Expert: What will drive mobile in 2016

Kristina: What are some of the drivers of double-digit annual growth in digital media audiences for 2016?

Pat Higbie, CEO, XAPPmedia: This is all about mobile and we believe the total audience growth rate next year in the U.S. will be higher than the 4.7 percent projected by eMarketer. New audio streaming apps from YouTube and Apple are exposing more consumers to mobile music streaming, which is raising awareness and generating net new users for the format. In addition, the big growth will be in time spent listening. eMarketer is forecasting daily time spent with streaming audio to increase by 18.6 percent. More time spent means more opportunities to capture consumer attention. Mobile advertising is expected to leap 41 percent next year chasing this larger and more active group of consumers.

Kristina: What is accelerating the shift to mobile consumption in the coming year?

Pat: Mobile enables convenient access to relevant news, information and entertainment anytime and anywhere. comScore reported last year that 95 percent of all streaming audio consumption takes place on mobile. As more consumers try streaming audio, the vast majority will migrate to mobile consumption. In addition to Apple Music, we also saw earlier this month the first ad-supported YouTube app optimized for music listening. YouTube and Apple both have large desktop user bases that will be migrating to mobile in 2016 to take advantage of the new apps. In addition, each year we see more automobiles purchased with Bluetooth connectivity. That makes it easier for consumers to maintain a continuous mobile listening environment even when on the go.

Kristina: How will the Apple Music-Spotify subscription wars keep subscription revenue high and bring more audiences into freemium, ad supported listening?

Pat: Apple Music and Spotify offer great audio experiences in both their subscription and ad-supported listening formats. Their international expansion and heavy promotion efforts to increase audience are exposing more users to these services–including the freemium products–which is creating new users that previously relied on the radio and owned music libraries for their listening. The campaigns complemented by great user experiences are driving higher numbers of subscribers and a larger audience to monetize through advertising.

Kristina: How will ad formats optimized for the mobile audio content model continue to drive revenue in 2016?

Pat: Interactive audio advertising is currently capturing ad CPM of $20 and higher without the benefit of targeting. That is four to five times higher than the conventional Internet radio advertising CPMs because voice interaction delivers engagement rates five to fifteen times greater than standard audio ads. As more audio publishers introduce interactive audio ads to their advertisers, it will start having a material positive impact on the effective CPM and total revenue for the publishers as well as on the revenue and ROI for the advertisers.

Kristina: Why do you think that ad loads will not increase substantially in streaming audio?

Pat: There is intense competition among streaming audio services and ad load beyond three minutes presents a risk of degrading the listener experience. Ad loads below three minutes appear to be neutral in terms of user experience. Streaming services are in such a pitched battle for audience that they will limit anything that could undermine user growth–including ad load. In order to drive higher revenue, these services need to increase CPM rates for advertising while continuing to convert their most avid users to subscriptions.