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February 23, 2007

How Poor Radio Commercials Increase Radio Advertising Costs

We get many visitors to our web site who are interested in learning more about radio advertising costs. As we've maintained, however, a perspective centered on radio advertising costs is misguided. I invite you to consider a different perspective.

There are two points I want to make today.

The first is that your radio advertising efforts are intended to result in a profit. They are not intended to minimize costs. The formula for profit is revenue minus costs (R-C=P).

To maximize your radio advertising profit, you must generate as much revenue for a given media spend. How do you do this?

You put the right message in front of the right people at the right place and time for the right cost.

Notice that radio advertising cost is only one element out of many required for success in direct response radio advertising. Don't get me wrong, it's very important. But the key lies in taking the right perspective. A "radio advertising profit" perspective, not a "radio advertising cost" perspective.

The second point I want to make has two parts. Part A is that your radio commercial will have a huge impact on generating the maximum revenue for your given media spend. If you get this part right, your cost per lead (CPL) will be lower, and since that is the "top of the funnel", it has an impact on everything that follows - conversion, average revenue per order, and ultimately CPO or customer acquisition cost.

Part B is that creating an excellent direct response radio commercial is very challenging. In a recent post we discussed the field of linguistics and the idea of framing. To further illustrate the complexity of human psychology and how this relates to creating radio commercials, I encourage you to check out the article by Sharon Begley in Today's Wall Street Journal (Marketplace section) titled "Studies Take Measure of How Stereotyping Alters Performance". The article discusses several studies on stereotyping and the impact of stereotyping on performance. However, if you read closely you'll see how the researchers used framing in the design of their studies on stereotyping.

The results demonstrate just how complex human psychology is. In one study, 90% of subjects said that the instructions didn't influence their performance on a task. Yet the study results revealed that the use of framing did in fact influence subjects' behavior. Think about this. 90% of people couldn't tell that they were being significantly influenced by some simple verbal instructions. "It has an effect on an unconscious level" said one professor involved in the research.

So in radio advertising, and in creating radio commercials, we're not just working with what's on the surface. What we are doing is working on an unconscious level.

It is for this very reason that we take such a scientific approach to building direct response radio advertising campaigns. Sure, it's messy and difficult to control for every possible variable. But the alternative - a haphazard approach based on personal opinions - is worse.

And it's for this reason, plus many others, that we advocate a wider perspective on successful direct response radio advertising than simply focusing on radio advertising costs.

Instead of a focus on radio advertising costs, we advocate looking at the whole picture. Remember the goal is to have your radio advertising efforts result in a profit for your business. That means getting the most for each dollar spent. "R-C=P".

Category(s): creative
Posted by Brett Astor at 10:35 AM | Permalink