Companies use radio advertising to promote products or services over the radio, typically in 30 or 60 second spots. Radio can be more expensive than some newer advertising methods, but it is a very strong medium, reaching 93% of American adults weekly according to Nielsen data. With an adequate marketing budget, you can use radio to work for your small business.
In this article, we will discuss radio advertising in detail, including costs, and show you how to create your first radio advertisement.
When Radio Advertising is Right for Your Small Business
Some small businesses fare better advertising on the radio than others, but advertisers can expect an average of 11.8x return per dollar spent on their radio ad, according to a Nielsen study of five industries published in 2017.
Here’s more info on the return per dollar spent on radio ads in different sectors:
Radio Advertising ROI by Sector
|Quick Service Restaurants / Fast Food|
Some types of businesses are more successful on radio than others.
Since traditional radio reaches a wide audience, businesses like telco providers and department stores generally have more success doing radio advertising since they offer services that cater to all demographics. Even at the lower end of the spectrum, quick service restaurants and fast food restaurants still saw a 3x return on their ad spend.
When Not to Use Radio Advertising
If you are in a niche market, it is probably not in your best interest to advertise on the radio. While you can target based on broad strokes, you can’t hyper-target your audience like you can with online advertising. For example, if you’re a distributor of vegan food products, it is not advisable to do radio advertisement since only 7% of Americans identify as vegan (and an additional 6% as vegetarian), so roughly 90% of people listening will have little to no interest in your product.
However, while the product may be relevant to only 10% of people listening to the radio, it’s probably relevant to 100% of people searching “vegan food” online. This is why online ads can stretch your dollars much further than radio advertising for this type of market. To learn more about online advertising, check out our guides to Google, Microsoft Advertising (Bing), and Facebook ads.
How Much Radio Advertising Costs
Radio advertising costs can range from $200 to $5,000 per week depending on your location. You will also need to factor in the cost of producing the commercial, including copywriting, voice talent, and audio / visual editing, which can add up to $300 to $1000.
Below, you can see the estimates of weekly advertising costs based on location using top performing radio stations from Local Marketing Ideas. These include 15 spots from Monday-Friday and 5 spots on the weekend:
Radio Advertising Weekly Estimated Cost by Market
|New York City, Los Angeles, Chicago|
|Dallas/Ft.Worth, Houston, Phoenix, San Diego|
|Denver, Cleveland, Kansas City|
|Akron, Wichita, Baton Rouge|
|Myrtle Beach SC, Green Bay, Topeka|
How Radio Ads are Priced
The pricing for a radio ad ultimately comes down to the following equation:
Number of People Listening x Cost to Reach 1,000 listeners (CPM) = Cost of Advertising Per Spot
The number of people listening is best measured by Average Quarter-Hour Persons (AQH Persons). The radio station can provide this data point for the slot you’re interested in.
The CPM rate can vary greatly from station to station, and market to market. The average daytime CPM rate is typically in the $12 – $16 range for adults between 18 – 49. If the audience that listens to the broadcast tends to be older than 50, a CPM of $8 – $12 is reasonable for daytime. The evening and particularly overnight should be lower.
The table below shows some additional terms you may come across when calculating radio advertising costs. Here are brief definitions of useful radio advertising terms from Nielsen:
|Average Quarter Hour Rating (AQH Rating)||Average number of people listening to a station for at least 5 minutes during a 15-minute timeline|
|Cost Per Thousand (CPM)||The calculated cost to reach 1,000 listeners|
|Gross Rating Point (GRP)||This is one measure of the impact of your ad (it is equal to the percentage of the target market your ad reaches multiplied by the frequency with which they hear your ad).|
|Cost per Point (CPP)||The cost to reach AQH equivalent to 1% of a demographic|
|Net Reach||The number of people a station can reach in a certain timeframe|
|Cume Person||Total number of people who listen to a radio for at least 5 minutes|
|Exclusive Cume||Total number of people who listens to only one radio station|
|Rating||The percentage of total listeners for a station divided by the total population in an area|
|Share||The percentage of people in an area who listen to a specific station|
Factors Influencing Radio Ad Cost
Number of people listening to your ad
The main factor that affects cost is the number of people who will be listening to your ad. Therefore, spots during the morning and evening commute will cost more than spots late at night. Likewise, playing an ad in a big city will cost more than an ad spot in a small town.
