Is advertising worth it?

I am curious just how effective radio advertising is? Obviously something's working since this has been the model for some 60 years, but I'm curious just how well it actually works. For instance, it seems like you can't go anywhere without hearing some kind of car adds, whether they be adds for a brand or a local car dealer. How could it be profitable for the company or dealer when there's going to be two or three competitors in the same hour? Not only that, but I don't know anyone who is going to buy a car simply based off of a radio ad for a certain brand or dealer. The same applies for home improvement chains or the national insurance advertisers. I know there is some level of effectiveness, in fact I've seen it myself. However, the one example I like to give when I point out how effective radio advertising is was for something that you're not likely to hear about from multiple companies, and multiple times an hour. Even if it was, I could participate in all of such events, and may not form a preference to one or the other. However, when my parents buy a car, they do research on what kind they want, then when that's done they go to the closest dealer. When we need stuff for the house we go to Home Depot because it's right down the street, that's also why we like Safeway. When I was going to school, I went to Safeway because that's what I was used to, though sometimes I'd go to Wallmart if I just wanted to walk rather than take the bus, and if I needed something in addition to groceries I'd go to Fred Meyer. You probably didn't need to know all those specifics, but the point was that, while all of these chains advertise on radio, it didn't factor at all into the decision to go to them. So, how well does radio advertising really work? I would think the business doing said advertising would want some kind of return on that investment, and they won't advertise if they don't get that return.

On any advertising platform, the more you dominate the chosen medium, the more effective it is. After decades of writing and producing radio commercials, I can tell you that it's also about having a good message. "For all your (fill in the blank) needs", doesn't work. It's trite. It doesn't speak to the consumer. Go back and listen to stuff from Dick Orkin's Radio Ranch or Chuck Blore who understood how to use the medium to sell and created emotion in their messages. Of course, these days, there are more platforms vying for the listeners' attention, and that makes radio a more expensive medium for the smaller businesses to use. Not to mention the 10 and 12 unit stopsets I hear. I could go on, but I still believe that reach and frequency combined with a creative message will be effective. But the ROI won't happen overnight.

There are various purposes for advertising. Top of mind awareness is a biggie.

I think limited time sale advertising is the most expensive and likely not worth it. For example, the number of people with a car is many but the number buying a car this weekend is very tiny. No matter the offer,you're not buying unless you are in the market for one.

Top of mind advertising can do wonderful things. I actually witnessed this: in an office the copier quit working and they needed to call someone to fix it. They didn't know who. One person mentioned a company name and another person in the office said they had heard of them. The consensus was they must be the best company to call,so they looked them up and used their service not even knowing a things about the company only that the name was familiar. I was selling radio then and this made a big impression on me on how advertising worked.

A guy that went to work in the marketing division inventory control portion of the Wrigley Gum empire was on a plane with Mr. Wrigley. Fairly new in his position he sought to make an impression on Mr. Wrigley. He used a magazine of about 60,000 circulation where they bought a full page ad for "Juicy Fruit". The new fellow noted there were no other ads for chewing gum in the magazine, that it had a fairly low circulation and that the company could save money by buying a much smaller ad or no ad at all. Mr. Wrigley listened and asked a question: "Son, what's the #1 selling chewing gum?" The new hire answer "Wrigley". Mr. Wrigley then said, "That's right and that ad keeps us #1". Mr. Wrigley knew the value of top of mind awareness.

When I started selling radio advertising after years on the other side of the building, I too wondered if it worked. I asked my Dad that had managed a large bookstore (for the time). He hardly ever bought newspaper and didn't have the budget for TV. He said radio advertising is a mystery to him. In the years he advertised he never could point to a single person or single sale he could attribute to 'results' from advertising.

He decided to stop advertising to see if it worked. Sales dropped across the board by 10%. Each week he thought it was a fluke, but by the 4th week he figured it must be doing something. In fact the home office was asking what was up. He began the same advertising schedule again and the first week he started, sales jumped by 10%. He believed advertising, at least as far as a bookstore went, produced a 10% increase. He bought a typical weekly total audience plan on carefully chosen stations that reached the demographic that was know to be heavy readers.

One observation: to jump start a website, you advertise on TV and radio because they reach the masses. To be found by search or accident is not the way to go. Even online banner ads seem to be much less effective unless very targeted to a very unique niche.

