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Are Radio Ads Effective?

by Mike Abelson   August 2, 2021
We look at how radio advertising works for small businesses, and when and why it doesn't work.
Best Practices Business Tips

Success in advertising is hard-fought and never guaranteed. The businessman John Wanamaker once said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

The truth is, sometimes you need to try a bit of everything.

Does Radio Advertising Work?

Radio advertising for small businesses

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Radio can be part of a solid marketing strategy. Here are a few reasons why:

  • Radio stations play around ten minutes of ads every hour. That’s good news for you. Consider this: newspapers have three times as many ads as content, and television is not much better. With radio, your ads get a more significant portion of the spotlight.
  • A well-crafted radio ad can excite the listener’s imagination, making them put the set pieces together in their mind. This can make your ads memorable without you having to invest in the visuals.
  • Reaching your target market is as simple as figuring out which radio station your customers choose.

It’s a myth that people don’t listen to the radio anymore. According to Pew Research Center, 83 percent of Americans regularly tune in to at least one FM or AM station as of 2020. Even the younger generation will forego their streaming apps to sample what the disc jockey has on tap.

Radio Ad Costs and Financing

According to Nielsen’s Total Audience Report, the return on advertising generated $28.82, which is twice what TV generated ($13.51). As radio advertising expert Matt Senne explained, “No other medium can reach such a broad cross-section of potential customers.”

Other favorable attributes of advertising on the radio include repetition and a relatively long exposure time. Combine that with the fact that production costs for a radio ad campaign are affordable, and it makes sense to get your message out over the airwaves. Radio ads cost about $200 to $5,000 per week, depending on your location. Production costs range from $1,000 to $2,500 on average, depending on the length, usage of sound effects, etc.

How Much Do Radio Ads Cost?

New York has by far the most expensive radio commercial cost, approximately $1,405 for a 30 spot, while in Topeka, Kansas, for example, the fee is just $25. A “30 spot” is 30 seconds of airtime. A “60 spot” is 60 seconds. Your initial ad campaign should have 20 spots in its first week to score greater radio advertising effectiveness.

Radio stations determine the price of an ad based on several factors:

  • The Popularity of the Station - The prestige plays its part. Famous radio stations that have millions of listeners are going to charge you more than lesser-known ones. If you’re willing to focus most of your advertising costs on radio ads, you can pay the higher amount to make more people aware of your brand.
  • Size of the Audience - New York City has a population of 8.4 million, while Topeka only has 126,000. Similarly, the costs in New York are going to be much higher. You can cut costs if you’re specifically targeting people living in areas with lower population density.
  • Time of Airplay - Radio stations have different audiences. Some stations may have the highest number of listeners tuning in during the day, while others switch on at night. Rush hours are potentially a hot time for most radio stations. The costs will be higher during busier hours accordingly.
  • Ad Frequency - The cost will also depend on how many times you want your ad to play during the day. The more your public hears your ad, the more memorable it will be.
  • Competition and Demand - Radio advertising is a highly competitive business. If the company receives many requests, that means that it is in high demand. Most radio stations increase their fees when the demand and competition go up to increase their revenues.

​Where to Look for Financing?

Is it possible to negotiate a more convenient deal for radio advertising? Absolutely yes! Bargaining in the radio industry is always worth a try. You can expect to decrease the price of the initial offer down to 20% to 40% if you negotiate cleverly. There are some tips and tricks on how to score better deals with the stations. For example, many radio stations offer reduced prices for higher ad frequencies or for reserving an ad spot much in advance. While radio advertising may not be the most expensive type of advertising, some companies may still struggle to pay the required costs to spread their message across.

Like any other marketing campaign, there are plenty of ways to find funding for radio advertisements. Crowdfunding is always a good option. You may target angel investors if you have a startup that will help with your marketing campaign and assist in taking your business off the ground. Many small business grants are also available for entrepreneurs who can use them for radio advertising purposes. The required amount of funding for a radio advert is not too much in most cases.

How to Choose the Right Radio Stations

Mistakes with radio ads.

Picking the right stations for radio advertising requires more meticulous research than you imagine. Of course, you should first compare your budget and the offered prices to see if you can pull off your desired ad. But you should do a deep cost-benefit analysis to see if your spending increases your customer base and income. Find out the main demographics of who your customers are and when they are usually in their cars bumping their favorite music on the radio. Then, find the radio stations that target those customers specifically.

