How Much Do Radio Ads Cost?

Today’s guest post comes from Bill Danziger, a writer at privatestudentloan.org.

The cost of radio ads and jingles is relative to return on investment. If within the initial stages of a radio advertising campaign, the increased sales and revenue driven by the new ad equals or exceeds the investment, then the ad/jingle costs you nothing. That would be the initial intention for any business considering a radio advertisement campaign and the hoped for outcome. The consideration of how to budget for a radio ad is different and more complex.

Why Advertise on the Radio?

Before discussing the costs of radio advertising we should understand what it is you are considering paying for. Radio ads are direct response advertising. This is a form of advertising that has a goal to create a response to the advertisement that can be quickly evaluated for its effectiveness. Direct response advertising is a quantifiable and accountable mechanism for generating specific information relating to and demonstrating its effectiveness or lack of effectiveness. Brand marketing in contrast, focuses on memory recall of a product, service or brand based on an emotion response to the ad. It does not require any action or input from the listener. The ability to assess effectiveness is delayed, often evident only in quarterly fiscal reports that are influenced by multiple factors.

The first consideration for cost of a radio ad concerns the advertising strategy and creative process. This upfront cost is essential to minimize the chance of failure and increased cost later in the process. Budget the costs of two test ads. The one that creates the best response is the test ad. If neither meets the break even threshold, redesign the ad with different content or to appeal to a different population of listeners.

Media Buying and Planning

The second consideration involves media budgeting. This is media planning and buying. In two parts, the first concerns are a test budget to assess the strategy, and review the creative and media variables affecting the fiscal outcome. While this expenditure can be daunting, it will generate response and revenue, and the intent is to bring you to the break even point. Anticipate a four week test period of review and adjustment of the ad spot to reach this goal.

Don't Burn Money

Don't Burn Your Money

Roll out

The second part is referred to as the roll out. At this juncture the creativity and production of the ad is proven viable. Your returns are above the break even margin. Now comes the time for additional investment to increase market awareness. You are motivated to spend more on media to increase return profitability.

How Often to Run a Radio Advertisement

To determine the number of stations and frequency of ad air time depends on several factors. During the test period an average of ten stations provides an adequate exposure. After, the determining factors are your business readiness to expand and the guidelines established in the original plan. When determining optimal number of sports on a particular station, remember that the cost per spot is determined by the size of the audience, bigger audience translates into more expensive. The decision then is dependent on testing and determination of what works within the context of the campaign guidelines. Nothing is ever set in stone. Radio advertisements can be tweaked at every level to produce the optimal expectations at the most reasonable investment.

So what is the bottom line? How much do radio advertisements cost? That answer is still in the testing phase. If during the testing period you reach the break even point for the initial four week testing period, the ads will generate profit and the ads cost nothing. It the testing period returns 75% of your initial investment, it will be a small cost to gain the invaluable information needed to adjust the final product and ensure a successful and profitable campaign.

Bill Danziger is a writer at privatestudentloan.org.

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One Response to “How Much Do Radio Ads Cost?”

  • Hi Bill, Thanks for the sound advice on running a radio ad. I agree that testing is important. Would you recommend requesting a media kit to verify that the audience that you would be reaching meets your targeted demographic?

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