Intro to Radio Advertising

With all the marketplace buzz about podcasts and streaming music services like Spotify, Apple Music, and Pandora, it’s easy to underestimate the power and effectiveness of AM/FM Radio. However, those perceptions are much different than the realities of AM/FM radio usage, ad penetration, and ad effectiveness.

According to Edison Research’s “Share of Ear” Q4 2021: How America Listens to Audio study, AM/FM radio continues to be a powerhouse for audiences and advertisers alike for the following reasons:

  • AM/FM Radio dominates the total Share of Ear with 40% of time spent by adults 18+. For comparison, all other forms of streaming audio come in at 6% or less.
  • AM/FM radio accounts for 76% of the daily audio time spent with any ad-supported platform
  • The audience share of AM/FM radio is 19X larger than ad-supported Spotify and 13X larger than ad-supported Pandora

A good reminder for us all from Mark Ritson, Marketing Professor:  “There is increasing global evidence that marketers are basing their media choices on their own behavior or that stoked by the digitally obsessed marketing media, rather than actual audience data … The first law of marketing is that you are not the market. You are an urban, professional, well-paid media executive. Everything you think and do is from a highly unrepresentative n of 1”.

Another important observation from Nielsen and Westwood One that leads to this misperception, is that “It is not uncommon for brands to report that AM/FM radio does not perform well in media mix modeling studies. AM/FM radio is such a small part of many national media investments that the media mix model has a hard time generating a stable and reliable read. Media mix modeling is a self-fulfilling prophecy. It reads well for the largest media investments in the plan. The small elements in the media plan experience “performance bounce” in sales volume and return on marketing investment metrics”.

Why Radio Advertising Works

AM/FM advertising is a critical channel for advertisers to use for a number of reasons but some of the most important are efficiency, unduplicated reach, and high ROI.

Affordability

  • The average cost of radio advertisement ranges from $200 to $5,000. The factor that significantly affects advertising costs is the size of the audience and the frequency of broadcasting.
  • As a rule, the more listeners a radio station has, the more customers your ad is able to reach, making your radio advertising costs higher.
  • The cost of entry for AM/FM radio advertising is considerably less than other broadcast-type mediums.

Ability to Reach a Broader Audience

  • According to Edison Research’s “Share of Ear” Q4 2021: How America Listens to Audio, AM/FM radio has a high degree of unduplicated reach with streaming platforms and is largely ubiquitous regardless of location of listening:
    • AM/FM radio streaming generates a +7% lift in incremental reach to AM/FM radio
    • AM/FM radio’s share of ad-supported audio is consistently strong at work (62%), at home (72%), and in the car (88%).
  • Also according to the Edison study,  AM/FM radio leads ad-supported audio across all major demos when the listening location  is in-car:
    • 18-34: 84%
    • 18-49: 85%
    • 29-54: 87%
    • 35-64: 88%

High ROI with Case Studies to Back It Up

What Makes a Radio Advertisement Effective?

The key aspects of radio advertisement success include: effective media planning, high-performing creative, and setting yourself up for measuring success.

Plan the proper weight levels to achieve your goals.  The most important considerations are:

  • What other media is planned in the market 
  • Individual market dynamics
  • Target Demographics 
  • Audience Interests and Affinities
  • Advertising category
  • Time of Year
  • Product purchase cycle

Make yourself memorable with a great copy and creative.

  • Consistency is key.  From the music, to the voiceover, to the call-to-action - be consistent in your creative.  You want your audience to know you are the advertisers even before the brand name is mentioned in the spot.  Develop strong audio branding techniques.
  • Be singular in your focus.  Each radio spot should convey one message.  Because there is not an option for user-initiated extended engagement like there is with internet ads, you need to build creative for the finite inventory you are buying.  Keep it simple, smarty!
  • Having a clear and simple call-to-action goes hand-in-hand with having a singular focus with your messaging.  Single message, single call-to-action.

Measuring success with AM/FM radio advertising should focus on the following KPIs

  • Reach
    • One of the most important measures of success is how well you reached your target audience. It is important to plan against reach during the planning process and measure overall delivery post-flight.
  • Brand Awareness
    • Brand Lift or Brand Awareness studies are important survey-based methods to use to measure the impact that AM/FM advertising is having on shifts in audience opinions.
  • Website Traffic
    • Compare the total number of website visitors after you began running radio ads to your total number of website visitors during the months before or use a vanity URL to more directly attribute traffic.
  • Total Sales
    • Conduct year-over-year and month-over-month analyses to see if sales are up or down in relation to the airing of your radio ads. By using radio-specific promo codes,  you can directly attribute sales to your ads.
  • ROAS
    • You can calculate your overall return on ad spend (ROAS) by dividing the revenue from total sales by the total amount that you spent on the radio advertisements

Wrapping it Up - Is Radio Advertising Effective?

For all the above reasons, AM/FM radio is the centerpiece of audio.  40% of all audio time spent goes to AM/FM radio and AM/FM radio represents 76% of ad-supported audio.  It is a critical part of your overall media mix that continues to drive impressive real-life results.

For more information on how you can explore or optimize your radio advertising effectiveness, please reach out to the experts at Ad Results Media today.