The Cost of Radio Advertising — Maximising ROI on the Airwaves
Table of Content
Types of radio
How to advertise on radio
Factors affecting the cost
What is the ideal frequency for a radio campaign?
How is radio advertising efficiency measured?
Radio commercial production costs
Budget
Partnerships
Radio ads can be some of the most recognisable, creative and effective marketing for any brand, but getting on the air does come with some costs attached. More than just paying for the commercial airtime or spots themselves, radio can mean budgeting for creative costs including script writing, production, studio time and professional voice artists. Keen to learn a bit more? Let's dive in.
(For more information on radio advertising as a whole, check out our expert guide.)
Types of radio
Brands looking to get their messages out on the airwaves have a couple of different options to choose from. Here are your main contenders.
Traditional FM and AM radio
AM and FM is what most people think of when they hear 'radio', using analogue signals that carry the broadcast to receivers. Traditional radio broadcasting is what most people listen to in their cars while they commute, including Melbourne stations like Nova, Gold FM and 3AW. The majority of radio media buying is done with FM and AM radio, and it remains very popular to this day.
Digital radio
Going beyond the regular band of AM and FM is digital audio broadcasting (or DAB+), which uses higher frequencies to allow for more unique stations and genres to be heard. DAB+ offers an exceptional sound quality, which many traditional broadcasters use to simulcast their analogue stations.
Other audio
Outside of standard radio formats, brands can also advertise on audio streaming services like iHeartRadio, Spotify, LiSTNR and Pandora. These ads can occur in streams of music, news or podcasts, reaching very specific and niche audiences based on genre and interests as well as more traditional demographics. Audio streaming is only getting more popular with time as more users appreciate the breadth of listening options and the convenience.
How to advertise on radio
Kickstarting your time on radio comes down to a number of factors, including how much advertising you want to do, but arguably the earliest stage is setting a budget. Planning an appropriate budget early on will help manage your expectations further down the track and keep you accountable. From there, you can begin considering your target audience, and which radio stations would be best to reach them, and the message you want your commercials to deliver.
Once you have your budget and an idea, you can contact a radio network directly to organise a campaign, or use a media agency to conduct your buying. Using an agency can help you navigate the complications of media buying, and also help you secure the best rates and spots.
Factors that affect the cost of advertising on radio
There's no one number that defines how much it costs to advertise on the radio, but rather a multitude of factors that define how much each spot in a radio campaign will cost.
Ad length
Radio ads can be anything from 5 to 60 seconds in length, but the longer your ad, the more you'll have to pay for it. This doesn't mean you can't go long with a full minute, but it might suit your budget to go for a 15- or 30-seconder which can be played more often.
Time slots
Each broadcast day is divided into 'dayparts' or ‘sessions’, which are segments of time throughout the course of the day. The four primary dayparts are:
Breakfast — 5:30am to 9am
Morning — 9am to 12pm
Afternoon — 12pm to 4pm
Drive — 4pm to 7pm
Radio doesn't stop throughout the 24 hours of a day, so ads can be heard outside of these hours as well, but the majority of listeners are connected during the four dayparts, so almost all buying occurs here.
However, not all of these segments are equal: breakfast is typically the strongest performer for listeners, so it also costs the most. Radio buyers have to pay a premium to be heard in these competitive slots, but you can save some money by identifying other times in the day when your target audience are likely to be listeners.
Frequency
Every brand wants their ad to be heard a lot, to ensure that audiences remember the message. But more spots — you guessed it — costs more money. Frequency can be a tough balance. If you play your ads too often, then the audience is quite likely to just get sick of hearing them altogether which can damage your brand reputation. But if they don't play often enough, it might not be worth running any because your message won't be able to stick with an audience. For a commercial that's trying to get your audience to act, we recommend your ad play at least 5 times a week in good spots.
Radio stations
Each overall radio network has different radio advertising rates, as well as potentially different rates for the individual stations they own. This is because some stations have more lucrative radio audiences and listener numbers — to reach those people, you'll need to pay a bit more. Similar to frequency, this can work for you because you don't always need to overdo it: if you can narrow your target audience down, you can more efficiently pick the right spots on the right stations, even if you sacrifice some overall listener volume.
What is the ideal frequency for a radio campaign?
For a commercial trying to get your target audience to take action, we recommend your ad play at least 4 to 5 times a day in peak listening times. Your ad should be heard in good spots for at least 4 days per week, particularly on days that align with your customers’ buying behaviours. For example, if you are a retailer trying to drive foot traffic into your stores, airing your commercials on Thursday to Sunday will give you the best possible chance at reminding listeners of your brand and prompting them to make a purchase.
