How to Grow Your Business Using Radio Advertising

While a lot of businesses are focused on utilizing digital marketing for growth, radio advertising is still an effective traditional marketing strategy you may want to explore.

There’s no question about it: digital marketing continues to trend upward as one of the most preferred marketing strategies to use. While that is true, radio ads can still be effective as millions of people here in the U.S. still listen to radio. With recent tech advancements, radio advertisements have a much higher quality now versus years ago. While radio does compete with other forms of advertising, Nielson Audio reports 243 million people listen to the radio: that sounds like a lot of opportunity.

Formats for Radio Stations

One thing you need to understand before you jump into radio advertising is radio station formats. The format is going to determine the specific audience segment the station appeals to and the audience it delivers to advertisers.

Here’s a list of the most common radio formats:

• Top 40

• Today FM

• Adult hits

• Progressive rock

• Alternative

• Classic rock

• Hip hop/urban

• World news

• 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

What Are Radio Spots and What You Need to Know

Radio spots are another term used for radio advertisements. This is what businesses buy to advertise their brand to listeners. Radio advertising is usually divided into three categories:

• Live read

• Sponsorship

• Produced spot

Those businesses who want to promote their products and services need to choose the type of radio advertisement they want 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. Now, let’s take a closer look at each of these categories and what makes them unique.

(1) Live Read

Live read is most commonly used at events. The commentators at the event would perform live reads, read the brand aloud, and hope that the product’s quick advertising will reach more people. Radio hosts that are well known and have a big following also can be hired to live-read an advertisement.

(a) Onsite Broadcasting Events

When you scale back to regional and local radio hosts, many of these personalities are quite popular. Many people follow them and have an affinity for 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.

(2) Sponsorships

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

(3) Traditional Produced Spots

One more radio advertising type is known as "produced spots." These are full radio advertisements that use stories, jingles, dialogue, and even voice actors. These would labeled as information advertisements; they encourage listeners to buy the products and services being advertised.

How Much Do Radio Ads Cost?

Naturally, you want to know how much radio ads cost. There’s a number of different ways that radio stations can determine the price of their radio ads, including:

• Specific demographics of the radio station’s audience

• Specific demand for the radio advertisement

• The amount of people that listen to your ad

• CPM rates

While any of these can determine a radio ad cost, the majority of them will likely focus in on the CPM rates. There’s a simple equation you can use:

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

Now, the CPM rate is likely to vary a lot from one radio station to the next. That is especially true as it pertains to programming and the market size. We'll be glad to give to an example, but it's only that, an example.

• The average CPM rate for ages 18-49 is around $13-$15.

• The average CPM rate for age 50+ ranges from $7-$11.

• Evening and overnight costs are usually lower due to inventory and a lower quantity of listeners.

What Are the Benefits of Radio Advertising

There’s a wide variety of benefits you can receive through radio advertising. In 2022, we can tell you from experience, a lot of businesses are not focused on leveraging radio ads. In a lot of markets, some people think radio advertising has become obsolete, but advertising on radio can still be an extremely effective marketing strategy.

Hundreds of millions of people all over the United States still listen to the radio. The majority of those listeners are driving in vehicles. Companies know that, and this is why some of them pour millions of dollars into radio ads.

Let’s take a look at each one of these radio advertising benefits.

(1) Target the Exact Demographic You Want

Each radio station within your market will target specific demographics and market segments. These are usually defined by what is known to be “programming,” type of music that will run through the segments, on-air personalities, and the specific time of day your advertising campaign will run.

(2) Hit the Market Fast

When creating a television or print advertisement, the time frame required to produce a single commercial or print ad may span weeks or even months. However, a radio host can advertise the product or service in an instant.

(3) Can Be Cost-Effective

While you can utilize social media to reach your target audience without a lot of costs, radio advertising can also be cost-effective, especially when compared to television and print advertisements. If you’re using TV or print now, it may make more sense to give radio a try, or at least test a radio marketing campaign at some point.

(4) Increased Frequency

Most marketers would label radio advertising as a frequency medium, we’d agree to that. Unlike television advertising that relies on reach and visuals, radio relies on repetition, making sure your message is heard multiple times. Playing your advertisement multiple times is going to give you the best opportunity to make an impression with listeners; it gives you an opportunity to be remembered.

(5) More Memorable

Speaking of being remembered, radio advertisements are generally more memorable compared to written and visual ads. Several studies have proven this, suggesting that sound can be stored effectively inside memory for longer than anything visual.

Think about all the jingles you know: that could be Nationwide, McDonalds, Slinky. All of these have launched jingles that are recognized by millions of people.

Cons of Radio Advertising

No Visual Appeal

One of the biggest cons of radio advertising is the fact that it has no visual appeal. When you compare it to social media or television, it can’t compete in this area. With that being said, there are strategies you can use to offset this disadvantage. For example, your radio advertisement can funnel listeners to a website or a video online. You can also use traditional marketing strategies, such as events or direct mail.

Lack of Attention

Another big drawback to the radio is the lack of attention of those listening. A lot of people that are listening to the radio are driving, so you may only have a specific amount of time to reach them. Even if you’re driving down the road with the radio on, you’re paying more attention (we hope) to driving than listening on the radio.

Tough to Get Spots

When it comes to radio stations and their regional sales reps, you’re always going to lose out to the bigger brands. In many cases, these branded spots are planned ahead of time and that takes away from new advertisers. Although it can be a challenge, it’s not impossible. If you can be consistent trying to find spots, you can make progress.

Here are some interesting radio and audio advertising stats, courtesty of eMarketer.

How much money will advertisers spend on audio ads?

Combined, U.S. radio and digital audio services received $16.8 billion in ad spending in 2021, of which terrestrial radio accounted for two-thirds with the remaining third going to digital audio.

Which digital audio platforms will have the most listeners?

This year, Spotify will have 83.1 million U.S. listeners, and Pandora will have 54.2 million. Amazon and Apple are gaining listeners, and we expect Amazon to surpass Pandora by the end of 2022.

What share of internet users subscribe to audio products?

In 2021, there were 121.9 million paid audio subscribers in the U.S., which account for 41.4% of internet users.

How much money will be spent on podcast ads?

US advertisers spent $1.33 billion on podcast ads in 2021, a 38.7% year-over-year (YoY) increase.

How many people in the United States listen to radio every week?

Every week, more than 90% of the total American population tunes into the radio.

How many people in the United States listen to radio every day?

About 59% of the total American population listens to radio programs daily.

How many radio stations are there in the United States?

In the U.S., there are more than 6,000 radio stations.

What percentage of radio listeners are buying advertised products after hearing about them?

It’s estimated that about 24 percent of people that hear radio advertisements buy the product advertised after hearing it from the radio.