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January 10, 2007

Can Radio Advertising Benefit Every Business?

You might think this is a self-serving question that will be followed by a self-serving answer, such as "Yes".

The answer is an unqualified "No". Radio advertising can't benefit EVERY business.

A better question is this: Is every business that could grow profitably with radio advertising currently using radio advertising?

And a great corollary question is: Is every business currently using radio advertising seeing the best results possible from its radio advertising budget?

The answer to both of these "better" questions is also "No". Hence this post.

The best way to find the answers we're looking for is (drumroll please)....

The best way is to test radio advertising. Yes, test radio advertising. It's the only way to know for sure whether radio advertising can provide your business with a way to acquire new customers profitably.

And if you are already advertising on radio, test another approach to radio advertising - one different than the current one, preferably with a different radio agency.

In some cases it doesn't make sense to test ideas out first because they are so expensive, and let's face it - nobody inside the organization dares be the champion of something that fails. Risk aversion at its purest. The imperfection of business reward systems.

But in this case, it's a failure of management not to test radio advertising. Why? Because the amount at risk of loss is so low and the potential reward is so high. Let me explain.

While there are costs associated with ad development, they are very minimal - hundreds of dollars not tens of thousands as with TV.

And while there is media cost involved, the testing dollars are minimal - thousands, not $25,000 or more. Further, with incremental testing, you don't have to commit $25,000 all at once behind a single ad -- so if initial tests are not promising, there is ample time to correct course before depleting a lot of money. There is a lot of flexibility in radio advertising.

And the last, and most important, reason why testing radio advertising is so low-risk is that even in the worst cases, there is always some revenue generated as a result of the test. This revenue offsets the other costs, further reducing the total cost. When you take this into account, and when you place the proper value to your business of what was learned from the testing, you can only conclude that it makes very good business sense to test radio advertising.

Radio advertising is perhaps the most underutlized advertising medium. Perhaps it's because you can't see something on the screen, or read the words in print.

But don't take my word for any of this - try radio advertising for yourself.

Posted by Brett Astor at 12:12 PM | Permalink