Radio Advertising, Measurement

Is Radio Advertising Effective?

by Ad Results Media – Jan 22 2025

Introduction to radio advertising

With all the marketplace buzz about podcasts, YouTube, and streaming music services like Spotify, Apple Music, and Pandora, it’s easy to underestimate the power of AM/FM radio. Yet, the reality is that radio usage, ad penetration, and effectiveness are as potent as ever.

AM/FM radio remains a powerhouse for audiences and advertisers alike, according to Edison Research’s Share of Ear, recently released in Q3 2024:

• AM/FM radio is the dominant ad-supported audio platform across every major demographic, capturing 69% total time spent.
• AM/FM radio has an 86% share of time spent driving, even among younger audiences 13 to 34 years old.
• Streaming music growth has come at the expense of owned music—not of AM/FM radio usage.

All the data continues to back radio, yet perceptions among media buyers don’t always line up with the reality of listening habits. As marketing professor Mark Ritson reminds us, “There is increasing global evidence that marketers are basing their media choices on their own behavior or that stoked by the digitally obsessed marketing media, rather than actual audience data … The first law of marketing is that you are not the market. You are an urban, professional, well-paid media executive. Everything you think and do is from a highly unrepresentative N of 1.”

Today, radio is often such a small part of many national media investments that media mix modeling studies may not capture an accurate picture of radio due to “performance bounce.” The media mix model favors larger media investments, creating a curve of variability that doesn’t reflect how consistently radio delivers on key KPIs.

What are the advantages of radio advertising?

AM/FM advertising is a critical channel for advertisers due to three distinct advantages: affordability, reach, and high return on investment (ROI) / return on ad spend (ROAS).

Today, radio is often such a small part of many national media investments that media mix modeling studies may not capture an accurate picture of radio due to “performance bounce.” The media mix model favors larger media investments, creating a curve of variability that doesn’t reflect how consistently radio delivers on key KPIs.

What are the advantages of radio advertising?

AM/FM advertising is a critical channel for advertisers due to three distinct advantages: affordability, reach, and high return on investment (ROI) / return on ad spend (ROAS).

Affordability: How much does radio advertising cost?

• The average cost of a 60-second radio advertisement ranges from $5 to $750 or more when measured by cost per point (CPP). Factors that impact radio advertising costs include audience size, listener demographics, time of day, the market in which the ad runs, and whether the ad is sponsored or not.
• As a rule, the more listeners a radio station has, the more customers it can reach, increasing its radio advertising rates.
• The cost of entry for AM/FM radio advertising is considerably less than other broadcast-type mediums.

Ability to reach a broad audience: Who does radio reach?

In 2024, AM/FM radio retained its lead over other platforms for reach:

• Among listeners 18 and older, radio’s 84% reach puts it ahead of social networking on smartphones (78%), CTV (74%), and traditional TV (58%).
• Among ad-supported audio, radio has the highest share of time spent, capturing 69% of listening time for adults 18 and older, which is more than podcasts (19%) and ad-supported streaming (3% to 5%).
• Radio ads deliver incremental reach, typically around 14 points.
• Even among the first truly digitally native generation, Gen Z, radio listening time (20%) falls just below YouTube (23%).

High ROI/ROAS—and the case studies to back it up

Radio advertising campaigns are cost-effective and can deliver outsized performance. Here are a few recent examples of advertisers who ran highly successful AM/FM campaigns in terms of ROI and ROAS :

• Office Supply Retailer: Nielsen Sales Effect Study: AM/FM Radio Campaign Grows Sales +11%, Increases Customer Base +6%, and Expands Share of Category Spend +21%
• Department Store: Nielsen Sales Effect Study: AM/FM Radio Campaign Grows Sales +10%, Increases Customer Base +17%, and Expands Share of Category Spend +15%
• US Auto Dealers: Need to Increase Their AM/FM Radio Advertising to Reach Consumer Who Are Ready to Buy

What makes a radio advertisement campaign effective?

The key aspects of radio advertisement success include effective media planning and high-performing creative.

... 2025 Radio Advertising Guide: Effectiveness, Statistics & More