Demographic of the radio station’s audience
Radio stations that have an audience between the ages of 24-54 will also have higher prices. That’s because this age group has the highest purchasing power, and therefore many businesses want to advertise to them. You can also expect to pay more for stations that attract a wealthy audience, such as a jazz or classical station.
Demand for an ad spot amongst advertisers
A radio advertising spot is not guaranteed, and usually goes to the highest bidder. Therefore, your ads may be knocked off the air if you don’t match the astronomical rates that occur during an election. The same may happen during major shopping times, such as around Thanksgiving and before Christmas, where major advertisers may buy up airtime to promote upcoming sales.
Special Events and Occurrences
There is a chance of prices changing depending on what events are occurring around town. This is because prices fluctuate depending on how many other people want to advertise during that time. For example, if there is a highly contested local, state, or national election, campaigns tend to pour money into local radio and TV at elevated rates.
For more information on radio ad cost, view our in-depth guide to radio advertising costs.
Best Stations and Times to Advertise
Best Stations to Advertise On
One of the first steps to radio advertising is deciding what station(s) you want your ad to run on. You can use Radio Locator to see the stations that are located in your area, and the type of genre they play.
Here are some general guidelines for targeting based on age from the direct response radio advertising agency, Strategic Media.
Targeting Radio Advertising by Age Group
|Age Range||Station(s) Most Listened To|
|Teens 12-17||Primarily Top 40, some Urban, Alternative|
|Adults 18-24||Top 40, more Alternative, Urban preference|
|Adults 25-34||Alternative, Rock, Top 40, some Urban, Adult Contemporary|
|Adults 35-44||Rock, Adult Contemporary primarily|
|Adults 45-54||Oldies, Adult Contemporary|
|Adults 55-64||Classical, New Adult Contemporary|
|Adults 65+||Adult Standards, Classical, News Talk|
To find out the audience that a radio station serves, simply reach out to them and ask. Most radio stations will have a contact person or department specifically catering to customers who want to advertise. The station should have a breakdown of their listeners based on the following criteria:
Once you have narrowed down which stations have an audience that matches up with the customer base of your business, you will have a better idea of which stations you will want to advertise on.
When You Should Advertise & How Often
Radio stations split up ad times into day parts. You probably won’t be surprised to know that the most popular times to run advertisements on the radio are during the morning and evening commutes. The different time slots you can choose from are as follows:
Best & Worst Times to Advertise on Radio
|Time Slot (aka Daypart)|
|6 AM - 10 AM||Considered to be one of the two most desirable time slots for radio advertisers because of the high engagement of listeners.|
|10 AM - 3 PM||Many talk stations tend to lose audience during this period. However, the shows of major talk personalities such as “Rush Limbaugh” are located in this day part. Some music stations gain audience as listeners use radio for background noise during work.|
|3 PM - 7 PM||A coveted time for advertising. Food and entertainment advertisers tend to seek this time out for advertising.|
|7 PM - 12 AM||Listeners are thought to be less responsive to radio ads during this time frame. With the exception of 7 PM – 8 PM, the audience tends to be much smaller than the daytime. However, there is an opportunity to get “bargain” rates.|
|12 AM - 6 AM||Considered the worst time to advertise. Unless you’re running a 24 hour diner or some other business that caters to people that work at night, this time period should generally be avoided.|
You can choose to have your ads shown exclusively in a certain day spot, or have an equal distribution of your ads throughout the day. The second option means the radio station will switch up what day and time your ad shows. The advantage of doing this is that you may get prime time ads for cheaper than you would if you chose to show all of your ads during the peak slots. However, we suggest to go with the first option since ads are usually more effective when the same people hear your ad multiple times. It’s easier to achieve this when you run your commercial at the same time every day.
Although morning and afternoon drive times get your ad the most exposure, choosing the best time to advertise on the radio will depend on your business.
