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How To Effectively For Use Radio Advertising To Grow Your Small Business

Radio advertising is a form of marketing strategy that uses the radio – both traditional stations, as well as satellite and internet radio – to promote a product or service. In many cases it is a less expensive form of advertising, especially when compared to television advertising.

With the advancement in technology, radio advertisements are becoming better when it comes to quality. Despite the competition from other forms of advertisement, Nielson Audio reports 243 million people listen to the radio, and have the potential to listen to advertisements.

Let’s dive into some radio advertising basics that will help small businesses be smarter with how they buy radio ads.

Radio Station Formats

The format determines the audience the station appeals to, and the audience it delivers to advertisers. Some of the most common radio formats include:

  • Top 40
  • Progressive rock
  • Alternative
  • Classic Rock
  • Golden oldies
  • Christian Rock
  • News and Talk Radio
  • Classical
  • Adult contemporary
  • Easy Listening

Which Format is Best For Each Demographic

The format of each station impacts which group is typically the core demographic that a station will reach. The following will give you an idea of which format targets which type of listener.

  • Teens 12-17 – Primarily Top 40, Urban, Alternative
  • Adults 18-24 – Top 40, Alternative, Urban preference
  • Adults 25-34 – Alternative, Rock, Top 40, Urban, Adult Contemporary
  • Adults 35-44 – Rock, Adult Contemporary
  • Adults 45-54 – Oldies, Adult Contemporary
  • Adults 55-64 – Classical, New Adult Contemporary
  • Adults 65+ – Adult Standards, Classical, News Talk

Types Of Radio Spots

Radio advertisements are called spots, and businesses are buying these to promote their brand. Radio advertising is further subdivided into three types – live read, sponsorship, or produced spot. For those businesses who want to promote their products and services, they need to choose the type of radio advertisement that they wanted to pay for.

A radio station has an ad time inventory of about 18 minutes per hour, which it sells in increments of 15 seconds, 30 seconds, and 60 seconds.

Live Read

Live read happens more often in at events. The commentators at the event would perform live reads, reading the brand aloud and hoping that the quick advertising of the product will reach more people. Radio hosts who have a lot of followers and is known in the industry are also hired to live read an advertisement.

Onsite Broadcasting Events

Radio hosts are local and regional celebrities in their own right. Many people  follow them and have an affinity to listening to certain on-air personalities. Many times radio stations will offer onsite events to their advertisers. This includes the on-air personality coming to the business location and broadcasting live to try and get fans to come to the business.

Sponsorships

Sponsorship are another type of radio advertising that are usually inserted into traffic, weather, or sports scores segments within a show. The announcer will tell the listeners that the segment was sponsored by a certain brand. This type of advertising is usually used for branding purposes and can help increase name recognition of a business.

Traditionally Produced Spots

Lastly, there are the produced spots, which are the full-blown radio advertisements that use a dialogue, voice actors, a story, and/or a jingle. These informative advertisements would encourage the listeners to buy the products and services from a certain business.

How Much Do Radio Ads Cost?

Radio stations have many ways they define pricing, such as number of people listening to your ad, demographic of the radio station’s audience, demand for an ad spot, special events, or if its Sweeps week (the times during the year when radio stations are judged and given their ratings). But at its core the following equation is used to define radio advertising cost.

Number of People Listening x Cost to Reach 1,000 listeners (CPM) = Cost of Advertising Per Spot

The CPM rate will vary greatly from station to station (depending on the programming), and market to market (depending on the size).

  • The average CPM rate is in the $12 – $16 range to target listeners between 18 – 49.
  • The average  CPM rate is in the $8 – $12 range for the 50+ audience.
  • The late evening and overnight costs will be lower due to inventory and number of users listening.

Benefits of Radio Advertising

Some people may think that radio advertising is becoming more obsolete because of the prevalence of the internet and other related advertising platforms. However, this is not the case – millions of people all over the United States are still listening to radio, with the majority of them listening from inside their vehicle or at their home. Many companies are still allocating marketing budgets to radio, to try to take advantage of the benefits listed below

Selective Targeting

Each radio station within your market will target specific demographics and market segments.  These are usually defined by the programming, type of music being played, the on-air personality, and what time of day your advertising will run.

Increased Frequency

Radio advertising is defined by many as a frequency medium. What this means, is that unlike television advertising (which relies on reach and visual presentation), radio relies on repetition, aka frequency of message to be affective.

