Dr. H. Ronald Moser Cumberland University

Kleppner’s Advertising Procedure Dr. H. Ronald Moser Cumberland University

Chapter 9 Using Radio Kleppner’s Advertising Procedure, 18e Lane * King * Reichart

Learning Objectives • Describe radio’s strengths as an advertising medium. • Understand the limitations and challenges faced by radio. • Discuss how radio commercial time is bought and sold. • Identify different roles of AM and FM radio. • Explain the rating systems used in radio.

The Pros of Radio • Radio provides advertisers options to reach very narrowly defined niche prospects. • Primary medium for targeting narrow audience segments. • The affinity radio builds with listeners carries over to the credibility it lends to products or services advertised. • Because of radio’s low cost and targeted format, it is an excellent supplemental medium to increase reach and frequency in specific target markets.

The Cons of Radio • Without a visual component, radio often lacks the impact of other media. • Its audiences are so small that advertisers must make numerous buys to achieve acceptable frequency and reach. • Adequate audience research is not always available, especially among many small market stations.

Exhibit 9.1. Average Daily Share of Time Spent with Each Medium • EXHIBIT 9.1. The average consumer will spend about one hour and 40 minutes a day using a radio.

The Contemporary Radio Industry – Clear Channel • With companies such as Clear Channel with more than 800 local stations and CBS Radio, Inc. with more than 130 stations, more and more radio stations belong to large mega-owners. • Radio more than virtually any other media creates an intimate, one-on-one relationship with prospects.

The Contemporary Radio Industry – Radio and New Technology • Some observers think that the audio platform of the next decade will be computers and satellites, rather than radios. • Satellite radio requires a special receiver, a subscription and contains few, it any, commercials. • Satellite radio is available by subscription and limits commercial interruption. • HD radio offers terrestrial radio stations the ability to deliver additional programming on the same amount of bandwidth with higher-quality sound.

Exhibit 9.2. The Contemporary Radio Industry – Listeners and Online Radio • Exhibit 9.2. Almost Half of Americans Have Listened to Radio Stations Online.

Features and Advantages of Radio as an Advertising Medium (1) • Some of the primary elements of interest to advertisers are the following: • Radio targets – From a marketing perspective, radio more readily and easily can appeal to prospects based on gender, education level, and financial status. • Radio reaches a majority of the population several hours a day. • Radio advertising influences consumers closest to the time of purchase. • Radio reaches light users of other media. • Radio works well with other media.

Features and Advantages of Radio as an Advertising Medium (2) • Because much radio listening takes place outside the home, it can reach consumers where they are and where other media are not available (see Exhibit 9.4). • Radio delivers consistent listening patterns. • Radio delivers messages at a low CPM. • Radio provides advertisers both immediacy and flexibility.

Exhibit 9.4. Radio Reaches CustomersEverywhere • EXHIBIT 9.4. Radio Reaches Customers Everywhere.

Limitations and Challenges of Radio • No medium is suited for every marketing and advertising situation. Like all media, radio has special strengths and weaknesses that must be considered by advertisers considering placing radio in their media schedule. • Audience Fragmentation– A major problem for advertisers whishing to use radio is its fragmented audience. In 2009, there were more than 13,500 commercial registered radio stations on the air in the United States(see Exhibit 9.5). • Clutter– The more commercials and other nonprogram content, the less likely it is that listeners will recall any particular advertising message. • Lack of a Visual Element– Radio uses a number of creative devices to substitute the ear for the eye in order to overcome its lack of visuals.

Exhibit 9.5. – Limitations and Challenges of Top Radio Formats • EXHIBIT 9.5. Radio Station format Analysis: • Country • News/news-talk • Religion • Variety • Religious contemporary • Adult contemporary • Adult alternative • Spanish • Hot adult • Talk • News stations

Limitations and Challenges of Radio Increased Use of MP3 Players– Although most teens still listen to the radio at least once per week, there has been a dramatic increase in the use of MP3 players and digital music listening, particularly among younger audiences. • No medium is suited for every marketing and advertising situation. Like all media, radio has special strengths and weaknesses that must be considered by advertisers considering placing radio in their media schedule.

Technical Aspects of Radio • Signal– Electrical impulses broadcast by radio are called Signals. • Frequency– All signals are transmitted by electromagnetic waves, sometimes called radio waves. These waves differ from one another in frequency (the number of waves that pass a given point in a given period of time). • Amplitude– • Amplitude Modulation (AM)– This system carries the variations in a sound wave by corresponding variations in its amplitude which is the height of the waves. • Frequency Modulation (FM)– This system carries the variations in a sound wave by corresponding variations in its frequency where the amplitude remains constant (see Exhibit 9.6 a and b).

Technical Aspects of Radio • Exhibit 9.6. – In Amplitude Modulation (a) waves vary in height (Amplitude); frequency is constant. Frequency Modulation (b) varies the frequency but keeps the height constant. These drawings, however, are not made to scale, which would reveal that width is the significant difference between AM and FM. The FM wave is 20 times wider than the AM. This fact helps to explain how FM captures its fine tones.

Selling Radio Commercial Time • Radio advertising dollars are heavily concentrated at the local level. • As group ownership became the rule rather than the exception, the major radio group executives promised advertisers better service and more efficient buying procedures. • Despite advantages consolidation brings to the mega-owners of radio stations, it doesn’t eliminate competition radio must overcome to earn advertising dollars. • The major competitors radio has for local advertising dollars include: Yellow Pages, the Internet, Direct Response, and Newspapers. • Out-of-home is not a major competitor radio has for local advertising dollars.