Radio is frequently thought of as ineffective because other media requires all the senses to utilize. Radio does not. With radio you can visit with friends, drive and even work. The message gets in your head even if you're doing something else. You don't have to remember all the details,just enough to get you to the business and the truth is a consumer only gleans what they want from all advertising, just enough to create the reason to go to the business.

A well written commercial, artfully produced and especially if it creates water cooler talk, really gets the job done. The art is always to not obscure the message with the art. Sometimes you remember the art but not the message.

As pointed out, ROI is not immediate but the curve is based on consistent long term advertising. Most suggest 90 days before you start to see an ample return. I contend it is based on the product advertised. If groceries, fine but an oil change business might need up to a year. I think it depends on consumption period.

And then you have this scenario: For many years Lou Grubb had a Chevrolet dealership in the Valley. He was a heavy, but very low key, advertiser on both radio and TV. You had to pay attention to his ads because they didn't scream at you - unlike the majority of other dealers. If I was in the market for a new car I would have bought one from him just to support what I liked about his thoughtful advertising. Unfortunately, I do not like anything produced by GM so Chevys were outside my list so his ad dollars were wasted on me but his message wasn't.

Another great example are the early VW ads. Great advertising but questionable products. Same with Anheuser-Busch. Great classic ads. Terrible beer but it sells well because of its Gemutlichkeit (good feeling).

As someone already noted.....the successful ad needs to hit the target when he/she is in the market for said product otherwise it is just a contribution to the medium.

Landtuna and B-Turner, you guys both bring up good points. I've actually experienced the same thing you have B-Turner, but in a slightly different situation. Those that know me know that anything inflatable pumps me up, pun only sort of intended. So, when I heard an ad on the radio for the Insane Inflatable 5K, I hit the website right away. Had I been ready to do a 5K that day and had they come to my market that year, I would have signed up right there. Unfortunately there's a similar event that popped up on my Facebook page when I liked the II5K page, and as II5K didn't come to Seattle this year, unfortunately they didn't get any of my money. That being said, that, at least for me, while it is the example I cite whenever I talk about how well radio advertising works, is the only example I can really think of when I think about how radio advertising works. I think Landtuna's point was exactly what I was getting at. Sure, you're top of mind when it comes to the product you sell, but if the majority of people don't like your product for whatever reason, what does that get you?

gr8oldies said:

Name recognition still works....even when your commercial is annoying. I think everyone in town knows who the dealer Fooorrrrrrrr the People is. Having said that, Google gets credit for radio ads when someone hears the ad then checks out the website

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I'm sure plenty of people who've heard the Kars for Kids song far too many times have called 1-800-KARS-4-KIDS when they've needed to dispose of a clunker. For better or worse, it's the most familiar name in the whole racket.

It has been mentioned what if you don't need,like or use the advertised product. This actually is not a result of advertising not working but rather it did because although you don't buy the product, you learned of it by advertising being effective.

You really can't do much about those who don't like or don't need the advertised product. No matter what those sales won't happen. You have to think of those ready to buy and how to get them to consider you. Advertising might reach a wide swath of the population, but it is a much smaller group that is ready to buy now and that's where all your results come from.

CTListener said:

I'm sure plenty of people who've heard the Kars for Kids song far too many times have called 1-800-KARS-4-KIDS when they've needed to dispose of a clunker. For better or worse, it's the most familiar name in the whole racket.

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Never heard of them nor have I ever heard of "Fooorrrrrrrr the People". Must not be in my market or my very limited radio listening isn't enough TSL.

landtuna said:

Never heard of them nor have I ever heard of "Fooorrrrrrrr the People". Must not be in my market or my very limited radio listening isn't enough TSL.

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You've never heard 1-877-KARS-4-KIDS? I thought those ads were nationwide, on all sorts of stations. (And yes, it's 877, not 800.) It's sort of a scam, in that people donate thinking it will help needy kids somewher, but the children actually being helped are middle-class Jewish kids, getting help in receiving a private-school Jewish education rather than a secular public-school education.

b-turner said:

It has been mentioned what if you don't need,like or use the advertised product. This actually is not a result of advertising not working but rather it did because although you don't buy the product, you learned of it by advertising being effective.

You really can't do much about those who don't like or don't need the advertised product. No matter what those sales won't happen. You have to think of those ready to buy and how to get them to consider you. Advertising might reach a wide swath of the population, but it is a much smaller group that is ready to buy now and that's where all your results come from.

