Ακροαματικότητα Ραδιοφώνου & Ραδιοφωνικών Σταθμών στο Ν. Αττικής 10/01/2022 – 06/03/202224/03/2022
Radio: The ROI Multiplier
THE MAIN HEADLINES
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
In a world first, this study evaluates radio advertising effectiveness in detail in terms of revenue return on investment (ROI) across a broad dataset. 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 multi- media combinations. All data were supplied direct by the agencies, and unbranded to preserve client confidentiality.
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. This makes radio the medium with the second-highest return on investment (TV is first), out-performing press, outdoor and online.
When the creative analysis from radioGAUGE studies is included, we see that the radio campaigns most likely to out-perform the average are those which have standout, present their message clearly and are seen to fit well with the brand. 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.
BACKGROUND & OBJECTIVES
Radio has established itself as an effective advertising medium in the UK, and the Radiocentre 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.
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 Radiocentre’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.
ABOUT THE STUDY
- What return on investment does radio deliver for advertisers, how does this compare to other media, and how does it vary by sector?
- What characterises the campaigns with the best ROI levels in terms of laydown and creative approach?
- How do different levels of radio spend affect the ROI for radio, and for the overall campaign ROI?
To meet these objectives we needed data which would:
- allow detailed analysis of the role played by radio in the media mix in terms of ROI
- identify the creative characteristics of the most effective campaigns
- give indications of the most effective ways to deploy media spend
An initial consultation revealed a major challenge to these goals – no single econometrics agency held enough data about radio campaigns to tolerate this depth of analysis. The ground-breaking solution we developed was to pool all available radio-related ROI data held by the main agency groups to allow detailed central analysis to be conducted and underlying patterns revealed. There were two main stages to the study in order to ensure that it delivered against these requirements.
- A. REVENUE RETURN ON INVESTMENT FOR RADIO ADVERTISERS
- B. VARIATION BY SECTOR
- C. HOW SECTOR AVERAGES VARY ACROSS MEDIA
- D. BEST PRACTICE INSIGHT FOR RADIO PLANNING
- E. BEST PRACTICE INSIGHT FOR RADIO CREATIVITY
- F. HOW INCREASING RADIO’S SHARE CAN IMPROVE TOTAL CAMPAIGN ROI
IMPLICATIONS FOR ADVERTISERS
The conclusions of this 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 – 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.
In consultation with our partner agencies in this project, the Radiocentre and J-ET are working to develop a campaign outputs report to feed into econometric analysis which buyers will be able to share at the press of a button.
It is anticipated that this will be launched early in 2014 and incorporate information along the following lines:
- Data supplied at an individual brand level
- Weekly GRPs/coverage/frequency by brand across each calendar year
- Split by day of week and time of day
- Provided in Excel format
Source: Radio: The ROI Multiplier - Radiocentre