The idea of frequency is to peak your ad plays on the days of the week that your target audience are more likely to respond or buy. If you are a service-based business that requires ongoing appointments, airing your commercials Sunday to Wednesday — especially in breakfast, mornings or afternoons — is going to optimise your budget. Listeners will be more likely to enquire during business hours, and make a booking in the early part of the week. Use Google Analytics data to verify which days of the week you see the most website traffic, as well as when you see it most consistently. This should give a good indication of when your customers are most likely to take action.
The ideal frequency also comes down to the intention behind your campaign. For ongoing branding and awareness, you can get away with an average frequency of 3 to 4 listens per month by each target consumer. Your budget is determined by which station(s) will best connect you with your target audience, and how many monthly commercials will reach this desired frequency number.
By contrast, a call to action campaign from a lesser known brand requires around double the frequency to generate a strong response. We recommend an average frequency of 5 to 6 times per month for each target consumer. It’s vital that you have a clear and concise message, paired with a strong offer or solution to a consumer problem.
If you are brand new to radio, you will need to put in some hard yards early on and let your reach and frequency build. This can take 6 to 12 months in many cases, but the benefits of having consumers easily and consistently recognise your brand are well worth the patience.
How is radio advertising efficiency measured?
Radio advertising efficiency is measured by the cost per thousand impressions (CPM). A radio CPM is a simple formula which takes the overall media investment from a brand and divides it by the number of overall impressions (in this case, individual listens), and then multiples that by 1000. This formula provides a dollar figure for how much a radio commercial costs to reach 1000 listeners. Brands aim to have low CPMs, meaning that their ad spend was more efficient.
Radio commercial production costs
When considering a budget, it's important to remember that you can't only expect to pay for the spots themselves — in most cases, you also have to pay to get your ad made. Radio ad production involves a number of different creative processes, and depending on how you get them done, each of them can have varying costs attached.
Scripts
Crafting the right script might be the factor that separates high-performing radio ads from forgettable ones. Your script needs to identify who the target audience is, what they're struggling with that your product or service can help, and why they should trust your word. That might sound like a lot, which is why being creative is so important — you can't just cover these things blandly or your audience won't be interested in listening.
Thankfully, radio networks and media agencies often have in-house script writing services to help ensure your creative ideas work. Beyond this, you can hire freelance script writers on their own, or if you want, you can have a go at writing the scripts yourself. This can save money in your budget and also uses your own knowledge of your brand and offering.
Voice actors
If you don't want to be heard yourself, you may need to hire one or more voice actors to read your script and play any different characters. Some networks have in-house voice talent that can be used, but you can also hire specialised professional voiceover artists to deliver your message in a particular way.
It can be a special touch to record it yourself or have members of your team though. Many small business owners opt to self-record to lend their ads a greater sense of authenticity and connect closer with their audience. If you have a strong community on social media, this can create a massive cross-media influence.
Recording
Most networks offer recording space in their own company studios, but your ads can be recorded independently and then passed on to them. Recording space may be bundled with the other services listed above which can make it more affordable and worthwhile for brands.
How much should you budget for your radio advertising campaign?
Radio networks will set different rates and overall expectations, and while radio is typically more cost effective than other forms of traditional media, it is still an investment. Overall though, we do genuinely believe it pays off. We recommend that clients looking to advertise in metro city markets should be prepared for a cost of at least $10,000 per month, or $100,000 a year. This ensures that you can achieve an appropriate level of reach and frequency with one major radio station to ‘own’ your category. Over time, combining this with clever creative will lead to a positive return on investment.
Partnerships
For people entering the radio advertising space for the first time, this kind of investment can be daunting. Thankfully, businesses do not have to navigate it all alone. Brands and marketing managers can go straight to the radio station or network and try to strike a deal, but this can be a bit difficult if you come from little or no experience in the space. But if they want the best balance between exceptional creativity and great spot rates…
This is where a media agency comes in.
Working with a media buying agency can ensure that your radio advertising costs are the most efficient they can be, and that you aren't being charged more than is necessary. Similarly, most media agencies have great relationships with the radio networks, and they can use this to get you bonus airtime and spots, often with no extra cost attached! Partnering with an agency that offers a full service can also help to keep all of your marketing efforts in alignment, with your audio messages matching those delivered on social media, TV or through your website.
Get on the air
For new businesses, radio can just look like a hefty price tag to an already stretched marketing budget, but in time it can become one of the most effective drivers of new customers and sales. While it might not be your first marketing avenue right out of the gates, it comes with significant benefits and opportunities when you are able to invest in it.
To give yourself the best chance of making radio advertising work for your brand, get in touch with us and tap into our years of expertise and direct radio connections. We'll help you craft radio commercials and get them in the ears of the perfect audience, all at the best possible price. When you want to get into radio, we're better together.
