The Business Case for AM/FM Radio Advertising: Be Known Before You’re Needed
A local advertiser recently asked for the “business case for AM/FM radio advertising.” Over the last ten years, a vast array of marketing science studies have documented how AM/FM radio advertising can build local businesses and national brands.
AM/FM radio advertising generates significant sales and profit growth reports Peter Field, “godfather of marketing effectiveness”
Peter Field’s latest blockbuster study is called The Long and the Short of It – 10 Years On: Radio’s Enduring Role in Effectiveness. This consequential new study lays out hard evidence for how AM/FM radio drives significant lifts in market share, pricing power, sales, profits, and ROI.
Field analyzed the Institute of Practitioners in Advertising (IPA) databank of over 1,200 case studies submitted to their Effectiveness Awards Competition. Covering a broad spectrum of marketing categories and budgets, they “represent the most rigorous proofs of the effectiveness of marketing communications in the world.”
Field compared the business outcomes of marketers who have AM/FM radio in their media plans to those that do not use AM/FM radio advertising:
- AM/FM radio boosts mental availability (the propensity of a brand to be noticed and thought of in buying situations) by +13%
- Media plans with AM/FM radio have +28% greater market share than brands that do not use AM/FM radio
- Advertisers using AM/FM radio have +42% greater profit than brands that do not use AM/FM radio
- Brands using AM/FM radio experience +23% greater return on marketing spend
Nielsen: AM/FM radio generates impressive $10 return on advertising across a wide variety of categories
Nielsen has conducted dozens of AM/FM radio sales effect studies by matching Portable People Meter AM/FM radio ad exposures to retail purchases from credit and debit cards and consumer packaged goods sales via grocery shopper card data. Averaging all of the studies yields a $10.59 return on AM/FM radio advertising spend.
How advertising really works: Steve’s Pest Control of Columbia, Missouri used AM/FM radio to build a huge business
1,095 miles to the west of New York City lies Columbia, Missouri, the home of Steve’s Pest Control, “Missouri’s number one choice for pest control.”
Steve’s Pest Control knows what Madison Avenue has forgotten. To generate substantial sales and profit, a business needs to create future demand rather than obsess over short term metrics and only focus on converting existing demand.
Steve Hotsenpiller and his wife Anita started their business over three decades ago with one truck. They bought ads on a small radio station.
Each year, they devoted about 8.5% of their revenues to advertising. As they grew, they bought ads on more radio stations and soon became one of the largest advertisers on local radio.
Due to its use of AM/FM radio, Steve’s Pest Control leads the market across all stages of the consumer journey
Steve’s Pest Control’s usage of AM/FM radio advertising has built a dominant brand. It is so impressive for a local business to win against big national brands!
Steve’s Pest Control’s unaided awareness (34%) is +32% greater than the next brand. Its ad recall (40%) is two and half times the nearest competitor. This is significant as advertising recall is the most responsive measure of advertising activity.
Steve’s Pest Control leads all brands in favorability. In terms of purchase intent, Steve’s Pest Control is two and half times larger than the next brand.
Steve’s Pest Control usage is two and half times greater than the nearest competitor. Its brand preference is more than twice as strong as the next brand.