Getting the most bang for the buck is something every advertiser covets. With all the places to reach consumers these days—from full-page print glossies to online native advertising—brands are faced with increasingly tough choices. But while new digital formats are capturing headlines, traditional formats—specifically radio—could give advertisers the returns they want.
A recent Nielsen sales effect study examined radio’s return on ad spend in four retail categories—department stores, home improvement stores, mass merchandisers and quick-service restaurants. The research showed that, depending on the category, every dollar spent in radio advertising could generate up to $17 of revenue from listeners exposed to ads. Hispanic consumers led all categories measured in total spend and drove increased sales ranging from 9% to 49%.
The research combined data from Nielsen’s Portable People Meter (PPM) panel with Nielsen Buyer Insights credit and debit card data to measure sales driven by advertising. Study participants were separated into two groups and weighted to be identical on key characteristics including: age, gender, race, education, employment status, household size, children and buying history. The main difference between the test and controlled groups was radio exposure.
For each category, radio exposure positively affected bottom-line sales and drove new, valuable shoppers.
However, there were also some differences across the different categories that marketers should be aware of when using radio to reach consumers.
- Department stores: Four department store brands scored an average 17-to-1 return on ad spend. They invested $21 million in third-quarter 2014 in radio advertising to generate $357 million of incremental revenue. Exposure to radio campaigns delivered a 10% increase in sales overall. Radio brought in more shoppers, and they spent more each time they shopped.
- Mass merchandisers: Two mass merchandiser retailers put nearly $14 million dollars to work on the radio in fourth-quarter 2014. Combined, they saw more than $227 million in revenue from customers exposed to the radio campaigns surpassing their expectations. This 16-to-1 return on ad spend was driven by increases in the total number of buyers and an increase in the amount spent per transaction.
- Home improvement stores: Two home improvement store brands invested more than $38 million in second-quarter 2014 radio advertising and were able to generate nearly $370 million of incremental revenue from customers exposed to radio campaigns. This is another great example of radio’s excellent return on investment of 9-to-1.
- Quick-service restaurants: Three quick-service brands with more than $29 million of ad spend in third-quarter 2014 generated more than $87 million of incremental revenue from customers exposed to radio campaigns. These restaurants also saw an average 6% increase in the total number of buyers compared to the prior three-month period. Radio exposure delivered a 3-to-1 return on ad spend.
These four new studies make a compelling case for why radio should continue to play a significant role in the media mix. Investing in radio ads can increase sales, deliver more people to stores, amplify brand messages and grow the business.
“Reaching 93% of all U.S. adults every week and playing a leading role in consumers’ purchasing decisions, radio has the ability to positively impact campaign results,” said Carol Edwards, senior vice president, media analytics, Nielsen.
The study was conducted between second-quarter 2014 and fourth-quarter 2014 from a single source panel of roughly 40,000 persons 18+ across the US. The data sources for the analysis included the Nielsen PPM panel, Media Monitors, Nielsen Buyer Insights (NBI) and SQAD. Each product provided critical data that contributed to the results.
Nielsen’s PPM panel helped determine consumers’ radio listening habits while the information from Media Monitors was leveraged to analyze commercial exposure. Data collected from NBI’s credit and debit card consumer insights was utilized to measure brand advertising spend and SQAD data was used to determine radio advertising investment across the measured brands.