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Radio Advertising Costs
Radio Advertising Costs: How Much Should I Spend?
“How much should I spend on radio advertising?” “How do I know I’m getting the best rates for radio advertising?” “Which radio stations should I advertise on?” “What are good and bad rates for radio advertising?” “How many spots should I broadcast on the radio station?”
Honestly, there is so much confusion surrounding radio advertising – I can’t blame you for asking these questions. Why is radio advertising so mysterious? The answer is – radio advertising is not mysterious. It just helps to know how it works.
Effective radio advertising is based on two main components – the message (the radio advertisement itself) and the media (on which the radio spot is broadcast).
Let’s first look at the radio ad itself. Before you even think about what radio stations to put on the air or how much to spend on radio advertising rates, you need to think about what you are going to say in your radio advertising. For the purposes of this article, I am assuming that all the lead generation and closing processes of call centers, fulfillment, websites, etc. are in place by you, the advertiser. Creating a radio ad that helps drive traffic is extremely important to the advertising process.
The advertising industry is full of voiceovers, radio personalities, DJs and others who all claim to create radio commercials. Be careful here. When entering the arena of radio advertising production, look for a radio advertising agency with experience and successful advertising campaigns. Anyone can create a radio ad, but not everyone can create a radio ad that drives traffic. Some radio stations offer free radio advertising if you advertise on their station. Most of these free ads are never based on a strategy and are just one of dozens of ads that an overworked radio producer has to create in five to fifteen minutes. Remember that you usually get what you pay for.
The most effective radio ads are built on a solid and proven strategy. Copy is written using time-tested formulas that maximize potential response. The talent is hand-picked to best connect with the end user, and the production is based on clear, high-quality and easy-to-absorb sound.
So… what does the radio ad production process cost? Most of the best performing radio ads tend to fall in the $500-$1000 price range. There are always exceptions to the rule (lots of changes for copy or audio, additional voice data, celebrity endorsements, etc.), but this number generally includes solid strategy development, copy from experienced copywriters, top-notch voice talent, and the highest quality production services.
For many who have questions about radio advertising rates and radio station rates, the mystery begins here. I’ll try to simplify the mystery of buying radio media as much as we can in this small space.
Buying good radio advertising focuses on a few different things:
* Finding the best radio stations on the market that match your customer’s demographics (age, gender, income level, etc.) and psychographics (interests, beliefs, hobbies, personality traits, etc.).
* Find the parts of the day that best reach your target customer. Mornings? Middays? Afternoons?
* Selecting the best radio stations that will most effectively reach the largest 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 to finding the best station (or stations) at the best price, the radio advertising process becomes a bit more complicated.
Here’s how to basically determine how much to spend on radio advertising. Find the radio stations in the market you want to advertise in that have the best potential to reach your target audience. It is based on radio station formats. Urban Hip-hop stations target a different demographic than a News/Talk or Soft Rock station. After selecting a group of radio stations, contact those stations and let them know you plan to advertise on their radio station. Ask radio stations known as “raiders” for specific information. This is the rating data that most radio stations can provide based on the specific requirements they require. From that point on, you’ll get a good idea of which stations will perform best for your target demographic.
Once you’ve narrowed down the radio stations to just a few that effectively reach our target audience, request a quote based on certain criteria – dayparts, frequency targets, etc. From these proposals, you can use tools to see who is reaching the target audience most effectively, such as Cost Per Point (ratio of spot price to percentage of ratings), Cost Per Thousand (ratio of spot price to audience category totals), etc. If the radio station is not competitive, ask the station to resubmit a more competitive proposal. Ask about the added value. Yes…it’s pretty time consuming…and yes, it’s hard to know if all the radio advertising rates for a station are too high. You really need to know the market and the going rates. (This is where having an experienced agency comes in extremely handy!) An agency can compare offers against historical figures to determine if radio station prices are in line with market averages… then negotiate and help close the purchase.
Great… but what does it cost? It depends on the size of the market you want to advertise in, as determined by Arbitron (Radio Rating Services). Radio advertising rates can be as high as $800 per 60 spots in a top market like New York City or $3 per 60 spots in Kerrville, TX. How do you know what to spend?