Here is a diverse list of some types of radio stations aimed at different customer segments:

Type of Station

Largest Number of Listeners (by Age)

Most Popular Hours

Top 40

16 - 35 year olds

Peak Time

Alternative

16 - 35 year olds

Peak Time

Classical

55+ year olds

Day / Evening

Contemporary

25 - 65 year olds

Day / Evening

News

55+ year olds

Peak Time

Oldies

40+ year olds

Day / Evening

Rock

25 - 65 year olds

Peak Time / Evening

How to Make It Work

Creating a successful radio ad campaign is hard work. It’s even harder when you don’t know what you are doing. Here are some best practices to make sure you’re putting all that effort where it belongs:

  • Choose the right stations and time slots based on the listening habits of the customers you want.
  • Spend time polishing the copy. It needs to get your main message across without being overstuffed (you probably have about 70 words to work with during a 30 spot). It should be entertaining and memorable. The first five seconds are the most important. Your focus should always be on why the customer should care.
  • Find quality voice talent. There are online resources available for finding voiceover actors. Listen to samples and decide whom you would like to represent your company.

If you don’t have experience with this type of marketing, it would be smart to hire a consultant or use a marketing agency. Be careful, though. Some of these organizations work directly with the radio companies, and their focus is less on getting you a great rate and more on lining the pockets of the radio station executives. You want to hire someone who’s on your side.

Mistakes to Avoid

Best ways to advertise through the radio.

I have a friend who owns a restaurant. He decided to purchase a billboard ad next to the freeway just outside of town.

Weeks went by, and he didn’t see an increase in customers. He was about to cancel the billboard when a customer finally came in saying that they had to try the big, juicy hamburger they’d seen in the picture.

“When I saw that burger, I just had to turn around and come back into town.”

His ad was on the wrong billboard. He was advertising to people leaving the city. He called up the billboard company, and they put his ad where it was supposed to be. Almost immediately, he enjoyed a significant uptick in diners.

Anyway, that’s a lot of words to make the obvious point that bad advertising doesn’t work.

  • Big mistakes in radio station advertising include:
  • Using a low-quality recording
  •  Choosing the wrong stations or ad time
  • Trying to fit too many words into one spot
  • Making your message too easy to tune out
  • Offending your target audience
  •  Breaking the law

That last point deserves particular attention: do not go against any advertising regulations in your area. It would be smart to have a compliance specialist listen to your ad before it airs. Also, ask the radio station what their rules are on reusing your ads on other stations. Most stations are okay with this, but it’s worth asking just in case.

Improving Your Radio Campaigns

Radio ad effective?

Hopefully, your first campaign is profitable. Either way, there will be room for improvement. Like:

Try adding sound effects and music to your commercial. A catchy jingle can make a big difference.

  • If marketing research shows people find your voiceover annoying, then record a new one. Grabbing your audience’s attention is essential. Bug them too much, though, and they will tune you out.
  • Listen to your commercial through your car radio. You might find that it sounds different when you experience it as your audience experiences it.
  • If the commercial doesn’t work, consider paying for a sponsorship instead. You could have the disc jockey advertise your company for you (e.g., “Today’s broadcast is brought to you by …”). Alternatively, you might be able to have the radio station make an ad for you.
  • Try out different audiences by purchasing a few spots on other stations. Depending on where you live, you may have these types of stations to choose from: Top 40, Classic Rock, Classical, News, Talk Radio, Easy Listening, R&B, and Alternative.
  • Switch up your time slots. You’ll pay more for the busy hours, like a rush hour when more people are in their cars with the radio on, but your audience will also be more substantial.
  • Renegotiate your rates based on your results. Once you know how much the ads are worth to your company, you know how much you should pay for them.
  • You might save money by advertising through a streaming service instead, which can cost half as much for a similar reach. Just be aware that the listeners will likely skew younger.
  • Make sure your customers can find you after they listen to your advertisement. Your company’s website needs to appear first on Google when someone searches your company’s name. If you have a retail location, make sure the address and contact information Google shows for it is up to date. You can do this by setting up or updating a Google My Business page. Please note that you will need to validate your address before Google lets you make changes. Validation requires having a postcard sent to you from Google and then entering a code printed on that card. This process can take several days, so plan ahead.

If you hit your stride recording the radio ad, then you try getting your voice out there in other ways. A podcast is a powerful way to reach an audience. The tricky part is building up that audience. You will need to find your niche and then get them to notice you. This can be expensive, and there is a very good chance it will never pan out.

Radio advertising might sound a little old-fashioned at first, but it is a cost-effective way to get your message out there. Speaking of your message, one last point that we can’t stress enough: every single radio advertisement you make must include a strong, clear, and concise call to action. You should always invite your customers to do something. Preferably something that makes you money.

Mike Abelson   Editorial Director
Mike is the Editorial Director at Lendza. He enjoys helping entrepreneurs and startups succeed through smart, innovative strategies. He’s partnered with CEOs and executives to grow businesses from the ground up. Before his work at Lendza, Mike was a stock market analyst. When he’s not traveling for work, he enjoys reading adventure and science fiction novels.