Here’s what Brian Colling, CEO of Colling Media, says about advertising times on the radio:
“The best run time really depends if your service is more of a want or a need. For people in the medical business, lawyers, repairs like hvac, etc., we typically recommend Monday through Wednesday because consumers tend to focus on what they “need to get done” earlier in the week.
For those in the ‘want’ business like automotive, furniture, retail, etc., we typically recommend Thursday through Sunday or a Wednesday through Friday drive time with weekend rotators (6am-7pm).”
Determine the Length of Your Commercial
Traditionally, radio spots are sold and priced based on 60 second commercial spots. However, you can buy 30 second or even 15 second spots.
Unlike television, a 30 second commercial doesn’t necessarily cost half as much as a 60 second commercial. For example, a 30 second commercial might be priced at 80% of the rate of a 60 second spot. This is because radio listeners tend to get less annoyed by the amount of time which commercial messages take than by the number of different commercials that are aired. (Here is good video explanation by Dan O’Day).
There is a study by Dr. David Allan that indicates that 60 second commercials are more effective than 30 second commercials. The longer commercial gives the advertiser an opportunity to tell a story and repeat their brand name and call to action more often.
Our suggestion: Go with the 60 second commercial.
Decide How Often You Want Your Ad(s) to Play
Frequency is the number of times your ad is heard by an individual person, while reach is the amount of people that hear your ad. In other words, frequency is talking to someone a lot, while reach is talking to a lot of people.
Many people think of three as the magic number. If someone hears your ad three times, they are likely to remember your business. Though this isn’t scientific fact, it is a good starting point for your small business when advertising on the radio.
As far as reach, you want to target people that are similar to your client base. You can start off by choosing one station that has listeners you believe are consistent with your current clientele.
According to the Small Business Administration (SBA), high frequency over a short period of time is much more effective than low frequency over a longer period of time.
This is because you can hammer your message home to people if they hear it multiple times in a week. If someone hears your commercial multiple times over a one month period, the message won’t be as potent because the listener probably won’t even remember hearing the message the first time.
By focusing your advertising in one daypart and advertising with good frequency (for example three spots per day Monday through Friday), you should be able to tell if this type of advertising is working for your business.
The risk of course of this strategy is that you might accidentally pick a daypart which doesn’t work for your business and get a misleading reading as to effectiveness as a result.
Suggestion: Pick the daypart that will be most effective for your business, and try a schedule of 3 ads per day, Monday through Friday.
How to Create a Radio Ad
There are a few different options when it comes to creating your radio ad:
1. Have the station create the ad for you
Sometimes the station will offer to create your ad for you at no cost. These spots can range in quality from poor to excellent depending on the people working on the spot.
If you go with this option, make sure you are not obligated to use the ad if it is not up to your expectations. Be wary as well since stations have an incentive to make your ad more pleasant to listeners by including music. While this may keep people from switching the station, it could dilute your message. You will also only be able to run this ad on their station; you’ll either have to create your own ad for other stations, or other stations will have to create a different ad for you.
If you choose to go with this option, make sure the station is clear about what you are looking for with your ad, and don’t feel pressure to use the ad if it’s no good.
2. Pay for a professional radio commercial production company
They can help you with the script, selecting a voice, music, recording, and effects. Have them produce two different ad spots so that you will be able to test the effectiveness of different messaging / approaches. You should be able to get a great radio ad made for around $800 to $1200 per commercial.
We suggest going with this option, because you will get higher quality ads that you can test out on different stations to see which works the best. This will improve future advertising efforts. For a more detailed explanation of radio advertising costs, you can also see our radio advertising costs article.
3. Hire a freelancer
If you already have your script, you can hire a freelance voice actor through platforms like Fiverr to record your commercial for you. You can find professional actors for as little as $5, but just make sure to look at the reviews to see which actors perform the best.
4. Create the ad yourself
Unless you have experience with voiceover acting, you probably want to steer clear of this option. Conveying a message solely through sound is a difficult task, and in most cases should be handled by a professional.
However, recording your own voice is a good option if you want to create a more personal message (e.g. I’m the owner of Dave’s Pizza and have a special offer for customers.) Just make sure you have others listen to it to make sure it sounds professional.
