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May 02, 2008

You Like Your Radio Ad? Yeah, But...

Mark Ramsey is giving voice to an important perspective in radio advertising. It's important because it's overlooked, especially by the Clear Channel's of the world. But Mark's still missing something.

I talk a lot nowadays about the rise of accountability in advertising, even as radio remains obsessed by "reach," which rarely promises anything about effectiveness. By "accountability" I do not mean guaranteeing that as many ears hear advertiser messages as we promise. I do not mean more accuracy in counting those ears. I mean proof that our medium - like any other - leads to the outcome the advertiser usually wants: sales.

Yeah, you like the ad.

But that's not the point of the ad.

The point of the ad is to get new prospective customers to buy.

Actually it's more than that. If that's all it was, then Mark's post, and others like it, would be dead on. In reality, he's more right than most, but it's still not 100% correct.

The rest of the picture is ... profit.

Generating sales does not mean that you've generated profit. It means you've generated revenue. As we all know by now, Revenue - Costs = Profit. Businesses don't survive on revenue. They survive on profit. Therefore, businesses need to generate profits with the money they spend on radio advertising.

Translating this, it means that the radio advertising did more than drive sales, it drove enough sales to result in a profit.

We've written a LOT about this on our blog. In fact, we wrote a book about it, the subtitle of which is "The Way to Greater Profit with Measurable Radio Advertising". There was a reason for that.

Posted by Jeff Small & Brett Astor at 03:25 PM | Permalink