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September 21, 2007

Mystery Solved! Why Radio Advertising Doesn't Work for You

Jeff was reading Ad Age recently and came across an article by Doug Zanger relating to radio advertising. The article is about how radio ads need to be entertaining.

Now pay close attention because this is a very exciting moment.

What we have found here in Mr. Zanger's article is a very concrete example - specific evidence - for why we so often hear businesspeople say "We tried radio. It didn't work for us."

Yes, proof. Let's look at what Mr. Zanger writes:

"We all need to be informed, but I would guess that the vast majority of us prefer to be entertained first. Which is why advertising in general -- and radio in particular -- strives to entertain."

This is straight up false. Radio as a medium may should to entertain but radio ads shouldn't necessarily do so. We've tested over one thousand different radio ads. Many times we've been asked to test a "humor" approach. Entertainment - in terms of funny or silly - simply doesn't sell. Could it? Maybe, but at it's best, it does not drive sales as well as other approaches (see our article on this topic).

"You're trying to get a lot of information across in 30 seconds without benefit of sight gags and visual shortcuts."

Okay, small point here, but everyone except Clear Channel knows that 30 second spots are less than half as effective as 60 second spots even though Clear Channel stations charge more than half as much. As an agency for radio advertisers, we have do the math. We sort of think a writer for Ad Age should, too.

"Bud Light's "Real Men of Genius" is that seminal idea that permeates through the industry and makes a real difference. I know plenty of fans of the campaign and there's a reason it does so well during awards season. ... Does it sell more beer? I have no idea. What I do know is that this may go down as the best campaign in the history of radio."

Wow. Now, we're taking deep breaths here. It strikes us as self evident that if you are trying to entertain, you will get fans and awards. But to dismiss the question of whether the ad has to sell more beer is downright ... offensive. It's bass ackwards.

Clearly Mr. Zanger has never bet many thousands of his own dollars that an entertaining ad will sell his product.

We guarantee you that shareholders of Anheuser-Busch would give up the laughs for a higher stock price. Guarantee it.

So of course this misguided missive got us wondering - who is this guy Zanger? What is his background? Well, we found out here and ... now it all makes sense. He's actually with Entercom Portland, which turns out to be a radio ownership group.

"Entercom is short for "entertainment communications." Based in Philadelphia, our main focus is radio (117 stations in 24 markets)..."

First of all, the name betrays a bias in itself. Beyond that, this perspective is consistent with what we've seen from the entire radio industry. It is in fact their biggest mistake, oversight and misunderstanding. It is the reason, and we're dead serious about this, that the radio industry as a whole has seen flat revenue for years.

What is this perspective? The dissemination of the idea that radio ads should entertain comes from radio industry's belief that the only thing that matters is audience size. The more listeners they get, the more they can charge for their airtime inventory. What would have the biggest influence on audience size? Keeping listeners from changing the station. And why does the radio industry think people change the station? Because the commercials don't entertain.

There are at least two very BIG mistakes in this line of thinking. They are:

1. Believing audience size is the only thing that matters. It does matter, but not to the exclusion of audience quality. That is, radio is only good to advertisers if it aggregates a homogenous group of people because that increases the advertisers' ability to reach them efficiently. You could have a smaller audience that buys a lot of my product and I'll pay you just as much as a 50% larger audience that buys half as much on a per X basis.

2. Believing the radio industry would make more money if commercials would entertain. Flat out false. Radio industry revenues and profits would grow if advertisers sold more as a result of radio advertising. If advertisers make entertaining ads, that might increase radio audience. If that increases radio ad rates it'll push all advertisers away from radio. Do you see how entertaining ads are a double hit to the radio industry? When advertisers face ads that don't sell and rates that go up they will stop advertising on radio.

It is the radio industry's responsibility to entertain - and if they do a good job at it, people will stay on through the commercials.

Now, businesspeople will read a respected publication like Ad Age and they'll think that radio ads should be entertaining. General ad agencies will point to the article to back up their confident assertion of the same. Hidden from view is the fact that these general agencies make significantly more money at is TV and print so if radio fails they're not too disappointed. The loser is the client, who having lost his or her shirt on testing radio will leave and forever say "we tried radio and it doesn't work". Then they'll pay their agency lots of money to go after entertaining people with TV ads.

Of course, the other loser is the radio industry.

Who's the winner? Radio advertisers who hold their ads accountable for producing measurable, profitable results. You see, we only pay the radio stations what it's worth to advertise on them, regardless of the audience size or the requested rates. How can we do that? Because we know what works, with whom, and where - and we know how much to pay for the airtime.

Posted by Jeff Small & Brett Astor at 06:00 PM | Permalink