If you do feel like you have a voice for radio, make sure you don’t sound like you’re reading from a script and avoid cliches. Even though creating your own ad will save you money in the short term, if your ad is no good, then it won’t drive any sales for your business in the long run.
Using the Radio Host to Promote your Business
When negotiating your advertising deal with the radio station, find out if live reads of ads are available. Instead of playing a pre-recorded commercial, the host or disc jockey will read from a script. This option has several benefits:
- Listeners tend to tune out commercials or change the station when a commercial comes on. When the host reads, it is a voice that listeners recognize, and therefore are more likely to pay attention to it.
- The DJ / host will often ad lib a bit with the commercial, taking more than the 60 seconds that you bought.
- Live reads can provide credibility to a product, implying that the host endorses the product. If you go with the live read, provide the on-air personalities with a free product and/or service so that they can speak from personal experience.
The only downside is that radio stations realize the benefit of this option, and therefore charge around 1.5 times the rate of a 60 second pre-recorded commercial. You can mix in your regular ads with live reads in order for your radio advertising budget to go further.
The Elements of a Good Radio Ad
Keep in mind that radio listeners will not be listening to your advertisement in the same way that you will. When you listen to your radio commercial to give your approval for it to be used, it will be in a quiet place with your entire focus on the radio ad. However, the audience for the commercial may only be partially listening to it or may hear only part of the radio advertisement. Additionally, real listeners will likely also be engaged in another activity, which means that you cannot ask them to use their brain to think about your content.
This has a few important implications:
- You need to repeat anything that is important several times throughout the advertisement.
- If you want the listener to remember anything specific, like a promo code or phone number, you need to make it very easy. For phone numbers, for example, a vanity number will work best (ex: 1-800-PLUMBER)
- If you are including your address, instead of saying 1234 Main Street, say at the corner of 5th and Spruce, right next to the high school. This work best for small towns where there are many recognizable landmarks.
- Stick to one message, and have a clear call to action of what you want the listener to do at the end of the ad (i.e. call for a consultation, drive to your business, visit your website, etc.)
Here are some more pro tips:
In order to have an engaging radio ad, David Burrows, Martin+Michael Agency, offers this advice:
“Feature a conversation between two people versus just someone reading a script. This has a much better impact as it feels more organic and interesting.”
Kelley Buttrick of KB Voiceovers also suggest sticking to a central message. She says:
“trying to cram in selling point after selling point after selling point into 30 or 60 seconds is like throwing a big bowl of spaghetti at the wall, not much is going to stick.”
Addressing your audience in the beginning of the ad also tends to do well at grabbing their attention (i.e. Hey, listeners!). You want to start your ad off strong so people will pay attention to the rest of your ad.
For more tips on how to create a good radio ad, view our article on radio advertising ideas from the pros.
How to Measure the Success of Your Radio Ads
Measuring if offline marketing efforts are successful is considerably more difficult than measuring online efforts. However, there are a few tactics you can use.
Use a vanity URL
You can send people to a landing page on your website that has a URL that is specific to your radio ads. This works especially well if you are offering a promotion that people can take advantage of by using the URL mentioned. For example, if you are running an ad on Hot 995, announce in your radio ad that people should visit www.yourbusiness.com/hot995. You will then need your vanity URL to redirect to a tracking URL. Unfortunately, this will only be a useful measure of success if you are trying to drive traffic to your site. To learn how to do this, view this white paper by Brian Clifton explaining ways to track offline marketing. You can purchase your vanity URL here.
Use a call tracking number
You can create a number that is different from your everyday number. If someone calls your business using the tracking number that you use in your radio ad, you will be able to track it back to your radio ad. Learn how to set this up here.
Ask your customers
If you are able to consult with customers one-on-one, ask any new clients how they heard about you. This will be trickier if you own a restaurant or clothing store since you won’t be able to track down every customer to ask where they came from. In these instances, consider asking customers to take a survey on every receipt. Offer an incentive (coupon, discount, etc.) to increase the chances that people will actually fill it out.
Measure sales during advertising period
The easiest way to see if your ads are working is to simply see if your sales have gone up over the period of time that your ad was running. Beware: you can’t attribute in increase or decrease of sales to your radio ad with 100% accuracy. There could be other factors at play that are influencing your numbers.
