Radio Advertisements deliver Six Dollars in Sales for Every One Dollar in Ad Spend

Nielsen Catalina Solutions (NCS) has teamed with Nielsen Audio to pioneer the first single-source measurement tool built for the radio industry. Clear Channel Media and Entertainment (Clear Channel) first piloted this innovative measurement approach in 2013 and is one of the radio networks included in this study.

At the Advertising Research Foundation’s RE:THINK Conference on March 24, NCS and Clear Channel presented the results of a comprehensive study to determine how radio advertising influences actual retail sales, and measures the return on the investment. The overall finding was that for every dollar spent on advertising, there was a sales return of six dollars on average for those exposed to the ads in the prior 28 day period. This work was sponsored by Nielsen as part of an ongoing initiative to expand insight into the effectiveness of radio as an advertising medium. The sales impact was measured for the specific media buys of 10 brands, each of which had different combinations of radio networks.

This group of 10 brands, which included eight CPG and two retailer brands, provided the foundation for the first normative database for radio effectiveness. Another key finding was that radio delivers a strong consumer sales response close to the time of purchase. The closer the exposure is to purchase, the higher the response. African Americans and Hispanics also showed higher responses to exposure.

How it works: The Portable People Meter (PPM) from Nielsen Audio detects inaudible watermarks embedded in the audio portion of a broadcast program or commercial. The PPM tracks what station was heard at what time. The listener information for specific commercials is then linked to 60 million households of frequent shopper data in a single source view to determine how the radio ads influenced the sales of products that were purchased in the listener’s household. All matches are performed in a privacy-compliant, non-personally identified manner.

“The advertising industry has longed for a much more comprehensive understanding of the effectiveness of audio advertising,” said Leslie Wood, Chief Research Officer, Nielsen Catalina Solutions. “Our single-source measurement solution will help advertisers better understand where their ad spend will have the most sales impact and can best be used for future campaigns.”

“We are very pleased with the outcome of this study,” said Radha Subramanyam, Executive Vice President, Insights and Analytics, Clear Channel Media and Entertainment. “We have always known that radio delivers big returns for advertisers and these studies provide the much needed support of that return. The deep personal connection and trust that consumers have to their radio stations and on air personalities generates significant value for advertisers.”