• by Jack Loechner , Staff Writer, June 15, 2005

A new study, conducted by Millward Brown and Information Resources Inc. (IRI), examined four pairs of Radio and television campaigns in a range of product categories over a six-month period and the findings established that Radio's ROI was 49% higher than television's.

Gary Fries, President and Chief Executive Officer of the Radio Advertising Bureau (RAB) and Co-Chairman of RAEL, said "This study addresses the core issue of advertising - Return On Investment. Radio's ROI Advantage substantiates our previous theories that Radio can and does deliver significant ROI for advertisers."

Although this formidable study should be reviewed in its' complete context, reported findings verified that:

• Radio moves product
• Radio ads increase sales even when national TV is present
• Radio's effect can be measured - when used at sufficient weight
• Radio delivers strong ROI

A brief excerpt of the detailed findings compares results, but we suggest a more complete study of the report to understand the decisions and criteria used to assure accuracy, yet simplify the conclusions.

The incremental radio campaigns (studied) were linked to statistically significant sales lifts of 3.6% (in the absence of synergistic TV), to 4.6% (in the presence of TV) according to IRI, while the national TV campaigns were higher at 7.3% (with radio) to 7.7% (without radio).

Since the statistical difference between those two values is weak, concludes the study, it would be fair to average the two together to say that the sales lift from incremental radio in this study averaged 4.1%. In addition, the difference between TV in the presence of radio and TV in the absence of radio is not statistically significant, so the study averages the sales lift from network television in this study to 7.5%.

 Which leads to the first significant (report) conclusion:

At roughly similar weights when summed across all advertisers, incremental radio delivered more than half the short-term sales effect of national network television buys. Furthermore, radio's effect on sales was at least as large, if not larger, when television was already in use at a level of 50-100 TRPs.

Having shown how incremental radio lifted product sales relative to national TV, the study goes on to show how the relative costs of those ads compare. To facilitate a clear comparison between radio and television costs the study solution was to "nationalize" the actual test radio buys into theoretical national radio campaigns. 

Keeping in mind that the study is examining total Return On Investment in this analysis, not "incremental" ROI,  the authors conclude that the approach taken was the most appropriate for this study.  Some ROI studies examine the return from each additional dollar of advertising, but this study approach is to estimate the total return from all of the test advertising in each medium.

The report concludes by averaging radio with and without TV, and TV with and without Radio, and calling it "The Simple Summary." And that's the bottom line, says the report. For these four advertisers, in this test, incremental radio delivered 49% better Return on Investment than the corresponding national television campaigns, using the best available comparative cost estimates

Read the Full PDF Report.