According to a recent Nielsen “sales effect study,” examining radio’s return on ad spend in four retail categories, every dollar spent in radio advertising could generate up to $17 of revenue from listeners exposed to ads from department stores, home improvement stores, mass merchandisers and quick-service restaurants. Hispanic consumers led all categories measured in total spend, and drove increased sales ranging from 9% to 49%.
The study found that, while new digital formats are capturing headlines, traditional formats, specifically radio, could give advertisers the returns they want, says the report.
Combined data from Nielsen’s Portable People Meter (PPM) panel with Nielsen Buyer Insights credit and debit card data, radio exposure positively affected bottom-line sales and drove new, valuable shoppers for each category studied.
Payback Per $1 Spent On Radio Advertising
ROI for $1 Spent
Source: Nielsen, January 2016
However, says the report, there were differences across the different categories that marketers should be aware of when using radio to reach consumers:
Department stores: Four department store brands scored an average 17-to-1 return on ad spend. They invested $21 million in third-quarter 2014 in radio advertising to generate $357 million of incremental revenue. Exposure to radio campaigns delivered a 10% increase in sales overall. Radio brought in more shoppers, and they spent more each time they shopped.
Mass merchandisers: Two mass merchandiser retailers put nearly $14 million dollars to work on the radio in fourth-quarter 2014. Combined, they saw more than $227 million in revenue from customers exposed to the radio campaigns surpassing their expectations. This 16-to-1 return on ad spend was driven by increases in the total number of buyers and an increase in the amount spent per transaction.
Home improvement stores: Two home improvement store brands invested more than $38 million in second-quarter 2014 radio advertising and were able to generate nearly $370 million of incremental revenue from customers exposed to radio campaigns. This is an example of radio’s excellent return on investment of 9-to-1, says the report.
Quick-service restaurants: Three quick-service brands with more than $29 million of ad spend in third-quarter 2014 generated more than $87 million of incremental revenue from customers exposed to radio campaigns. These restaurants also saw an average 6% increase in the total number of buyers compared to the prior three-month period. Radio exposure delivered a 3-to-1 return on ad spend, notes the report.
Carol Edwards, senior vice president, media analytics, Nielsen, concludes that “… reaching 93% of all U.S. adults every week and playing a leading role in consumers’ purchasing decisions, radio has the ability to positively impact campaign results… ”
Weekly Reach of Devices (% Of U.S. Population)
Source: Nielsen, October 2015
For more information about the Nielsen report, please visit here.