M. Bruce Abbott |
M. Bruce Abbott is Creative Director/Partner of Radio Lounge, a direct
response radio advertising agency at www.radioloungeusa.com
If you are thinking about advertising on the radio, let the experienced
direct response radio advertising professionals at Radio Lounge make
your campaign a success. Call us for a free consultation. No pressure,
just friendly people who love to help companies succeed with their
advertising on the radio. Call toll free, 1-866-4-AUDIO-9. That's
1-866-428-3469...but we would never say it like that on the radio :)
Remember...Direct Response Radio Advertising Works - when done right,
it can achieve powerful results. |
M. Bruce Abbott
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Radio Advertising Prices - What To BudgetDemystifying Radio Advertising. Find out how much radio advertising costs. M. Bruce Abbott
March 16, 2009
Radio Advertising Costs : How Much Should I Spend?
“How much
should I spend on radio advertising?”
“How do I know I am getting the
best radio advertising rates?”
“What radio stations should I advertise
on?”
“What are good and bad radio advertising prices?” “How many spots
should I air on a radio station?”
Every day at Radio Lounge, we hear radio advertising questions such as these.
Honestly,
there is so much confusion about radio advertising floating around – we
can’t blame you for asking these questions. Why is advertising on the
radio so mysterious? The answer is – radio advertising is not
mysterious. It just helps to know how it works.
Effective radio
advertising relies on two major components – the message (the radio
commercial itself), and the media (that the radio spot airs on).
The Message
Let’s
look first at the radio commercial itself. Before even thinking about
which radio stations to air on, or how much to spend on radio
advertising rates, you must think about what you are going to say in
your radio ad. For this article, we are assuming that all call centers,
fulfillments, websites, etc. lead generation, and sales closing
processes have been put in place by you, the advertiser. Creating a
radio commercial that helps drive traffic is extremely important to the
advertising process.
The advertising industry is full of voice
talents, radio personalities, DJ’s and others, all claiming to create
radio commercials. Be careful here. When entering the arena of radio
commercial production, look for a radio advertising agency that has
experience and a track record of successful ad campaigns. Anyone can
create a radio ad, but not everyone can create a radio ad that pulls
traffic. Some radio stations provide free radio commercials if you
advertise on their station. Most of these free commercials are never
based on strategy and are just one of several dozen commercials that
have to be created by an overworked radio production person in a five
to fifteen minute window of time. Remember, you usually get what you
pay for.
The most effective radio commercials are built on a
solid, proven strategy. The copy is written using time tested formulas
that maximize potential response. The talent is handpicked to best
connect with the end user and the production is based upon clear,
quality, and easy to absorb audio.
So…what does the radio
commercial production process cost? The majority of radio commercials
that work best usually fall into the $500 to $1000 price range. There
are always exceptions to the rule (lots of revisions to copy or audio,
additional voice talents, celebrity endorsements, etc.) but this figure
generally covers development of a solid strategy, copy from experienced
copywriters, performance by high caliber voice talents, and the highest
quality production services.
The Media
For many with
questions about radio advertising rates, and radio station prices, here
is where the mystery begins. We will try to simplify the mystery of
radio media buying as much as we can in this small amount of space.
A good radio advertising buy focuses on a few different things:
* Finding the best radio stations in a market that match your
customer’s demographics (age, gender, income level, etc.) and
psychographics (interests, beliefs, hobbies, personality traits, etc.).
* Finding the dayparts that best reach your target customer. Mornings? Middays? Afternoons?
* Selecting the top radio stations that most efficiently reach the
highest potential customers, the right number of times (defined as
frequency), for the least amount of money
Usually, when
researching radio advertising costs, many potential radio advertisers
have a pretty good idea of the first two points. However, when it comes
down to finding the best station (or stations) at the best price, the
radio advertising process becomes a little more challenging.
Here
is how we tackle the process at Radio Lounge and determine how much to
spend on radio advertising costs. Within the market you want to
advertise in, we find the radio stations that have the best potential
to reach your target customer. This is based on the formats of the
radio stations. Urban Hip-hop stations will target different
demographics than a News/Talk, or Soft Rock station. After we select a
group of radio stations, we contact those stations to let them know we
are thinking about advertising on their radio station. We ask for
specific data from the radio stations called “rankers”. This is ratings
data that most radio stations can provide based on specific
requirements we have requested. From this point, we have a good idea
which stations perform the best in our target demographics.
Once
we have narrowed down the radio stations to just a few that will
effectively reach our target customer, we then request a proposal based
on certain criteria – dayparts, frequency goals, etc. From these
proposals, we can see who reaches the target audience most efficiently
– using tools like Cost Per Point (ratio of spot rate to ratings
percentage), Cost Per Thousand (ratio of spot rate to audience category
totals), etc. If a radio station is not competitive, we will often ask
the station to resubmit a more competitive proposal. But, how will we
know if all of the station’s radio advertising rates are too high.
Radio Lounge has access to data that allows us to compare proposals
against historical figures to determine if radio station prices are in
line with market averages. We negotiate, and help execute the purchase.
