If you were one of the 706,000+ listeners tuned into a Portland radio station last week, then chances are you heard one of Warren Buffett's radio commercials.
Mr. Buffett's company owns Geico. And last week, like most other weeks, Mr. Buffet's company invested in more radio commercials than any other advertiser.
Mr. Buffett has a personal net worth of $87.5 billion dollars, according to Forbes Magazine's Real Time Net Worth Monitor. This makes Mr. Buffett the 3rd richest person in America.
Mr. Buffett's wealth has been built on investing in value, not by chasing "the next big thing." Mr. Buffett makes his investments based on solid fundamentals, not on, as he says, "chatter."
If a Maine small business owner depend on "chatter" to forge their advertising investment decisions instead of media fundamentals, then they cannot hope to achieve a substantial return on investment.
So let's look at radio's advertising fundamentals, or as I call them, the three "R's"...Reach, Recall, Return.
Advertising Investing Fundamental #1: REACH
Traditional AM/FM radio reaches more consumers each week, according to Nielsen, than any other medium. More than TV. More Than Newspaper. More Than Pandora. More Than Spotify.
When it comes to driving sales for business owners, reach, according to Nielsen, is more potent component of advertising than brand, targeting, reaching, or context.
As Warren Buffett might conclude, those Maine business owners who overlook Portland radio for less powerful media are falling victim to "chatter" and missing the key fundamentals.
Advertising Investing Fundamental #2: RECALL
Notice in the chart above, the "brand" is the next most powerful advertising element after "reach". Advertising won't drive sales unless the consumer can recall a company's brand promise when it comes to make a purchase.
Recall is another fundamental that Portland radio delivers to Maine small business owners.
Local Ad Recall, a research company that measures the effectiveness of advertising, found that brand recall was 516% higher for companies that advertised on the radio vs. companies that did not. Consequently, Maine businesses that advertise on Portland radio have a much better chance of having their brand remembered by prospective customers than companies who don't advertise on radio.
Nielsen found comparable results. Across several different business categories, on average, radio advertising improved recall by 82%. The businesses measured were a health and beauty company; an information technologies company; an auto aftermarket retailer; a motorcycle company; and a mobile app company.
Advertising Investing Fundamental #3: ROI
Nielsen has produced more than 20 studies that demonstrate AM/FM radio can deliver what Ad Age magazine calls an "eye-popping return on investment." The latest study by the company has produced similar results. It revealed that a radio advertising campaign conducted by an auto-aftermarket retailer generated $21.00 of incremental sales for every $1.00 invested. In other words: turning nickels into dollars.
Over a three-month period, according to Westwood One who commissioned the study, Nielsen matched its Portable People Meter panel with credit and debit card spending data in order to compare purchases of those exposed to the radio campaign with consumers who were not exposed. The results continue to demonstrate radio advertising's jaw dropping ability to improve a business owner's bottom line.
The multiple studies Nielsen has conducted demonstrate, on average radio produces a 6 time ROI. According to Ad Age magazine, these findings indicate that advertisers can expect higher returns-on investment from radio than TV, digital, or social media.
Case in point. Scott Libby, owner of Royal River Heat Pumps in Freeport, credits his radio advertising campaign and its catchy jingle with doubling his sales in just one year. "When it comes to reach," says Mr. Libby, "radio is second to none."
Cathy Manchester, a real estate agent based in Gray, Maine, has had similar results utilizing radio as part of her company's marketing mix. "When we began advertising on the radio several years ago," says Ms. Manchester, "our business doubled! We went from selling 100 homes a year to approximately 200 homes each year! Radio advertising continues to provide a steady stream of well qualified customers for us!"
Jon Goodman, who is the front man of Time Pilots, a Maine based wedding band also experienced accelerated growth when he started advertising on radio. "It would be fair to say," says Mr. Goodman, "that our wedding business has tripled."
Stacy Dodge, an owner of the Bill Dodge Auto Group with Maine locations in Westbrook, Saco, and Brunswick, also lets reality not perception guide her company's media and marketing decisions. "We have been using Portland radio as a primary marketing source for about 10 years now." said Ms. Dodge. "We have seen very measurable results and are able to target our audiences more effectively."
"We are also more effectively able to market specific brands to a specific audience which is sometimes harder, and more expensive, to do with other mediums, said Ms. Dodge. "Radio is a very cost effective way to get your message out to the people you want to hear it."
Although Mr. Buffett has never specifically commented on radio advertising fundamentals, media expert Doug Schoen has.
When presented with the fundamentals, Mr. Schoen told Forbes Magazine, " You wouldn’t know it from all the media coverage focused on streaming video and streaming music, but recent Nielsen data shows radio actually has the most reach among American media consumers. 93% of adults listen to the radio each week as compared to 87% who watch TV, a substantive difference."
Mr. Schoen goes on to say, "The implications of results like these are profound for the communications and advertising industries 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.
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