Radio Advertising Is Still a Great Deal for Dealership Marketing!
Every new medium that rises to popularity is expected to put an end to radio. Film, television as well as all the entertainment that the Internet has brought us – none of them have put an end to radio. That’s why radio is still a great outlet for agricultural dealership advertising!
According to Nielsen research, 93% of Americans listen to the radio every week. Broadcasting is still a good way for small businesses – such as agricultural equipment dealers — to spread their message. But finding the best prices on airtime can be a little tougher than other ad buys. Several variables such as frequency and time of day can make the same thirty-second spot on the same station, fluctuate wildly in cost!
Factors in Setting the Price of your Ad
Stations use a ton of data when deciding how much to charge for their ad spots. The major influences on radio advertising costs are:
- The Size of the Audience
The more people that tune into the station and hear your commercial, the more you can expect to pay.
- The Station’s Demographics
Some target groups are more popular among advertisers than others. For example, expect to pay more for adults ages 25-54.
- How Much Competition There Is for Your Timeslot!
It’s simple supply and demand. If several businesses want their ads on at the same time, the station can drive up prices. You probably have a large summer sale, as do most of the other retail businesses in your area. Those summertime spots are probably a little pricier!
- How Well Can You Negotiate– The station will probably give you a pricing proposal. THIS IS NOT THE FINAL PRICE! The station knows this. They know you know this. They expect to come down just how much depends on the station’s practices and your negotiation skills.
Crunching the Numbers: Terms You Need to Know!
- Spots– Number of times the commercial will run
- Rate – Cost per advertising spot
- Cost– Rate times the number of spots
- Average Quarterly Hour (AQH)– The average number of persons listening to a particular station for at least five minutes during a 15-minute period. (This is broken into quarter hours so that stations and advertisers alike can be more exact with a station’s performance. It focuses on “at least five minutes” because this gets rid of “skimmers” whose attention the station never really has. If someone listens to a station for more than five minutes, they are a legitimate audience member, and prospective customer for you!
- AQH Rtg– The AQH divided by the population x 100
- Frequency (Freq) – The average number of times the same person will hear a commercial
- Net Reach– The number of different persons reached in a given schedule
However, the cost or value of a spot cannot be determined to be concrete. Some times of the day are much more valuable than others. A spot that airs at 1:00 AM may have less than 1/10th the listeners of a spot that airs at 1:00 PM. By including less desirable, lower-cost spots in an advertiser’s schedule, a radio station can make the cost per spot sound very cheap.
Instead of looking at the number of radio spots, you should figure out the Cost Per Thousand (CPM) or Cost Per Point (CPP).
- Cost per Thousand (CPM)– The radio advertising cost to reach a thousand listeners.
- Cost per Point (CPP) – The cost to reach 1% of the population (also known as a Gross Rating Point or GRP) within a specific geographic area.
While a CPM (Cost per Thousand) can be considered “healthy” at around $18, CPP (Cost per Point) can vary greatly depending on your region’s population. Cost Per Point is useful in comparing the relative costs of different advertising options within a specific area. But how do you keep all these terms and their relationships in your head, while in the middle of a heated negotiation?
Effectively Radio ad pricing should come down to a pretty simple equation:
Number of Listeners X CPM = The Cost of an Advertising Per Spot
Radio Costs Built on Demographics
Demographics decide everything in media buying. We know most people between 25 and 54 make buying decisions in this country. If a station’s key demographic falls in that range expect to pay more.
An argument could be made that farming is an old man’s game. 2012 census data shows that the average age of the “American Farmer” is 58 years old (and rising). However, you only need to spend an afternoon in your showroom to know you’re selling tractors to men and women much younger than that.
Hobby farmers and younger generation family farmers are buying tractors more than ever before. Despite what surveys might say about “farming,” a lot of agricultural equipment purchases are made by those decision makers in the 25 to 54 year old demographic.
Competition and Temporary Demand Factors Can Also Play A Role
As opposed to print ads that are negotiated, designed printed and then left uncontested for a week, month or maybe longer, radio schedules live in the digital age and are living, breathing things that react to supply and demand.