Playing your advertisement multiple times (some say it takes 3 times hearing a spot before you internalize it, acknowledge it, and remember it) will ensure that your listeners will be familiar with your product or service.

More Memorable

Radio advertisements can be more memorable compared to written and visual ads. According to researchers, sound can be stored effectively inside memory for longer than visuals. This is the reason why some companies are doing their best to create a memorable jingle that will stay in the minds of those who will listen to it.

Cost Effective

Radio advertising is cost effective when compared to television and print advertisements. Usually the cost to create the spot – if you don’t have one – will be included in the price of the radio advertising campaign.

Short Time to Market

When creating a television or print advertisement, the time frame required to produce a single commercial or print ad would span weeks or even months. With radio advertisement, the product or service can be advertised by a radio host in an instant.

Drawbacks of Radio Advertising

Poor Attentiveness

One of the most prevalent disadvantages of advertising on the radio is the poor attentiveness of the people who are listening. Many people are either changing channels on their radio when they are driving, or are too focused on the road to pay attention to what is being said.

Lack Of Visual Appeal

Compared to television which uses the sense of sight and sound, radio advertising only impacts one of the five senses – sound.

One way to offset this is to utilize additional advertising channels that the radio station has – such as buying ads on their website or for sponsorships at events.

Buying Spots Can Be Challenging

Radio stations have regional sales reps that also offer spots to larger brands. Many times these spots are planned far in advance and take inventory away from new advertisers – thus, sometimes the process of obtaining the spot you want, when inventory is low, can be difficult.

Tips For Radio Advertising

  • Hire a good writer that can create interesting advertisements.
  • The advertisement should be short, simple, and focus on a single message.
  • Use dialogues, interviews, or stories to present the product.
  • The advertisement should be direct to the point, and include an CTA you want the user to take – remember they are most likely in their car, so make the action easy and memorable.
  • Provide a deal or hook within the message.
  • The advertisement should also have a distinct story, and it should appeal to one’s emotion and logic.
  • A good radio advertisement should have a talented voice actor and production managers that would transform the experience of the listeners.

Current Statistics About Radio Advertising

  • Every week, close to 92% of the total American population are tuning into the radio. The majority of those who love to listen to the radio are people who drive and those who stay at home.
  • Every day, around 59% of the total American population is listening to a radio program.
  • There are more than 6,000 radio stations in the United States, and thousands more can be found in other countries.
  • 25% of those who are listening to radio advertisements are buying the product advertised after hearing it from the radio.
  • Radio is one of the most accessible forms of media in the world today, despite the prevalence of the internet and the television.

How To Measure The Success Of  Your Radio Ads

You can determine the impact made by a radio advertisement if you compare the sales figures, brick and mortar visitors, and/or website traffic before and after the advertising campaign. We recommend using a unique phone number or website address that can only be attributed to the radio advertisement. This will help you better track the response you’re getting from your radio advertising.

Key Radio Advertising Definitions

  • Average Quarter Hour Rating (AQH Rating) – this is the total number of people who are listening to a radio program for five minutes for every 15 minutes.
  • Cost Per Thousand (CPM) – this term is also known as cost per mille, and it is a marketing term that is used to identify the price for every one thousand impression, especially when done on a website or radio. For those who wanted to pay for their radio advertisement, they need to speak with the radio station and identify their cost per thousand. if the radio demands $1 CPM, it means that the advertiser, for every one thousand impressions, must pay $1.
  • Gross Rating Point (GRP) – it is a term widely used in the world of advertising, measuring the impact of an advertisement. To calculate it, you need to get the percentage of the target market that was reached by the advertisement, and then multiply it to the exposure frequency.
  • Cost per Point (CPP) – this is the cost that an advertiser needs to reach their particular goal when advertising using the radio.
  • Net Reach – This refers to the total number of people who will be able to listen to an advertisement played on the radio at least once.
  • Cume Person –  short for “cumulative audience.” It is the number of different listeners who listen to a radio station for at least five minutes during any time period.
  • Exclusive Cume – this term refers to the number of people who are listening exclusively to a single radio station in a particular day or time.
  • Rating  – this is the total number of households that are listening to a particular radio station or program for a given time frame. Popular radio programs have higher ratings compared to their competitors, and through the years, the ratings system have become the benchmark for radio stations to charge more or less.
  • Share – this is the percentage of radios that are tuned into a particular radio station in a specific time frame.