Here’s a valuable system we’ve used from our history of working with radio advertising rates. The system is based on a fixed branding schedule that can be used for one spot per day in the morning run, one per day in the midday and one per day in the afternoon run – Monday to Friday and two spots on Saturday and Sunday. That’s nineteen seats a week for sticker price. This type of schedule is good for achieving the desired frequency level (that is, the average listener of a station will hear a radio ad a certain number of times). Based on these general assumptions, you can use the following chart to budget for a radio advertising campaign.*
* Please note that these are gross prices and do not include production costs or agency discounts. These are market averages for the standard radio schedule mentioned above, actual costs may vary. Excludes added value, ROS schedules, extra seats, etc. Different combinations of day parts at different stations can cost much less.
* Markets 1-5 (eg: New York City, Los Angeles, Chicago, etc.)
For a top performing station, you will pay $4,000-$8,000 per station per week.
* Markets 6-20 (eg Dallas/Ft.Worth, Houston, Phoenix, San Diego, etc.)
For a top performing station, you will pay between $2,000 and $5,000 per station per week.
* Markets 21-50 (eg: Denver, Cleveland, Kansas City, etc.)
For a top performing station, you’ll pay $1,000-$3,000 per station per week.
* Markets 51-150 (eg: Akron, Syracuse, Baton Rouge, etc.)
For a top performing station, you will pay between $800 and $2,000 per station per week.
* 150+ markets (eg: Myrtle Beach SC, Green Bay, Topeka, etc.)
For a top performing station, you will pay between $500 and $1,500 per station per week.
You might be saying, “Wow! That can be expensive”. In some cases it is! These are the standards, and radio advertising schedules come in all shapes and sizes. Sometimes the timelines are smaller depending on the promotional goals and objectives. However, it is recommended that you are able to commit to the minimum range.
Note that there is no mention of radio advertising residuals at all. The rest of the promotion is the practice of buying unused inventory at deep discounts. Residual advertising success is more in theory than practice. But that doesn’t mean there aren’t advertisers who have found success with ad residuals. If and when ad remnants fall into your lap, it is highly recommended that you investigate. However, basing your entire radio advertising campaign on residual advertising can be shooting yourself in the foot. Except for a few times a year, most top radio stations don’t have that much unsold inventory. Often the biggest advertisers have contracts that guarantee so many cheap/free spots to run. The reality is that if big advertisers (with big dollar schedules) need to submit their spots, or if another advertiser is paying just one cent more than yours for the remaining spots – bang! You just went off the air that day. You can pay for twenty seats and only get two of them in the air. It’s up to the stations to decide, but what if you’re hoping to increase sales with this ad. Or better yet, in the era of consolidated radio conglomerates, your residual ad could be aired on the third-to-last rated station in the market. The result is NO RESULT. I’m a firm believer that you REALLY GET WHAT YOU PAY FOR in radio advertising.
Now that radio advertising rates have been explained, you may be wondering how long should I advertise? The type of radio advertisement helps determine the duration of the campaign. Event promotion? We recommend shorter and more compact timelines to generate before an event or launch. Product branding? Long-term schedules with a little breathing room often work best. Maybe even flying could work (during a fortnight, a fortnight’s holiday or whatever). In most cases, two things determine the duration of a radio advertising campaign, the advertiser’s goals (traffic numbers) and external factors such as sales cycles. Yes, and usually the budget affects the length of the campaign. It is not wanted, but it is the reality.
You might be thinking, “So if I want to get a spot on the top 3 radio stations in Houston, I’d have to pay $1,000 for an ad plus $3,000 a week per station…that’s $10,000 for one week of advertising!” It’s true, and it could be just what you need to reach several thousand potential customers. The real question is, “How much money can you make from a few thousand potential leads?” Is it more than $10,000 a week? $40,000 a month? These are questions to ask yourself because in the world of advertising, traffic is pretty good.
It works even better if you let a professional advertising agency reduce that cost even further. Let the agency create a great radio advertising schedule for you, offering an immediate discount ABOVE the lowest radio station price you have negotiated, with great added value.
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