You might negotiate a rate, produce a spot and get it on the air, but if a particular event (a local business announces a going out of business sale, let’s say) increases the value of your time slot in your region – and someone outbids you, the station can pull and replace your spot by the end of the day, by lunch, or (maybe) by the end of the hour (though this last one is only theoretical – I’ve never actually seen it happen.)
Negotiating Better Rates
Alright, so now you’ve got a good idea of what goes into the rates you’re going to pay for your radio spots, how do you make sure those rates are as low as possible?
- Start with a rate card– Effectively a rate card is just a customized pricing sheet for the buy you’ve asked for. It is on the station to price their starting position. Never name your first price. A rate card will cover the cost of your spots during the different times of day as well as the expected listenership for each of those times. The station expects to come down from this price, but always let them quote the first number!
- Ask for discounts– Try to think of special situations around your buy. Maybe you’re a first-time advertiser. Perhaps you’re a long-time advertiser. Maybe you’re buying more ads than you normally do. Ask for first-time discounts or faithful customer discounts or anything else that comes to mind! The station may not honor this, but there is no harm in asking.
(NOTE: If you imply you got such a discount at a competing station, you might motivate them to give you one also. Competition is a great motivator!)
- Offer a cross-promotion– Radio stations love connecting with listeners in interesting ways. Every day of the week you’ll hear stations broadcasting from businesses and events around the community. If your rates seem a little too high, you might offer your lot or a piece of equipment as a cross-promotional tool to help the station reach it’s customers!
- Shop around– Just like with a new tractor, when buying media you have to shop around! Know where the best deals are and use the information as leverage!
Flexibility on Your Part Might Mean Lower Rates!
A lot of dealers might agree to a time range for the spots to run – anywhere from 8 am to 8 pm. Giving the station this flexibility might get them to lower your rates, but you’ll have to work hard to ensure you’re not stuck in the worst time slots. You can do two things to avoid this:
- Ask your account executive to set expectations, “your ad will probably run about 50% of the time in this time slot and 50% in that time slot.” The station will know when your ads will run the day before.
- Ask your ad rep to send you this information on a daily basis. If your rep knows that you are paying attention, it’s less likely your commercials will air during bad time slots.
While letting the station choose your run times can lower your price, remember radio advertising only works through repetition. You need the same people to hear your spot several times before they remember your offer. Therefore you might save money by having the station choose your times, but if they are inconsistent your advertising strategy will be much less effective.
Cost of Creating a Radio Ad
Radio stations will usually offer to produce your ad at no charge. However, if no money is coming in, you can only guess what kind of priority your ad will get. For years, spot production was a work-intensive process that came with a hefty price tag. Businesses like agriculture equipment dealerships, really had no choice but to have the radio station produce their spots – giving up a lot of creative control in the name of staying in budget.
However, recording and editing technology has advanced and quality audio work has gotten less expensive. Almost any advertising agency, like Kirkpatrick Creative, has the tools in-house to do professional voice-over and radio spot production. If you’re working with an agency you also gain personal attention, creative input, accountability as to how the spot performs, and strategic feedback on getting more from your radio advertising budget.
While several years ago, it seemed like a no-brainer to have a radio station produce a spot for free, now it seems the opposite is true. Creative advertising agencies can produce a spot and monitor it’s success at surprisingly affordable rates!
NOTE: If you DO want the station to create your ad, make sure they understand what it is you want. And if they can’t manage to give you what you want, you’re not obligated to use their ad. Things like the wrong background music, the wrong tone of voice or the wrong edit can have tremendous effect on your ad’s message and effectiveness. Make sure you get what you want.
The Bottom Line
Radio is still one of the most effective forms of advertising agricultural equipment dealers have at their disposal. It’s also one of the least expensive, if you know how to negotiate the best rates.
If you have any questions or concerns on your dealerships radio advertising methods, contact Kirkpatrick Creative today!