The term “targeted advertising” is a broadcasting buzzword. Potential profiteers talk about targeted advertising because it promises to be lucrative, and it may be promising for HD Radio broadcasters.
Not every listener is going to want to participate in targeted advertising. Our society has raised suspicions about privacy to paranoia proportions. However, there will be those who are unconcerned. There will be those who prefer to hear commercials that match their lifestyle. There will be listeners that desire certain free-but-protected programming and are willing to opt-in to receive premium content.
Participating consumers may never know the commercials they receive are different: They will not hear any more or fewer commercials. They will receive different commercials that have meaning for their lives.
This is based on an ad substitution system NDS created for television. With ad substitution, cost per thousand (CPM) estimates for a targeted television advertisement are 10 times that of a normal broadcast ad. If we can say that this financial return is also true for radio, then just 10 percent listening audience participation will double station advertising revenue. What station will refuse this return?
Figure 1. Station installation of a targeted ad system.
As a program is transmitted on the radio, all the receivers play the same audio. When a commercial plays, and if the business rules state that ad substitution is acceptable, participating radios will play an ad that the listener would prefer to hear based upon his demographics, lifestyle, preferences and interests. The radio receiver, when substituting, chooses among the prerecorded commercials in its memory. These commercials are delivered through the radio station and the targeted receiver records them. Recording never disrupts the listener's experience.
Receivers are addressable and can be arranged into specific target groups. A receiver may belong to many different groups. The receiver will automatically identify the ads it is supposed to receive and record.
A participating station will transmit an HD Radio signal to deliver the commercial content. A broker will organize demographics and groupings. Substitute commercials broadcast as per system scheduling, matching the contract between the advertiser and radio station. The station audio playback system triggers transport stream signaling as per the pre-established business rules.
Key decision factors
Because HD Radio broadcast bandwidth is limited, parallel streams may not be bandwidth efficient. Therefore, pre-recording substitute material is the chosen methodology. Commercial delivery does not need to be real-time. A narrow pipe delivers a pre-recorded commercial encoded as an HDC file or a data file such as a JPG image in slower than real-time speed, which maintains quality while consuming very little bandwidth. A 48kb/s encoded file delivered on a 5kb/s pipe transmits a 30-second audio commercial in five minutes. If a recording is incomplete, it may be suspended until the commercial is broadcast again in the content carousel. This ensures efficient recording and more completed deliveries.
The receiver recognizes its entitlements and the content addressed to it. The receiver records commercials and files onto flash memory in the unit. Recorded content plays back as directed by triggers in the transmission transport stream.
Commercials delivered by a radio station substitute for broadcast commercials while the consumer is listening to that station. Commercials delivered by one radio station can substitute when listening to a different radio station if and only if the participating advertiser works with both stations. The receiver must also account for both the tuned station and the delivering station.
The broadcast architecture includes a data carousel for content playout. The carousel playout logically connects to a data pipe/data channel in the HD Radio Importer. The carousel also provides information into the metrics system, providing transmission accountability.
The metrics or measurement part of the system will also accommodate feedback from the field. The field reporting structure may require direct feedback as well as delayed feedback. Feedback may also include subjective estimates made from listening patterns, expected deliveries and triggered substitution statistics.