Advertising on radio, according to a study by Nielsen, can return up to $23.00 for every $1.00 invested. "The implications of results like these are profound for the communications and advertising industries," said Doug Schoen in Forbes Magazine, "and as a marketing professional with over 35 years of experience, I found this data nothing short of fascinating. It’s quite clear that we should all be paying more attention to radio, its reach and potential to help our businesses. It’s doing the job with expert efficiency."
For a Maine small business owner to replicate the same eye-popping ROIs described in the Nielsen study requires selecting the right Portland radio stations to advertise on. With more than 20 stations to choose from and with limited budgets, how does the business owner decide? (Hint: There's a good chance the right stations don't include the favorite station of the owner).
Step 1: Articulate A Marketing Objective
According to the Small Business Guide For Effective Radio Advertising, before a business owner can choose the radio stations to use, a marketing objective must be selected for the campaign. To be effective, every campaign should have just one objective that relates to one of the business’s major priorities.
The objective chosen will determine not only the radio station selection but also the length of the campaign, and content of the commercial. Fortuantely for the business owner, there are only two types of marketing objectives to choose from:
1. Branding objectives are used when you want your target consumer to believe something about your product or service. An example of a branding objective could be: Get working mothers to believe that my daycare service is the safest place in town to entrust their children.
2. Promotion objectives are used when you want your target consumer to take specific action. An example of a promotion objective could be: Get people who maintain their own cars to buy 3 quarts of motor oil at my store this weekend.
Marketing objectives should include a singular, well-articulated target consumer. Using gender and age alone are too broad to be effective targets. Instead, it is imperative to target the consumer by lifestyle. Some examples could be:
- Working Moms
- Shoppers With Home Depot Cards
- People Who Plan To Retire In 5 Years
- Under-employed, College Graduates
Selecting a very specific target will be critical for choosing the right Portland radio stations to advertise on.
Step 2: Choosing Quality Not Quantity
The cost of advertising on a radio station is generally proportional to the number of listeners it has. The most listened to station in Portland, therefore, is usually the most expensive on which to advertise. When advertising on a budget, however, the station with the greatest quantity of listeners may not be the best value for a small business's marketing dollars because the owner will pay for every person who hears a commercial...even those listeners who may not be the ideal target consumers for the advertised product or service. In many cases, smaller, less-expensive radio stations may be more likely to reach the target customers being sought than the larger, more expensive stations.
For instance, an owner of an upscale furniture store might want to target consumers who earn $100,000 per year and are planning to buy furniture in the next 6 months. In Portland, for instance, this target audience might represent only 3.7% of the total population. When choosing a radio station on which to advertise, therefore, this budget-minded furniture store owner would not want just the station with the most listeners, she would want a station that was composed of at least 3.7% of listeners who earned $100,000 per year and plan to buy furniture in the next 6 months. Certainly, the greater a station's audience comprises the retailer's target audience, the greater advertising value it has.
The Formula For Success
In marketing, comparing the percentage of a target consumer in the general population to the percentage of the target consumer among a station's audience is called indexing. The formula for calculating an index is [(% of Target Consumer In Market)/(% of Target Consumer Among Station Listeners)x100]. In the furniture store example above, the index would be 100 [(3.7/3.7)*100=100]. When, as in this example, the index equals 100, that means that the instance of target consumers among a radio station's audience is exactly the same as the instance of target consumers among the general population.
So suppose a local appliance store wanted to specifically target Home Depot shoppers who were planning to make a major appliance purchase over the next 12 months. In Portland, 4.4% fit this description. Research indicates that only 2.8% of the audience of the most listened to station in the market fits this description. That would be an index of 64. In other words, the audience of the most listened to station is 36% less likely than the general population to be Home Depot Shoppers who plan to make a major appliance purchase over the next 12 months.
On the other hand, another Portland radio station in the same market has few listeners but 7.9% of them are Home Depot shoppers who plan to make a major appliance purchase in the next 12 months. This would compute to an index of 180. This means the station's audience is 80% more likely than the general population to be Home Depot shoppers who plan to make a major appliance purchase over the next 12 months. Additionally, the index tells us that the audience of the less listened to radio station is 112% more likely to match the target audience than the station with more listeners.
So if you were the owner of the appliance store and you working with a limited advertising budget, then which station should you choose? The best choice is the second station even though it has a smaller audience. The reason is simple. Everyone who hears your commercial on the second station will be 116% more likely to be your target consumer than the listeners of the first radio station. No doubt, a much better return on investment.
To help determine how a small business's target consumers index against various Portland radio stations, a reputable radio station representative can provide the specific research necessary. The most reliable research comes from Nielsen’s Scarborough Report and from GFk MRI.
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- The Ear Wants What The Ear Wants. Advice For Maine Small Business.