RAB study promises to 'unlock millions' for advertisers

Brands using radio for their advertising get nearly eight times the return on investment (ROI), according to the first-ever analysis of confidential cross-agency data presented by the Radio Advertising Bureau today.

Simon Redican: 'Hands up who doesn't want to increase ROI?'
Simon Redican: 'Hands up who doesn't want to increase ROI?'

The RAB's econometrics study examined radio advertising effectiveness in terms of revenue return on investment (ROI) and its results presented to 220 clients and agency specialists today.

The research used data collected from the major global media groups, including Group M, Publicis Groupe and Havas Media, and encompassed more than 2,000 media campaigns. This data was then analysed by specialists Holmes & Cook to provide its conclusons.

The study revealed that using radio can boost overall campaign ROI. Mark Barber, planning director of the RAB, revealed that radio was found to return £7.70 for evey pound spent, with notable performances in automotive and retailer categories, as well as impulse products. This new discovery makes radio the medium with the second-highest return on investment after TV, he said.

Simon Redican, managing director of the RAB, noted how radio currently carries 6% of all advertising budgets, but said if budgets were reallocated to give radio a 20% share of total – with no increase in overall expenditure – the total campaign ROI would rise by over 8%. For the Top 100 radio advertisers, this is equivalent to getting an extra £1.4 billion return on their advertising investment.

Plan for reach not frequency

The data also reveals an important finding about best practice radio planning – campaigns which maximise weekly reach up to and beyond 40 per cent (rather than optimising on frequency), deliver significantly stronger radio ROI. This is news for the way agencies normally plan radio as "the frequency medium" and suggests that coverage is the new touchstone for optimising radio effectiveness.

The results of the analysis supplied by nine econometrics agencies covering more than 517 separate brand campaigns also highlight how creativity plays a role in enhancing ROI – brands which have the highest radio ROI use commercials which stand out, fit well with the brand and communicate information simply.

Redican said: "With data sourced from all of the world’s major agency groups this is the most detailed and robust perspective on radio ROI in the world.

"Hands up who doesn't want to increase ROI?" he asked. "The findings of this research are unambiguous"

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