Radio is a powerful advertising medium that can offer exceptional Return on Ad Spend (ROAS). Industry experts have found that radio ads can deliver up to $12 in earned revenue for every $1 spent in advertising money. Moreover, radio marketing has a vast reach, with studies showing that on-air ads can reach approximately 247 million Americans aged 12+ each week.
But how do you know whether you've hit your deserved ROAS? Finding out your return on ad spend should be one of the primary goals of your marketing strategy. Due to the nature of radio, it does require special effort to determine ROAS for on-air advertising. For instance, marketers often have to:
- Create a baseline model of what marketing efforts would look like without radio ads, and then project the impact that radio ads exert
- Measure ROAS with special attribution tools
- Separate the effects of radio and other advertising channels
The good thing about measuring ROAS from radio ads is that the addition of Search Engine Marketing (SEM) techniques makes radio ROAS much easier to quantify. The combination of digital marketing and radio marketing attribution tools (unique URLs, UTMs, and software) makes it relatively simple to separate the effects of radio and SEM.
Here are some key ways that you can measure your ROAS to determine the level of success from your radio advertising initiatives.
Early Indicators of Success
A more effective way to measure ROAS, though it still involves the use of fairly basic methodology, is to examine "early returns" for the potential impact from radio ads. Here are a few things that you can investigate:
- Increased search volume. If a radio ad has had an effect on your consumers, then you can expect to see an increase in search volume around certain keywords from your ad.
- Increased site traffic. Along with a higher search volume, you should also see increased traffic on your company's website.
- Higher-quality traffic. As more visitors come to your site because of your ad, you'll likely see a corresponding decrease in bounce rate, since these new visitors come with high interest and/or purchase intent.
- Increased site visit to conversion rate. Ultimately, you'll likely see more visitors become leads, and eventually paying customers.
Attribution tools are a more sophisticated means of tracking advertising impact. For example, programs like Veritone and Analytics Owl can track new site visits within 8 minutes of a radio spot's airing.
Subtracting the effects of SEM on increases in site traffic and conversions is simple since SEM already has built-in attribution measures like UTMS (Urchin Traffic Monitors, or snippets of code appended to URLs for the purpose of tracking user engagement from outside marketing campaigns). Of course, it is also possible to give out a unique URL on the radio spot itself, which makes attribution even simpler. Because only radio listeners know the unique URL, every visitor must also be someone who listened to the ad.
An advertising partner will use attribution software to help quantify your ROAS and measure success. Although it is an imperfect science, it works…and for someone with firsthand experience, there is a pattern of success that emerges time and time again. Radio makes people know who you are, then they will search for your name and visit your website. This leads to more organic and paid hits, boosting your cost per click in the process. Ultimately, you’ll have more people visiting your site, and you’ll make more conversions.
While gross sales and site traffic (or foot traffic in the case of physical stores) can be useful, they don't tell the whole story of a campaign's effectiveness. After all, even without radio ads in play there would still be some gross sales within a certain time frame.
Nevertheless, it is possible to create a baseline model of what sales would look like without any influence from radio advertising. Then, as an example, you could compare the results from weeks with ads against the equivalent week-over-week growth the month or year before. This would provide a good idea of how effective your ads for the week actually were.
The final way to gain insight into ROAS from your radio advertising is simply to ask your listeners. You can develop a survey for target customers to determine how many actually heard your ad, and then extrapolate a percentage of your gross sales from the percentage of respondents that answered in the affirmative.
The Importance of ROAS
In summary, it's not enough to know your gross sales for a certain time frame and then blindly attribute a percentage of them to your radio ads. You need to look at early indicators of success that play into your true ROAS and focus on attribution tools, such as unique URLs from radio spots that you can easily track.
Once you've compiled all the relevant data, you can calculate the ROAS as follows:
(Ad revenue - ad investment) / Ad investment = ROAS
For example, if an ad generates approximately $1,000 in sales at a cost of $100, then your ROAS would be (1,000 - 100)/100, or a ratio of 9 to 1.
It's vital to calculate your ROAS, since gross sales mean nothing if you're paying an exorbitant amount on advertising expenses. Experts at radio stations have years of experience in making sure that ad creative results in positive ROAS. If you make sure that your radio station partners have the knowledge and experience required for strong ROAS numbers, then you'll likely see your business enjoy sustained growth, now and into the future.
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