Suppose you woke up one morning and found a 100-year-old machine in your basement. You soon discovered that every time you put a dime in the machine, one dollar came out. How many dimes would you drop in that machine?
Good news for Delaware Valley small business owners: such a machine exists and you probably have one in your car, at work, at home, even on your phone. It's called local radio.
Over the past few years, Nielsen has conducted over 20 studies to determine what type of return-on-investment (ROI) a business can expect from radio advertising. Although the results varied by industry, the average company generated $100 in sales for ever $10 invested. Turning dimes into dollars.
The chart below shows the range of returns from each study.
AdAge, a trade magazine for advertising professionals, calls these types of return "eye-popping". The magazine goes on to say radio's ROI is superior to commercials on TV, online, and social media.
One of the reasons radio advertising delivers such impressive returns is the medium's dominant reach.
Last week, for instance, significantly more consumers tuned-in to Philadelphia radio than watched local TV; read a newspaper; or who logged-on to Pandora and Spotify.
According to Nielsen, reach is the most important media consideration for driving sales. It is more important than branding, targeting, recency, or context.
Radio commercials have also proven to be very effective in producing unaided message recall at time of purchase. A Philadelphia area consumer can only buy something from a company they can remember. This can have a profound effect on ROI, as well.
Local Ad Recall, a research company that measures the effectiveness of advertising, found that brand recall was five times higher for companies that advertised on radio versus the companies that did not.
Local business owners have always known that they can expect impressive returns-on-investment when advertising on Philadelphia radio stations.
Nolan Painting is, by definition, a small business. The company was started 40 years by Kevin Nolan with a just a couple-of-painters. Today, this Havertown based company has 125 employees and has grown to be the largest residential painting company in the United States.
For a local contractor to become that large is especially remarkable when the company only paints homes in Philadelphia, Bucks, Chester, Delaware, and Montgomery Counties. This year, according to April Torrisi, Nolan Painting's Marketing Manager, "we are on track to do $12,000,000 in sales."
"Advertising on Philadelphia radio," says Ms. Torrisi, "is one of our top four sources of acquiring new jobs. It ranks with repeat business from past customers, referrals, lawn signs, and the advertising on our own trucks. Our return on investment on our radio advertising dollars has been very strong."
Landis Block And Concrete in Souderton, PA also has grown with the help of advertising on Philadelphia Radio stations.
The company is co-owned by brothers Jarrod and Jamie Nyce. Their grandfather started the company in 1943 as Nyce Crete in Landis, PA which is still operated by the brothers. Originally, the company primarily sold ready mix concrete to contractors.
Four years ago, the brothers began advertising on Philadelphia radio with a single station. The first commercials included the voice of a well-known on-air personality encouraging listener to buy from Landis Block. "Radio personalities have built a lot of trust with their audience," says Jarrod. "Using them in our commercials extends that trust to our business."
Almost immediately, Mr. Nyce began to notice the results of his efforts on Philadelphia radio. "New customers started telling us right away that they learned about us on the radio."
By the end of the first year of advertising, Mr. Nyce says Landis Block saw a 5% uptick in business. A strong enough return to add a second Philadelphia radio station into the advertising mix."
"At the end of the second year," he says, "we started seeing 25% growth. Our retail business was through the roof."
Mr. Nyce attributes 40% of that growth to radio advertising.
"If we ask ten new customers how they heard about us, four will say radio advertising. Four will say referrals. And, two will say the internet."
Mr. Nyce now invests in advertising on Philadelphia radio stations year-round. "We need to be on all time," he says. "Our customer decision cycle can be as long as eight months. We need them to hear us when they are ready to buy."
When asked if Landis Block will continue on Philadelphia radio, he says, "We need to advertise to grow."
After seeing the results of Nielsen's ROI studies, media expert Doug Schoen wrote in Forbes Magazine, "I found this data nothing short of fascinating. It’s quite clear that we should all be paying more attention to radio, its reach and potential to help our businesses. It’s doing the job with expert efficiency.”