 50 percent less than traditional advertising-print, sponsorships, online banners, regular radio and so on.

For Jones, that meant a savings of $10 per acquisition. But besides the low price, he says he chose the medium because he wanted to reach an active audience worldwide-people who are at their work or home computers and in a position to try the software right then and there. "With our spot running every hour," he explains, "we could hit the same listener four to eight times per day, giving us great brand recognition."

If you own a dotcom or if you think Internet users would consider your business interesting, Web radio ads may be the perfect way for you to advertise. Of course, now you face the dizzying task of choosing the right online radio station. With approximately 5,000 of them out there, you may want to turn to a Web media company for help. Two major players that can provide assistance are and Zenith Media.

Their services can be costly, however, so if money is tight, search the Web yourself or network to find a media-buying company that offers the services you need at a price that's better-suited to your budget. Or select a local radio station with a demographic profile that matches your product or service. Then all you have to do is write the ad copy-your radio station partner will do the rest.

With broadband access and other technologies becoming more widely available, now is a good time to start taking Net radio seriously. What's more, it's poised to meet the mainstream. Expect appliances currently under development-such as stand-alone Internet radios or software that converts conventional stereos into Internet streaming machines-to push listeners and advertisers your way.

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