Great…but
what does this cost? It depends on the size of the market you wish to
advertise in as determined by Arbitron (the radio ratings services).
Radio advertising rates can be as high as $800 per 60 spots in a top
market like New York City, or as low as $3 per 60 spots in Kerrville,
TX. How will you know what to spend?
Here’s a valuable system we
have used from our history of working with radio advertising rates. The
system is based on a solid branding schedule that may run one spot per
day in the morning drive, one per day at midday, and one per day in the
afternoon drive – Monday through to Friday, and two spots on Saturday
and Sunday. That’s nineteen spots a week at sticker price. This type of
schedule is good for achieving a desired frequency level of three
(meaning the average listener to a station will hear the radio
commercial at least three times). Under these broad assumptions, you
can use the following chart as a rough guide to budgeting your radio
advertising campaign.*
*Note, these are gross rates and do not
include production costs or agency discounts. These are market averages
for the standard radio schedule mentioned above, actual costs may vary.
Different combinations of dayparts on different stations may cost much
less.
* Markets 1 -5 (ex: New York City, Los Angeles, Chicago, etc.) Expect to pay from $4000 to $8000 per week/per station for a top performing station.
* Markets 6 – 20 (ex: Dallas/Ft.Worth, Houston, Phoenix, San Diego, etc.) Expect to pay from $2000 to $5000 per week/per station for a top performing station.
* Markets 21 – 50 (ex: Denver, Cleveland, Kansas City, etc.) Expect to pay from $1000 to $3000 per week/per station for a top performing station.
* Markets 51- 150 (ex: Akron, Syracuse, Baton Rouge, etc.) Expect to pay from $800 to $2000 per week/per station for a top performing station.
* Markets 150+ (ex: Myrtle Beach SC, Green Bay, Topeka, etc.) Expect to pay from $500 to $1500 per week/per station for a top performing station.
You
may be saying, “Wow! That can be expensive”. Relax, these are standards
and radio advertising schedules come in all shapes and sizes.
Sometimes, schedules are smaller depending on advertising goals and
objectives. However, we do recommend that you are able to commit to the
range of minimums.
Leftovers?
Notice we have not
mentioned remnant radio advertising here at all. Remnant advertising is
the practice of buying unused inventory at deep discounts. Remnant
advertising success exists more in theory than in practice. However,
this is not to say that there are not advertisers who are having
success with remnant advertising. If, and when, remnant advertising
falls into your lap, we suggest you look into it. However, basing your
entire radio ad campaign on remnant advertising may be shooting
yourself in the foot. With the exception of a few times a year, most
top performing radio stations do not have that much unsold inventory.
Often, the largest advertisers have contracts that guarantee so many
low cost/no cost spots that have to run. The reality is that if large
advertisers (with the big dollar schedule) need their spots to run, or
if another advertiser pays just one penny more than you did for your
remnant spots – bump! You just got bumped off the air that day. You may
pay for twenty spots and only get two that air. The stations will make
it up to you, but what if you were counting on that advertising to
drive sales. Or better yet, in the age of consolidated radio groups
your remnant advertising might run on the third to the last rated
station in the market. The result is NO RESULT and you have just wasted
money for nothing. We really do believe that when it comes to radio
advertising YOU TRULY DO GET WHAT YOU PAY FOR.
Now that radio
advertising rates have been explained, you may ask the question, how
long should I advertise? The type of radio advertising helps define the
length of a campaign. Advertising for an event? We recommend shorter,
more compact schedules to create buzz leading up to the event or
launch. Branding a product? Often, long term schedules with a bit of
breathing room work best. Maybe even flighting could work (on two
weeks, off two weeks). Most of the time, the two things that will
determine how long to run a radio advertising campaign will be
advertiser goals (traffic numbers), and external factors such as sales
cycles. Oh yeah, and usually budget affects the length of the campaign.
It is not desired, but that’s reality.
The Total Cost
You
may be thinking, “So if I want to run a spot on three top Houston radio
stations, I should expect to pay $1000 for a commercial, plus $3000 per
week per station…that’s $10,000 for one week’s worth of advertising!”
That’s true, and may be just what it takes to reach over half a million
potential well targeted customers. The real question is, “How much
money can you make off half a million potential targeted customers?” Is
it more than $10,000 a week? $40,000 a month? These are questions to
ask yourself, because in the world of advertising, that is pretty good
traffic.
It works even better when you let Radio Lounge reduce
that cost even further. What if Radio Lounge was able to get you a
great radio advertising schedule by providing an instant discount ABOVE
the negotiated lowest radio station price?
Launch Your Radio Advertising Campaign
You
may still have many questions about radio advertising. That’s why we
are here. We want to help you get the biggest bang for the radio
advertising buck. Radio Lounge has worked with thousands of radio
advertising campaigns. We know what works and what does not. Let Radio
Lounge help you with all facets of strategic development, creative
development, copywriting, production, media planning, media
negotiation, and monitoring of your radio advertising campaign.
Call for a free consultation. Toll free 1-866-4-AUDIO-9…that’s 1-866-428-3469. Let Radio Lounge help you drive traffic with powerful radio advertising solutions
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