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Radio outscores TV in providing ROI for US advertisers: Study

MUMBAI: The Radio Ad Effectiveness Lab (Rael) in the US has put out the results of a study which show that radio campaigns show 49 per cent better return on investment (ROI) for advertisers than TV campaigns.

 

This “real world” study was conducted by Millward Brown and Information Resources (IRI), and it examined four pairs of radio and television campaigns in a range of product categories over a six month period ending in early 2005. The study was conducted in four small markets. The product categories included Grocery Food, Grocery Non-Food, and two very distinct Over-The-Counter Drug products.

Radio moves products. Across four different advertisers, incremental radio advertising consistently and significantly increased product sales and delivered meaningful profit for each dollar of advertising. Radio demonstrated in this study that it can function as a primary medium for advertising.

Radio ads increase sales even when national television is present. Radio was just as potent in the presence of 50–100 TRPs of national TV as it was by itself. In fact, the test results actually suggested slightly more impact for radio when combined with television than when used alone. Radio’s effects can be measured—when radio is used at sufficient weight. Radio is prepared to be held accountable for its advertising effectiveness.

But effectiveness measurement requires that advertising be present at sufficient weight for statistics to accurately capture that result. Most importantly radio’s ability to deliver strong ROI for advertisers has been proven in a real-world test at last.

 

 

Rael states that it can only guess how much better that value might be if the creative quality of radio advertising received as much attention and investment as ads in other media. All the television campaigns in this test had received favorable advance testing; none of the radio ads were pretested. The $1 million study, funded by radio companies with input from advertisers and ad agencies.

In half of the test households, TV commercials for the test products were removed and replaced by public service announcements. Half of the households had no radio commercials for the products being tested.

To measure the effectiveness of the campaigns, Millward Brown examined scanned grocery purchase data and conducted pre- and post-survey telephone surveys.

 

 

The study found that radio advertising lifted sales of the four products by an average of 4.1 per cent, while TV commercials increased sales by 7.5 per cent Radio’s 4.1 per cent retail lift occurred with or without a corresponding TV campaign. Used in conjunction with television, radio produced a 4.1 per cent lift above and beyond TV’s 7.5 per cent spike.

According to Rael research consultant Jim Peacock, the average radio spot costs 80 per cent less than the typical TV commercial. Once the costs of the campaigns were factored in, Rael concluded that return on radio advertising dollars is 49 per cent better than with TV.

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