By having a general idea of how well your radio ads are working, you will know whether you should continue advertising on the radio or if you should shift your efforts to other forms of advertising.
Music Streaming vs Traditional Radio Advertising
On-demand radio and music streaming services like Pandora and Spotify are growing in popularity. According to a study by Nielsen, on-demand streaming listeners increased by 62.4% in 2017 compared to the previous year.
Here’s a comparison of traditional radio advertising with music streaming ads:
Traditional radio often cover a specific market, usually a city or a state. Meanwhile, online music typically has an active user base that spans cities and states. For example, Pandora has 81 million active users in the world, while the number of potential listeners for a radio station in Chicago is its population of 2.75 Million. Online streaming services have an edge in terms of potential reach, but keep in mind that if your small business caters to a local market, not all Pandora subscribers will be a qualified customer for you small business.
According to Nielsen, radio reaches over 90% of Americans in all age ranges. However, a study by LOOP says that online streaming services compose 51% of younger millennials’ (Ages 18-24) daily listening time. Although the statistics vary, if your business caters to the younger generation, it might be ideal to try advertising with online streaming services.
Similar to other forms of digital advertising, online streaming services have powerful targeting tools that radio stations simply do not have. Other than traditional demographics, Spotify can target people based on information like behavior, moods, and online activities. Review online streaming apps and sites, and check if you can use their targeting options to better reach your audience.
The best way to compare the cost of radio advertising and music streaming advertising is through CPM or cost to reach 1,000 people. Radio ads generally have a CPM of $12 to $16, while music streaming ads have a CPM of $5 to $30.
Radio advertisements are typically 30 to 60 seconds long. On the other hand, online streaming services like Pandora and Spotify offer 15 to 30 second spots. This means that your ads need to present all vital information in half the time compared to traditional radio ads.
As discussed above, there are several daytime and primetime slots that you can target when doing ads on the radio. Since online streaming is on-demand, you won’t need to worry about advertising during a specific show or timeslot. Instead, you can focus on targeting your audience based on options provided by the streaming service like playlists and genres.
Online streaming allows you to add a photo, like a company logo or product picture, to your ads, something traditional radio isn’t capable of. Similarly, you can add a link to your website directly on a music app, which allows your audience to quickly act on your message.
Benefits & Challenges of Advertising on the Radio
Like every advertising medium, there are pros and cons to advertising on the radio. Below, we details the benefits and challenges of radio advertising:
Benefits of Radio Advertising:
- Reach a large amount of people. Over 90% of Americans tune into the radio on a weekly basis, according to Nielsen. Therefore, it’s likely that your target audience listens to the radio and will hear your ad.
- Radio is a local medium. Many stations only play for a specific geographic location, so your local business advertisement will only be heard by potential customers in your area.
- Target based on trends. Not only can you target listeners by geographic area, but you can also target based on listening trends. For example, younger audiences tend to listen to the top hits stations, while older audiences are more likely to tune into classical and talk radio.
- Reach people who can spend. More than two-thirds of the weekly radio audience works full-time and listens to the radio during the commute and also during the workday.
Challenges of Radio Advertising:
- People are distracted. Someone who is listening to the radio is probably doing something else when your ad plays (the driver is busy driving, passengers on their phones, etc.). This means it can be hard to capture someone’s attention with your radio ad.
- People can easily switch radio stations. There are hundreds of AM/FM radio stations that users can choose between while listening to the radio. Therefore, when a commercial comes on, they can easily switch to a different station.
- People are not spending as much time listening to the radio. To reach the entire audience of a radio station requires more spots than television. Television is sometimes called appointment viewing. Viewers generally have the intention of watching an entire show from beginning to end. On the other hand, radio listeners often tune in and out at different intervals. For example, two people that listen to the same show while driving to work may never listen at the same time. Thus, a small business advertiser will have to advertise more often to reach everyone listening, and that can strain your budget.
Bottom Line on Radio Advertising
Despite the proliferation of on-demand services, radio is still a very powerful medium to advertise to a wide range of customers and age groups. With an adequate marketing budget and the information detailed in this post, you can use radio to effectively boost your marketing strategy and bring in more business!