Just shy of a hundred years ago, a New York radio station aired the first paid radio advertisement for a local apartment complex, and with that commercial radio was born. At first, radio advertising was limited to commercial businesses sponsoring individual programs, with the classic “this program has been made possible by” book-ending the beginning and ending of each individual show. As the industry grew, large radio stations began experimenting with different formats and eventually landed on the format we know today – with blocks of advertisements coming at regular intervals throughout the programming.

But the pervasiveness of the internet has sent the traditional radio industry into another wave of transition, as they are forced to compete with newer models like satellite radio (SiriusXM) and streaming radio (Pandora, Spotify). The ways that businesses are using radio as part of their marketing strategy are shifting just as quickly.

Terrestrial Radio

Despite newer satellite and streaming radio options, terrestrial radio (another term for your standard AM/FM in-car radio) is still the leading media platform when it comes to reach. According to the 2016 Nielsen Audio Today and Pew State of the News Media 2015, 93% of people listen to terrestrial radio over the airwaves (which is higher than TV viewership at 85%, smartphone use at 74%, computer use at 50%, and tablet use at 29%), and most consumers are listening to terrestrial radio for more than 12 hours per week. Radio’s reach spans from millennials (92% are reached weekly), to Generation X (95% reached weekly), to Boomers (94% reached weekly).

Advertising on terrestrial radio is still an incredibly effective marketing strategy, especially for businesses who are targeting demographics that include commuters heading into or leaving work, such as retail stores or restaurants.

Satellite Radio

SiriusXM, the largest satellite radio available today, was the first disruptive competition to terrestrial radio. They began offering an ad-free listening experience for a flat monthly fee as early as 2001. Despite some rocky years, satellite radio continued to grow in popularity, due in large part to their partnerships with automakers and car dealers. As of April 2016, SiriusXM boasts a subscriber base of more than 30 million listeners.

Despite marketing themselves as being an ad-free listening experience, SiriusXM does have opportunities for advertising through live reads by A-list talent, segment sponsorship, and some standard :30 and :60 second advertising spots on channels that are non-satellite exclusive channels, such as Fox News, CNN and ESPN channels. Although these advertising spots are much more expensive, their reach is often worth the cost for the right business.

Streaming Radio

Sometimes called internet or digital radio, streaming radio is a type of radio that involves using an internet connection to listen to a continuous stream of audio that typically cannot be paused or replayed, much like terrestrial radio. It took streaming radio several years to work through their monetization options, but most streaming radio stations now offer an advertising-supported stream for free and a premium ad-free experience for a small monthly fee. Although streaming radio lets people take their premium radio with them wherever they go, thanks to smartphones and (most recently) data-connected vehicles, there is still the limitation of data caps and connection speeds which has prevented the streaming radio segment from overtaking terrestrial and satellite radio options.

As of 2015, Nielsen reported that 67% of all music listeners access streaming services at least once in a typical week. Although the reach isn’t as large as terrestrial or satellite, streaming radio offers advertising opportunities that are much more targeted. With streaming radio, you can narrow your advertising down to your specific demographic, such as males aged 25-35 who have an interest in going to the movies. This type of targeting makes advertising on streaming radio an attractive and effective form of marketing.

The Process

If you’re ready to dive into the world of radio advertising (after, of course, discussing your strategy with your marketing agency), here is the typical process you will go through.

• Decide on your messaging: The first step to a radio advertising campaign is to define your messaging. What are you trying to advertise? Is it an event? A new product or service offering? A sale? It’s good to write your script at this point, to keep your marketing focused as you move forward.
• Determine your demographic: What demographic will be the most likely to respond to your campaign?
• Identify the media: Over what type of radio (terrestrial, satellite or streaming) are you most likely to reach your target demographic?
• Select your station / targeting criteria: For terrestrial or satellite radio, which specific station will your demographic be tuned in to? During this phase, you should be looping in your potential stations to ask for listener data to confirm your assumptions about your demographic were correct. If you’ve chosen to advertise on streaming radio, what are the specific targeting criteria needed to reach your demographic? Gender, age, interests?
• Frequency and negotiation: Now that you’ve opened the lines of communication with your radio station, you can begin to select what type of advertising package you want – which includes how often your ad will run, over what time period, and during what times of the day. Although we recommend working with a agency for all of your marketing needs, it is crucial to leverage the power of an agency during this stage. As a marketing agency, we often have established relationships with representatives from each station, and can leverage this negotiate better pricing and packages on your behalf.
• Record audio: Make sure you choose a voice that will accurately represent your brand, and appeal to the demographic you are targeting. Your audio should be recorded at a professional studio so your voice talent is experienced, recorded clearly, and so you have the proper licensing for any music or sound effects.
• Provide to the station: Your audio studio should be able to prepare your commercial per the stations requirements, and hand it off to them directly.
• Review: Review how your campaign has performed and make any adjustments to your overall marketing plan as a result of the data you have collected.

Radio advertising can be an incredibly effective marketing tool, but it has to go hand-in-hand with the rest of your marketing strategy. If your radio ad is driving listeners to your website, for example, but your website is not user-friendly, responsive or doesn’t contain the same type of language the listener just heard on your ad, you won’t see nearly the returns from your ad that you should. If you’re thinking that radio advertising might be the right next step for your business, we can help you plan and execute a campaign that is right for your needs.