354,000 Reasons to Take Advantage of Direct Response Radio Advertising
We dig TV advertising as much as the next guy. But geez...
The average 30-second TV ad rose 9% to $354,000, reports Response Magazine. That's before media costs. And before knowing if the ad will work - and, if so, how well.
Can you imagine paying that much money for a TV ad...before you even know that it'll work - that it'll grow your business profitably?
Neither can we. Yet it happens all the time. That's the world of "brand advertising." Our hats are off to the brand advertising agencies that somehow are able to sell their clients on spending tons of money to create ads without being accountable for any sort of measurable results. Clearly the best sales pitch is happening in the room when that decision happens. Of course, that's not necessarily true of the ads that get created afterwards.
To put this in context, consider the following. Production costs for a radio ad are rarely more than $1,000. Further, we can test multiple ads (messages) across multiple audiences and yield the optimal message/targeting combination...for less than $30,000. That includes all ad development costs and media dollars.
And we put our money where our mouth is: if, after testing, we haven't created a profitable advertising campaign for our clients, we've lost money alongside them. That's a risk that most (if not all) TV agencies are simply not willing to take.
What this means is that for less than $30k, you've got a nationwide radio advertising campaign that is ready to start delivering a large number of profitable new customers to your door (or website) - in a demonstrably measurable way, week-in and week-out, for years to come. And it'll build your brand in the most powerful and lasting way - by directly driving customer engagement with the brand.
But if you prefer, we can create one heck of an out-of-the-box radio ad and charge you, say, $100,000 for it. We'll come to your offices and pitch you on how awesome it'll be and how much we think your customers will love it. Then we'll all go out and party together and have a great time. And when we air the campaign we won't measure results, so your boss and/or shareholders won't be able to prove that your decision was a poor one!
Or, you could give accountable radio advertising a try. You could have an expert team create the right message and target the right customers for your business. Then you could see just how well radio works for you, and save that $354,000 for a down payment on a corporate jet.
How Smartphones are Boosting Direct Response Radio Results
Smartphones are everywhere, yet none to date have a radio receiver embedded in them. This has led some to assert that radio is a thing of the past. Yet, once again radio is proving remarkably adaptable and resilient.
Terrestrial (traditional) radio has not only endured but thrived for over 100 years, even through the arrival of television, the personal computer and the internet. Today, 92% of the U.S. population over twelve listens to radio every week (Arbitron Radio Today 2012). And with the growing use of smartphones, terrestrial, streaming and satellite radio are poised to become more ubiquitous and therefore an even more powerful customer acquisition tool for direct response radio advertisers.
Advertisers in any medium are challenged to prevail over the distractions consumers face. Smartphones are making it easier for radio advertisers to cut through these distractions. In fact, thanks to smartphone technology, never in the history of direct response radio advertising has it been easier for listeners to respond to your ad. Long gone are the days when a phone number is hastily written down on dirty napkin in the car with the hope it might find it's way into the listener's home.
Now when you persuade the listener to engage, voice recognition like Siri and Dragon Dictation make it more convenient than ever to capture critical information like phone numbers and URLs. If you're running a great promotion and are relying on codes for tracking purposes, accessing the internet via your smartphone makes it quicker and smoother than ever for your customers to participate. When your radio ad does what it can and should do - stimulate, entice and inspire customers to respond - smartphones help advertisers close the attention gap, and more importantly, drive response and close a sale.
It's easy to see how smartphones are helping direct response radio advertisers, but why isn't AM/FM radio a feature of your phone? We recently pointed out in our radio advertising article for Electronic Retailer Magazine, penetration of smartphones in the United States passed 50 percent in 2012 and none of them offered terrestrial radio. This will soon change. Sprint's recent press release disclosed Android and Windows phone devices will come equipped with NextRadio FM tuners.
By the end of 2013, 80% of the world's population will be using a mobile phone. Add to this that in 2012 Neilson Mobile Insights' reported that smartphones account for 50% of all mobile phones in the U.S. By 2016, less than three years away, smartphones will account for close to 70% of all cell phone sales world-wide. Now that traditional radio will join streaming radio options such as Pandora and Spotify on your smartphone, there has never been a better time to take advantage of direct response radio advertising.
This One Thing Costs Radio Advertisers Their Success
What is the one thing that most surely costs radio advertisers their success? In a word: complexity.
"Simplicity does not mean removing features, benefits, or services from your product. It means distilling what's most important about those features, and explaining them in the fewest words possible."
The quote above is from an article by Jeff Hoffman over at Inc Magazine. His article brings to light how and why this notion of simplicity applies beyond the radio advertising world to all businesses. In his article he points out that "your customers are constantly being bombarded with new information." This has always felt like a very true statement - because it has been true for so long, probably since the printing press was invented. But today we have multiples more opportunities to ingest information and the acceleration of "information proliferation" hasn't shown signs of slowing down.
At times while reading Mr. Hoffman's article I felt like he was writing the job description of a direct response radio advertising copywriter. Here is one example:
"One of the most valuable skills in the world is the ability to explain complex concepts in simple, easy-to-understand terms. Writing lots of words is easy. Making your point with an absolute minimum number of words is really hard. Yet it is so much more effective."
As most readers of this blog by now know, we write and produce 60 and 30 second radio ads for direct response radio advertising campaigns. So, basically, we're held accountable for generating profitable sales for our clients in just 30 or 60 seconds of audio. It's high-stakes audio persuasion.
"Imagine you had a quick minute to tell a potential customer why he should do business with you. Because in today's world, that's all you have anyway."
