Radio Advertising Costs

By Author: Mohan Chen
Total Articles: 431
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Usually, when researching radio advertising costs, many potential radio advertisers have a pretty good idea of the first two points. However, when it comes down to finding the best station (or stations) at the best price, the radio advertising process becomes a little more challenging.

Here is how we tackle the process at Radio Lounge and determine how much to spend on radio advertising costs. Within the market you want to advertise in, we find the radio stations that have the best potential to reach your target customer. This is based on the formats of the radio stations. Urban Hip-hop stations will target different demographics than a News/Talk, or Soft Rock station. After we select a group of radio stations, we contact those stations to let them know we are thinking about advertising on their radio station. We ask for specific data from the radio stations called "rankers". This is ratings data that most radio stations can provide based on specific requirements we have requested. From this point, we have a good idea which stations perform the best in our target demographics.

Once ...
... we have narrowed down the radio stations to just a few that will effectively reach our target customer, we then request a proposal based on certain criteria - dayparts, frequency goals, etc. From these proposals, we can see who reaches the target audience most efficiently - using tools like Cost Per Point (ratio of spot rate to ratings percentage), Cost Per Thousand (ratio of spot rate to audience category totals), etc. If a radio station is not competitive, we will often ask the station to resubmit a more competitive proposal. But, how will we know if all of the station's radio advertising rates are too high. Radio Lounge has access to data that allows us to compare proposals against historical figures to determine if radio station prices are in line with market averages. We negotiate, and help execute the purchase.

Greatbut what does this cost? It depends on the size of the market you wish to advertise in as determined by Arbitron (the radio ratings services). Radio advertising rates can be as high as $800 per 60 spots in a top market like New York City, or as low as $3 per 60 spots in Kerrville, TX. How will you know what to spend?

Here's a valuable system we have used from our history of working with radio advertising rates. The system is based on a solid branding schedule that may run one spot per day in the morning drive, one per day at midday, and one per day in the afternoon drive - Monday through to Friday, and two spots on Saturday and Sunday. That's nineteen spots a week at sticker price. This type of schedule is good for achieving a desired frequency level of three (meaning the average listener to a station will hear the radio commercial at least three times). Under these broad assumptions, you can use the following chart as a rough guide to budgeting your radio advertising campaign.*

*Note,these are gross rates and do not include production costs or agency discounts. These are market averages for the standard radio schedule mentioned above, actual costs may vary. Different combinations of day parts on different stations may cost much less.

* Markets 1 -5 (ex: New York City, Los Angeles, Chicago, etc.)
Expect to pay from $4000 to $8000 per week/per station for a top performing station.

* Markets 6 - 20 (ex: Dallas/Ft.Worth, Houston, Phoenix, San Diego, etc.)
Expect to pay from $2000 to $5000 per week/per station for a top performing station.

* Markets 21 - 50 (ex: Denver, Cleveland, Kansas City, etc.)
Expect to pay from $1000 to $3000 per week/per station for a top performing station.

* Markets 51- 150 (ex: Akron, Syracuse, Baton Rouge, etc.)
Expect to pay from $800 to $2000 per week/per station for a top performing station.

* Markets 150+ (ex: Myrtle Beach SC, Green Bay, Topeka, etc.)
Expect to pay from $500 to $1500 per week/per station for a top performing station.

You may be saying, "Wow! That can be expensive". Relax, these are standards and radio advertising schedules come in all shapes and sizes. Sometimes, schedules are smaller depending on advertising goals and objectives. However, we do recommend that you are able to commit to the range of minimums.

Notice we have not mentioned remnant radio advertising costs here at all. Remnant advertising is the practice of buying unused inventory at deep discounts. Remnant advertising success exists more in theory than in practice. However, this is not to say that there are not advertisers who are having success with remnant advertising. If, and when, remnant advertising falls into your lap, we suggest you look into it.

However, basing your entire radio ad campaign on remnant advertising may be shooting yourself in the foot. With the exception of a few times a year, most top performing radio stations do not have that much unsold inventory. Often, the largest advertisers have contracts that guarantee so many low cost/no cost spots that have to run. The reality is that if large advertisers (with the big dollar schedule) need their spots to run, or if another advertiser pays just one penny more than you did for your remnant spots - bump! You just got bumped off the air that day. You may pay for twenty spots and only get two that air. The stations will make it up to you, but what if you were counting on that advertising to drive sales.

Or better yet, in the age of consolidated radio groups your remnant advertising might run on the third to the last rated station in the market. The result is NO RESULT and you have just wasted money for nothing. We really do believe that when it comes to radio advertising YOU TRULY DO GET WHAT YOU PAY FOR.

Now that radio advertising rates have been explained, you may ask the question, how long should I advertise? The type of radio advertising helps define the length of a campaign. Advertising for an event? We recommend shorter, more compact schedules to create buzz leading up to the event or launch. Branding a product? Often, long term schedules with a bit of breathing room work best.