CLOSE-UP: LIVE ISSUE - RADIO. RAB study shows radio's effectiveness

RAB finds 9 per cent sales boosts where brands use radio ads, Glen Mutel says.

Guess what? The Radio Advertising Bureau has just completed and published a research project that threatens to revolutionise the way clients look at advertising. Hands up who can guess what conclusion it draws?

If your answer was "that companies can significantly boost their sales by advertising their products on radio", then well done, you were right.

Of course you were. What else would you expect from the RAB?

Nevertheless, this research is fairly meaty stuff. The RAB has long been extolling the virtues of the radio campaign, but now it has put not only its money, but also its time and expertise where its mouth is.

The result of this investment is the Radio Sales Multiplier Study - an initiative run by the customer marketing consultancy dunnhumby. For those unfamiliar with its work, dunnhumby is the segmentation specialist that, along with EHS Brann (then EHS Realtime), helped Tesco to create the landmark Clubcard scheme.

Using historical Clubcard data, dunnhumby sought to measure the effect of past radio campaigns on the sales of 17 FMCG brands, including Dr Pepper, Jaffa Cakes, Chicken Tonight, Fairy Liquid, Nescafe Gold Blend and Bird's Eye Potato Waffles.

It did so by comparing the sales performance of the brands in two regions - one that had been exposed to radio advertising, one that had not. To ensure the research was accurate, the study only focused on brands that had consistently dabbled in radio marketing over the past two years. The parameters of the study also dictated that other media activity for these particular brands, including in-store promotions and refurbishments, were balanced between the test and control regions.

So was it all worth it? The results of the study vary considerably. Some products enjoyed sales increases of up to 31 per cent, while others failed to shift a single extra unit. On the whole though, the brands fared well.

The average sales increase attributable to radio advertising was 9 per cent.

While it's tempting to declare that this figure is a vindication for radio advertisers everywhere, it's important to note that the study doesn't show how much each of the measured campaigns cost. Nor are we privy to relevant companies' profit margins. Therefore, it's difficult to say with conviction that a 9 per cent rise in sales is an adequate return on each advertiser's investment.

The value of the sales multiplier is also affected by the fact that it only measured the immediate consequences of a particular radio campaign.

It can't tell us whether or not the featured campaigns had positive or negative long-term effects on the fabric of the 17 brands. The RAB does admit that it would like to conduct a more extensive version of the study over a longer time period in the future, although it has no immediate plans to do so.

However, qualifications such as these are endemic to most sample-based research. The size of the RAB's undertaking and the care it has taken to render the research accurate will no doubt ensure the sales multiplier study's credibility. And any piece of research that claims it can show advertisers a way to increase their sales by 9 per cent is bound to attract interest.

But the true worth of a study like this will ultimately depend upon whether creatives, planners and media buyers feel that it effectively backs up their convictions. Will it help those sympathetic to radio persuade clients to allocate more marketing spend to the medium?

MediaVest's UK head of radio, Marc Helm, is in no doubt that it will.

"Studies such as this give us more confidence in the medium we promote as they essentially demonstrate that it has an effective reach," he says.

"It's a solid piece of research and it's exactly what clients want to see, because it demonstrates proper return on investment and shows that every pound is spent efficiently."

As well as showing radio to be an effective advertising medium, the study also presents advertisers with a way to counter their rivals' activity.

The Tesco Clubcard database recorded which items were on price promotion during the test. One particular product, Brand I, came up against a savage price-cutting offensive by its main rival. In the non-radio regions, this affected its sales by 9 per cent. However, in the regions in which it ran a radio campaign, this brand was able to offset its rival's strategy, reducing its own loss in sales to only 3 per cent.

The study also shows how the effect of a price promotion can be enhanced by radio activity. When Brand I slashed its own prices, sales in the non-radio test area shot up 21 per cent. However, when timed to coincide with radio ads, this figure was increased to 29 per cent.

All of which bodes well for radio advertisers. Although, no-one would argue that the sales multiplier study tells the whole story. It doesn't take into account the quality of radio campaigns. An ill-conceived creative strategy could render the promised 9 per cent sales increase nothing more than a pipe dream.

Nor does it really explore the effect other types of marketing activity have on sales. However, it's not for the RAB to overly concern itself with the effectiveness of other media. The bureau has backed up its own rhetoric, and the gauntlet has been thrown down for its TV, press and PR equivalent bodies to do the same.

For although it may not tell the whole story, in the right hands the sales multiplier study could be a valuable weapon in the battle for adspend.

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