Why advertise on TKO?

For every EURO you invest, you can get 8, 10, 20 euro BACK

“On average radio advertisers get their money back 7.7 times over”

“Reallocating ad budgets to radio gives significantly higher returns

“It is coverage rather than frequency which boosts radio ROI

“Radio accounts for 25% of all daily media consumption

Radio enhances other media campaigns”

“Advertisers achieve very high levels of “share of mind””

“Radio speaks to listeners at key activity moments across the day”

“Radio offers the best results in terms of ad avoidance

HOW RADIO IS PROVEN TO INCREASE SALES FOR ADVERTISERS

In a world first, a study was conducted by independent analysts to address the question of the value of radio advertising and, more importantly, the return that advertisers get from their investment.

The results are based on an analysis conducted by Holmes & Cook of confidential ROI data supplied by nine econometrics agencies representing all major media agency groups, covering over 2,000 individual media campaigns across 517 separate advertising campaigns. The campaigns covered ten major sectors, and used a variety of multimedia combinations. All data were supplied direct by the agencies, and unbranded to preserve client confidentiality.

First-ever analysis of confidential cross-agency data reveals radio’s true return on investment (ROI):

  • Brands using radio get their money back nearly eight times over on average, and in many sectors, radio offers the best ROI of any media
  • For radio campaign planners, maximising weekly coverage rather than frequency delivers significantly stronger ROI
  • The brands which have the highest radio ROI use commercials which stand out, fit well with the brand and communicate information clearly
  • Using more radio boosts overall campaign ROI: if existing budgets are reallocated from other media to give radio a 20% share of spend, overall campaign ROI increases by 8%
  • For the Top 100 radio advertisers, this is equivalent to recouping over £1.4bn in untapped return on their advertising investment

The implications of this study are evident: advertisers can significantly boost their campaign ROI by:

  • increasing share of spend on radio to around 20%, subject to media mix
  • maximising radio weekly audience coverage (rather than optimizing frequency)
  • leveraging effective creative components (stand-out; brand-fit; clarity) within radio executions

Key Points:

  • On average radio advertisers get their money back 7.7 times over
  • Brands which reallocate more of their ad budgets to radio see significantly higher returns
  • It is coverage rather than frequency which boosts radio ROI

To summarise, investing in advertising on radio, on a station that has the best coverage, is a guaranteed revenue generator for businesses.

BACKGROUND

Radio has established itself as an effective advertising medium in most countries of world, and the RAB (Radio Advertising Bureau) of the UK holds over 600 case studies demonstrating this. Radio’s strengths mainly lie in the way it is consumed:

  • people listen for long periods – radio accounts for 25% of all daily media consumption time, according to IPA TouchPoints
  • in tandem with the high share of voice that radio offers compared to other media this allows advertisers to achieve very high levels of “share of mind” compared to their rivals
  • radio allows advertisers to speak to listeners at key activity moments across the day – during the school run, food preparation, commuting etc.
  • radio offers the best results in terms of ad avoidance, as radio advertising is delivered within a format that prevents the phenomenon better than any other medium, with the exception of cinema.

It seems to be this unique consumption pattern that, when underpinned with the important emotional support role radio plays in people’s lives, gives radio the “multiplier effect” which has been demonstrated many times in the RAB’s major studies, notably:

  • how radio boosts the effect of TV advertising (The Awareness Multiplier, 2000)
  • radio’s ability to drive FMCG sales (The Sales Multiplier, 2003)
  • how radio boosts brand browsing online (The Online Multiplier, 2010)
  • how radio’s emotional component enhances ad effectiveness (The Emotional Multiplier, 2011)

Recently however there has been a dramatic change in the media effectiveness information available to advertisers. An ever increasing need to justify media investment is leading to marketing activity being analysed in far more detail than ever before, particularly in terms of identifying cause and effect. As a result, all the major agency groups now have econometrics specialists, and the effects of individual media within the media mix are being continually measured – albeit in confidence, and using slightly different modelling approaches in each agency.

WHAT DOES IT MEAN?

All of that might seem very confusing, we could say “That was the science bit”, but the most important question is what does it mean for the advertisers?

On average radio advertisers get their money back 7.7 times over, although some categories show exceptional performance, notably automotive and retailer brands, as well as impulse products. The top performing category is retail, with an average ROI of almost £20 for each pound spent on radio advertising. This makes radio the medium with the second-highest return on investment (TV is first), out-performing press, outdoor and online.

It is worth remembering that the results of this research are represented by an independent body, reinforcing the knowledge and opinion shared already by advertisers who have already tapped into this revenue generating medium, the fact that radio really does work, and the return on investment speaks for itself.

PLANNING AND DELIVERY

In terms of media planning, it is coverage rather than frequency which boosts radio ROI – there is a strong statistical link between these.

Perhaps most importantly, this meta-regression analysis allows us to assess the “multiplier effect” which different levels of radio spend have on overall campaign effectiveness. This reveals that brands which reallocate more of their ad budgets to radio see significantly higher returns in terms of overall campaign ROI.

Currently radio carries 6% of all advertising budgets, but this study demonstrates that if budgets were reallocated to give radio a 20% share of total spend – with no increase in overall expenditure – the total campaign ROI raises by over 8%.

For the top 100 radio advertisers, this is equivalent to recouping over £1.4bn additional return on their investment.

By increasing the share of budget allocation to radio, traditional campaigns such as newspaper advertising are enhanced, showing how all mediums can work together to enhance the overall mix.

The conclusions of the study are clear: radio is currently underinvested in by advertisers.

The Radio ROI Dataset highlights a distinct imbalance between ROI delivery and level of investment by medium – as the chart below demonstrates, radio receives the lowest share of media budgets yet achieves the second highest ROI.

At a wider level, radio is demonstrated to deliver significant improvement in overall campaign ROI when used optimally. To exploit this effect fully and unlock significant gains in untapped revenue, advertisers should consider:

  • increasing share of spend on radio to around 20%, subject to media mix
  • maximising radio weekly audience coverage (rather than optimising frequency)
  • leveraging effective creative components (stand-out; brand-fit; clarity) within radio executions

Implications for more effective econometric analysis of radio activity

This study highlights how understanding radio campaign delivery is an important variable in optimising radio ROI, yet detailed data about campaign weights doesn’t always bridge the gap between buyer and econometrician.

BEST PRACTICE INSIGHT FOR RADIO CREATIVITY

Having established the effect of media planning practises the next stage of the analysis looked for correlations between high ROIs and creative characteristics.

The three factors which characterise strong sales uplift in this study are:

  • standout (the advertising is distinctive from other brands)
  • brand fit (the advertising fits with the brand’s character and wider advertising campaign)
  • clarity (the advertising message is simply expressed and comprehensible)

These indicators harmonise very clearly with historical analysis of effective creativity: the Awareness Multiplier Study singled out engagement and brand linkage as key requirements for powerful creative, the Sales Multiplier Study highlighted simplicity, synergy with other media and audio branding devices, the Online Multiplier Study recommended good brand linkage & simplicity, but also clear web direction for online follow-up, ’Turning Art into Science’ emphasised the consistent use of audio brand cues within different radio executions and across media.

TO CONCLUDE

Radio advertising WORKS, but it is an untapped medium that can bring greater returns than any other available advertising medium available.

But, effective delivery is crucial. Adverts should be brief and concise and provide the key points of information that support the marketing mix and other advertising campaigns. Radio can enhance and lead the overall advertising strategy for a business, and can deliver results, either as part of the marketing mix, or as a standalone medium.