We've actually tested - live and on the air - different ads for the same product, but one with more details than another. What have we found? Complexity kills response. We have our theories on why, but the bottom line is clear consistent: to grow your profits using direct response radio advertising - keep it simple.
Radio Advertising Costs in Perspective
The cost of radio advertising is one of the topics we get the most questions about. On the surface it seems like a simple question: "How much does it cost to advertise on the radio?" However, it's actually a difficult question to answer. Here's why: it's the wrong question. Let me explain.
First of all, there are as many different answers to that question as there are days, dayparts and radio stations in the country (that's days times dayparts times radio stations - so there are tens of thousands of possible answers). Each media buy is different, based on multiple factors including the size of the station audience as well as the supply and demand for each day, daypart and station.
So, one way to answer the question of radio ad rates is to tell you how much it costs to air one spot on a particular radio station in, say, Los Angeles, on a Tuesday at between 9am and 3pm. But the radio ad costs on that radio station would be vastly different - much more - than advertising on a station in Austin, Texas or Buffalo, New York.
And that's just for one airing of one radio spot. How many radio airings of your radio ad would you like? Over what period of time?
By now you can see that there are number of factors that go into answering the question of how much it costs to advertise on the radio. From a very simple perspective, these inputs need to be provided before an answer can be given.
However for direct response radio advertising, we take a different perspective from even this. We look at advertising cost more like an investment- that is not some marketing-sales-speak. We look at it that way because in direct response radio advertising, that "cost" is accountable for a return, or an ROI (return on investment). For example, if a client invests $10,000 in radio advertising over a one week period of time, that $10,000 is accountable for a return on that investment that meets or exceeds the clients' profitability hurdle. This is measured in new customers generated, a cost per lead metric, orders, or revenues.
So, when someone asks "how much does it cost to advertise on the radio?" or, "how much will my radio commercial cost?" we could say it depends on how many leads you want to generate, how much revenue you want to generate, etc. We would arrive at a radio advertising spend (investment) based on the kind of business results you want to see. And that's why we LOVE direct response radio advertising so much!
The Truth About Radio Advertising Awards
Larry Julius over at Portland Radio Group recently penned a blog post about the 2012 Radio Mercury Awards winners. He points out that all of the winners had one thing in common - they told a story. His post goes on to assert that if only every ad would use story to "cement relevant facts into the receptive mind of the listener", it would be a "great" radio commercial.
Hold on a second.
First of all - yes, we all love stories. But great radio ads need to do more than stories do. Stories entertain. They don't necessarily sell. And any definition of a "great radio commercial" that does not include "it sells" or some variation (like, "it grows the clients' business, demonstrably") is not a complete definition.
We'd all love to make funny, artsy ads. My favorites are the Dos Equis ads. Hilarious. Brilliant writing. But I haven't purchased a Dos Equis beer in at least 5 years. Despite having listened to those ads probably ten times more than the average consumer. During that same five year period.
My second point is this: awards reward things that clients don't necessarily benefit from. Awards are for advertising agencies. Not clients. They say literally nothing about how well that ad agency can sell something for a client. Telling an entertaining story is nice, and fun. But it does not necessarily sell, and most frequently it doesn't.
How do I know this? Because in overseeing well in excess of six thousand radio advertising tests, I've learned a thing or two about what sells in radio ads. And what doesn't. So, this isn't my opinion. It isn't my preference either - I'd rather make Dos Equis ads. But it is the truth.
Yes, storytelling can sell, but only if done in a certain way. And even then it most often plays no more than a 50% role in the success of a radio ad. At Strategic Media we call it the context of the ad, in contrast to the content. The context of the ad is meant to grab attention, to establish a level of interest that lures in the listener's attention. Even though I am speaking of it as separate from the content, context and content are inseparable. In great radio ads they work together to both capture & hold attention while delivering content that compels the listener to take action.
The 3 ads that Portland Radio Group references in their post as exemplary are, frankly, dead on arrival when it comes to creating successful radio advertising campaigns. Let's take the HBO ad (2nd one down). It does three things simultaneously that kill its potential. First the voiceover takes a monotone approach that fails to convey "you must listen to this - it's important". Is it funny? In a backwards way, yes. But in the process of being quasi-funny, it fails to grab and hold attention. Next, he overwhelms the listener with information, much of which is completely unfamiliar to the average listener. Third, there is no compelling reason why I should take any action upon hearing this ad - even if I were able follow the onslaught of information (because I happened to hear it while sitting in a dark cave with no other competition for my attention, which would be the requisite situation). I would venture a bet that HBO sold nearly nothing from airing this ad - assuming the ad ever even made it on the air or was even made with he intention of selling HBO's product rather than winning the agency an award.
Radio advertising awards are best understood for what they are. They are marketing tools for agencies and the radio media industry. But since they don't conduct the kind of testing we have over the last 13 years, they don't actually know what works and what doesn't when it comes to creating excellent radio commercials. In our opinion, the only radio advertising awards that matter are the ones that win our clients new customers, profitably.
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Predictably Irrational: The Hidden Forces that Shape Our Decisions, Dan Ariely
Outliers: The Story of Success, Malcolm Gladwell
Made to Stick, Heath & Heath
The Power of Persuasion, Robert Levine
Influence: Science & Practice, Cialdini
Words That Work, Frank Lutz
My Life in Advertising and Scientific Advertising, Claude C. Hopkins
Or Your Money Back, Alvin Eicoff
Being Direct, Lester Wunderman