Could Radio Ads Influence Investor Behavior?

Written By

SMI Staff

Published On

Tuesday, Jul 23
Table at business meeting covered with papers and devices

The goal of direct response advertising is to motivate consumers to act. Metrics like cost per lead and cost per acquisition measure the effectiveness of an ad at achieving that goal. Yet, advertising’s effects are more wide-ranging and complex than even the most multi-faceted direct response analysis can measure, because those effects are sometimes indirect. 

Researchers have found that advertising not only influences consumer behavior, but also investor behavior. In fact, commercials can impact investor behavior enough to create a noticeable boost in trading activity in the advertiser’s stock.

The Wall Street Journal reports that, in the 15 minutes after a commercial aired, “investors seek out financial information about the advertiser, leading to a 3% increase in queries to the Securities and Exchange Commission’s Edgar database of company filings and an 8% uptick in Google searches.” When this increase in online searches for a particular brand occurred, researchers noted a slight boost in trading activity in the company’s stock the next day. According to their calculations, each $1 spent on TV advertising can generate 40 cents of trading activity.

Although the effects of radio ads on stock trading have not been studied, based on what we already know about radio’s ROAS (return on ad spend) and its potential to influence Google search inquiries, this study suggests that radio ads may produce similar results to those generated by television ads.

As the indirect benefits of advertising continue to be explored, direct response offers a straightforward means to evaluate the effectiveness of your ads. To find out how your brand can produce quantifiable results through audio channels, contact SMI today.

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