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 efficacy of AM/FM Radio. However, common 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” Q3 2023: 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 37% of time spent by individuals aged 13+.
- 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.”
What are the advantages of radio advertising?
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: how much does radio advertising cost?
- The average cost of a 60-second radio advertisement ranges from $5 to $750 when measured by cost per point (CPP). Factors that impact radio advertising costs include size of audience, listener demographics, time of day, the market the ad runs in, whether the ad is sponsored or not, and ad length.
- As a rule, the more listeners a radio station has, the more customers it can reach, making your radio advertising costs higher.
- The cost of entry for AM/FM radio advertising is considerably less than other broadcast-type mediums.
Read more: How Much Does Radio Advertising Cost?
Ability to reach a broad audience
According to Edison Research’s “Share of Ear” Q4 2022: 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:
The audience share of AM/FM radio is 18X larger than ad-supported Spotify and 15X larger than ad-supported Pandora
AM/FM radio’s share of ad-supported audio is far and away the largest among persons 18+ - significantly more than podcasts (15%), Ad-supported Pandora (5%), Ad-supported Spotify (4%) and Ad-supported Sirius XM.
AM/FM radio streaming generates a +36% lift in incremental reach to podcasts
Also according to Edison, AM/FM radio’s reach has grown among Gen Z, reaching over half (55%) of those aged 13 to 24 in the U.S. daily. Since Gen Z makes up 40% of all consumers, and they are rapidly generating more wealth to spend, this is a powerful demographic to reach. Yet, radio doesn’t stop there—it also powerfully connects with other demographics. For example, 84% of those aged 55+ are reached each week by radio; 83% of those aged 25-54 are also tuning in weekly.
High ROI with case studies to back it up
- Office Supply Retailer: Nielsen Sales Effect Study: AM/FM Radio Campaign Grows Sales +11%, Increases Customer Base +6% and Expands Share of Category Spend +21%
- Department Store: Nielsen Sales Effect Study: AM/FM Radio Campaign Grows Sales +10%, Increases Customer Base +17% and Expands Share of Category Spend +15%
- US Auto Dealers: Need to Increase Their AM/FM Radio Advertising to Reach Consumer Who are Ready to Buy
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 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
- 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.
- 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
Does radio advertising work?
For all the above reasons, AM/FM radio is the centerpiece of audio. According to Nielsen, AM/FM radio represents 73% of ad-supported audio and dominates in-car ad-supported audio with 87% of the total share.
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.