So….you’re thinking of advertising on Radio….
A friend with a single location clothing store reached out to me as she had been approached about buying advertising on a radio station. I took a bit of time and crafted some guidelines / suggestions to help her decide if it was right for her business. After doing so, I thought I would take what I sent her and share it as an article.
Before considering radio (or any advertising for that matter), set a budget. This may sound obvious but you would be amazed the number of small businesses that track their spending, but don’t actually consider how much to commit to advertising. Here’s a good rule of thumb;
Budget 2% — 4% of gross sales. A new business may hit 6% as there is signage and other one-time capital costs to include. This translates to between $2,000 and $4,000 per $100k in annual sales. If your gross sales are $500,000, your budget (which should include contributions to BIA’s, business cards and often even promotional discounts) should not exceed $10,000 — $20,000 annually or $850 — $1,700 per month.
An effective way to determine how your ad buy in one medium compares with another is by CPM (Cost Per Thousand). You can ask your rep to provide a potential reach (audience) per week then calculate the CPM.
Example, if your schedule will reach 200,000 per week that’s 200 x 1,000. If your weekly schedule has a cost of $500 per week then you can divide the number of thousands of people you will reach (200 as per the earlier example) into the cost per week = in this case $500 / 200 (thousands reached) = $2.50 CPM.
$2.50 is a very low CPM. Radio often promotes themselves as being very cost effective when compared to other media but they do that by using their total reach. Unfortunately, a lot of the reach is wasted; they live well outside your trading area, they are the wrong demographic or gender etc. A more accurate way of comparing is to actually determine the primary target of your business (example women 25–64). Have the rep provide you with the reach against that demo, then recalculate accordingly. In the earlier example, we calculated the CPM based on all people reached 200,000 (200 thousands) while women 25–64 may only represent 60,000 people (60 Thousands), Now you can divide your investment per week ($500) by the number thousands of women 25–64 you reach (60) and your CPM goes up to $8.33.
Another thing to consider when looking at radio advertising is “Frequency”. Most radio reps will talk a lot about “you need to buy more spots to get your frequency up”. While this is true, the amount of frequency (or more your ability to build frequency with the audience) will vary depending upon the stations format. i.e. an all news format where people are tuning in for “quick hits” to get a traffic report or a news update will in fact require more spots to build frequency because the time they spent listening is low. In the case of talk radio and easy listening stations that people leave on throughout the day, you can achieve frequency with fewer commercials.
Another way to build frequency is to narrow the times where your ads run. An example would be to only buy commercials between 3p and 6p (commonly known as afternoon drive). By doing this, you will shorten the time between your commercials playing which will allow you to build frequency more efficiently. The downside is you will only build frequency against the audience that listens at that time. Your rep can look at their listener-ship and determine when they listen and possibly recommend a time of day where you will have a better chance of reaching your primary customer demographic (women 25–64).
Even more important than the number of commercials you buy and where you air them is the Creative. It only takes 1 ad to get a response. The right ad can get people to respond while the wrong ad will never work. Some tips for doing radio creative are;
1) Be clear with the name and type of your business. Offer that information at the beginning, middle and end of the ad. You would be surprised how many ads get produced where I find myself going “who was that ad for?”
2) If possible, have a call to action. “Come in today” — “Book a consultation” — “Mention me, Tracey, when you come in and I’ll give you a free tips of the trade booklet”. These are as much ads as they are invitations, so be sure to extend the invitation!
3) If you can make the call to action have an expiry date — “sale ends Friday”, this helps as well. Create a sense of urgency.
4) Only try and be funny or create a “conversational” script if you can get the talent to pull it off. So many stations will fall back on “two girlfriends talking at a coffee shop” and while the script seems good, without the right talent it will sound contrived and amateur. Often, a straight forward, sincere read is best.
5) 60’s over 30’s. People think a 60 second commercial is twice the price of a 30 second commercial and this is not normally the case. You can often buy a 60 second commercial for 25% above the price of a 30 — but get twice the amount of time to talk to the audience. With a 60, you can tell more of a story, slow the pace of the ad and really try and connect with the audience. I recommend fewer 60 second ads over more 30 second ads. Take your time and explain why people should do business with you. What is YOUR unique selling proposition (USP)
6) As much of a stations reach is outside your immediate trading area, you could consider making a unique offer to distant shoppers. “We’re so sure that a visit to our store will be worth the drive that if you come and spend $50, we’ll pay your gas with a $10 gas card from Shell”. A bit risky but it’s a unique offering and may allow you to convert new, distant customers. More importantly, you can ask them to show their drivers licence to prove they are from out of town which will give you a way to measure response.
7) Refer to your website and more important, keep your website up to date. Place any offers from your ads right on the front page.
Lastly, ask for more and offer less $ than they are asking for.
On the “ask for more front”, stations are always looking for giveaways, things for the street team to hand out, prizes for the afternoon drive host to give away etc. This is a way to get your business mentioned more for very little cost. Always ask for promotional opportunities and free spots (even in the all night show).
On the “offer less $” front, radio is a very competitive medium and the reps need to make sales. Offer to commit to a longer term if the rate is lowered or just feel free to say “I’d be happy to move forward but my budget only allows me to commit this much”. I‘d be willing to bet you the rep will either take what you offer or will split the difference.
If you commit to a longer term, check the fine print on cancellation policy. Typically it’s 2 weeks notice but make sure you have that in writing somewhere.