Selling Radio Commercial Time – Network Radio – Some Generalizations • The demise of network radio as a major national medium and the beginning of local radio begin in 1948 with the introduction of television. • Network radio is a minor source of advertising dollars. • Of the $9.5 billion spent annually in radio, $975 million was derived from network radio advertising (see Exhibit 9.7). • A competent media planner would look increasingly at network radio to extend reach to working women and light users of other media. • Based on the information about the top national radio advertisers in 2009, retail spent the most money. • A major difference between the network arrangement in radio and television is that radio stations can be associated with a number of radio networks simultaneously. • One advantage satellite links bring to even a small radio station is the opportunity for national advertising dollars as part of a network.

Selling Radio Commercial Time – Radio Networks Benefit from Satellite Technology • The following are advantages that satellite links bring to local affiliated stations: • Stations are guaranteed quality programming based on latest audience research. • Radio networks bring celebrities that local stations could not afford. • Small stations can obtain national advertising dollars. • Cost efficiencies of shared programming with hundreds of affiliates keep personnel and programming costs low. • A major disadvantage that satellite links bring to local affiliated stations would be the increased costs for personnel and programming.

Exhibit 9.7. Selling Radio Commercial Time – Top U.S. Radio Advertisers • EXHIBIT 9.7. Top U.S. Advertisers in National Radio:

Exhibit 9.8. Selling Radio Commercial Time – Spot Radio • Spot radio means buying radio time on local stations on a market-by-market basis by national advertisers. • Exhibit 9.8. Top U.S. Advertisers in Local Radio in 2009.

Selling Radio Commercial Time – Spot Radio – Some Generalizations Spot radio means buying radio time on local stations on a market-by-market basis by national advertisers. In 2008, national advertisers spent about $8.5 billion dollars in spot radio advertising. If the information on the top 10 national spot radio advertisers in 2009 was any indication, the largest category of radio advertisers is telecommunication companies. Spot radio provides national advertisers the ability to spend an even smaller portion of their annual advertising budget. Moser

Selling Radio Commercial Time – AM versus FM – Some Generalizations • FM dominates overall listening audience and is the clear leader in most formats. • AM stations reach older audiences. • Talk radio has “saved” AM; HD radio may help further. • Radio is largely devoted to music; especially country. • Country is the format carried by more U.S. radio stations than any other. • The quality of the audience is as important as the size (hence, focus on niche markets like jazz). • The average rating for a top radio station would be from 6 am to 7 am (see Exhibit 9.9).

Exhibit 9.9. Selling Radio Commercial Time – Radio Dayparts • For radio, Drivetimes are 3 to 7 in the afternoon.

Radio Ratings Service – Some Generalizations As discussed in Chapter 8, the growth of television has created some significant problems in determining accurate audience-rating data. Dozens of companies provide research service for radio. The major source of local syndicated radio rating and the dominant company in radio research is Arbitron Inc, which provides audience data through its Arbitron Radio division. Because much of radio listening occurs outside of the home, and advertisers and radio stations are interested in capturing data on radio listening throughout the day, Arbitron has developed a Portable People Meter (PPM). Arbitron is testing the PPM, which is being used in 20 of the largest radio markets. Network radio is important to a number of national advertisers. The primary source of radio nation network ratings is the Radio’s All-Dimension Audience Research (RADAR) reports.

Radio Ratings Service – Arbitron Provides Ratings Services • The major source of local syndicated radio rating and the dominant company in radio research is Arbitron Inc, which provides audience data through its Arbitron Radio division.

Using Radio Rating – Steps in Buying Radio Delineate the Target Market Select Particular Stations Based on Audience and Cost Efficiency Schedule Spots

Using Radio Rating – Issues in Buying Radio Time • Unique characteristics of a radio buy include the following: • Inventory is perishable, and when a spot goes unsold, revenue is permanently lost. • Radio is normally used as a supplement to other media. Therefore, coordination with other media is a must. • Most radio advertising sold in packages of spots tailored for each advertiser. • Fixed rate cards rarely exist. • Negotiations determine pricing.

Using Radio Rating – Questions to Pose When Buying Radio • What are the product characteristics and benefits? Can these be relayed through radio? • Who is the target market and can they be reached with radio? • Who is the competition? How are they using radio and other media? • What is our basic advertising and marketing strategy? Is it consistent with radio?

Using Radio Rating – Differences between TV and Radio Ratings • Among the primary differences between the use of ratings in television and their use in radio are the following: • Radio advertisers are interested in broad formats rather than programs. • Radio ratings measure audience accumulation over a relatively long period of time or several dayparts. • Audiences for individual stations are smaller than for television. • Higher levels of frequency are necessary.

Using Radio Rating – Metro Survey Area • Radio audience ratings use two geographic boundaries to report audience: Metro Survey Ares (MSA) and Total Survey Area (TSA). • An MSA always includes a • city or cities whose population is specified as that of the central city together with the county in which it is located. • The TSA is a geographic area that encompasses the MSA and certain counties located outside the MSA that meet certain minimum listening criteria. • To make an effective radio buy, you would use Average Quarter-Hour (AQH) in which it is located. • Audiences or the cumulative or unduplicated audience (Cume) listening to a station over several quarter hours or dayparts

The End! WHAT ABOUT THOSE REVIEW QUESTIONS? THEY WILL BE THERE! “S” DRIVE

Dr. H. Ronald Moser Cumberland University