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I am curious, is a client at any advantage when they are the only thing in that business to advertise on a particular station? Maybe it's just me, but I'd feel like it was harder to get in customers to my car dealer if I was buying on a station next to a bunch of other dealers and national spots for other car companies than say the local bookstore example given above, which may be the only bookstore getting advertising from radio in this particular market, or one of only a couple, not a half dozen or more.

If you're the only one I'd think you would be at an advantage. I think one of the worst things happening on radio and TV is running direct competitors in the same stop set. When you have 3 car dealers in the same break I suspect it would be easier to mix information among all the car dealers.

bobdavcav said:

I would think the business doing said advertising would want some kind of return on that investment, and they won't advertise if they don't get that return.

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Exactly, and since most advertising is based on return business, you have the answer to your question. They don't buy ads for charity.

There is a guy in Houston that built his business with radio and TV advertising. He began by renting pieces of furniture from small furniture stores,putting it under a tent on a corner and selling orders for the piece of furniture ordered through the little furniture store that gave him a commission for each order.

His commercials were horrible and he admits they were. Some radio ad TV stations refused to air them.He didn't care if the played midnight to 6 am. In time he had an old warehouse.

Before coming to Houston, I remember seeing the same guy on TV in Dallas around 1969. He pulled the wad of cash from his back pocket and loudly proclaimed Gallery Furniture saves you money back then. By 1993, I got to Houston and the radio and TV airwaves were filled with the same guy and his 'saves you money'.

Today he runs what was the highest volume single location furniture store on earth doing more volume than many of the national chains do from all their stores. I think he has 2 locations now.

The commercials are still obnoxious, just not as much as they were. Everybody knows the name Gallery Furniture, that they 'save you money' and that you get no back order slip..buy today, it's in your house today (even if you buy at 9 at night).

You might know the owner through The Houston Rockets (I think he was the primary owner) or the guy that opened his store to storm victims during Hurricane Harvey.

I think he'd say he's built what he has in part by advertising. He'd say it certainly works.

b-turner said:

There is a guy in Houston that built his business with radio and TV advertising. He began by renting pieces of furniture from small furniture stores,putting it under a tent on a corner and selling orders for the piece of furniture ordered through the little furniture store that gave him a commission for each order.

His commercials were horrible and he admits they were. Some radio ad TV stations refused to air them.He didn't care if the played midnight to 6 am. In time he had an old warehouse.

Before coming to Houston, I remember seeing the same guy on TV in Dallas around 1969. He pulled the wad of cash from his back pocket and loudly proclaimed Gallery Furniture saves you money back then. By 1993, I got to Houston and the radio and TV airwaves were filled with the same guy and his 'saves you money'.

Today he runs what was the highest volume single location furniture store on earth doing more volume than many of the national chains do from all their stores. I think he has 2 locations now.

The commercials are still obnoxious, just not as much as they were. Everybody knows the name Gallery Furniture, that they 'save you money' and that you get no back order slip..buy today, it's in your house today (even if you buy at 9 at night).

You might know the owner through The Houston Rockets (I think he was the primary owner) or the guy that opened his store to storm victims during Hurricane Harvey.

I think he'd say he's built what he has in part by advertising. He'd say it certainly works.

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That would be old "Mattress Mac" McIngvale, right? He blew through a lot of his profits when he splurged on racehorses some years back. Not sure if he's still in the game. If he is, it's on a much smaller scale. He used to have runners in many major stakes races.

That's the guy and he's still going strong.

A few months ago the wife and I were in purchasing a new sofa from the local furniture store in Fredericksburg, VA. While the 20-something sales agent was writing up the order, we got into a conversation about advertising. I mentioned to the sales agent that I'd recalled they used to do quite a few weekend remotes with the local Hot AC station. The agent confirmed they used to, but he convinced the furniture store owner to move their ad budget to "digital", including social media like Facebook and Instagram. The goal was to increase reach for less money than what they had been spending with local radio. So I asked; when you did the radio remotes, how much foot traffic into the store was directly attributed to the radio ads, and how much of that foot traffic converted to actual sales? I could tell by his expression that it dawned on him while he was replying to my question; they made on average 15-22 sales per weekend radio remote from an average 50-60 people through the door that were called to action by advertising with the station. My next question was lobbed-up: So how many sales have converted from foot traffic that was directly attributable since moving your ad budget to all digital and social? Answer: None that he knew of. As we were wrapping up our business, he justified the decision to move all their ads away from radio by stating: "All my friends and family are on Instagram, so that's where the store needs to be too." As we were heading for the door, the sales guy shook my hand thanking me for buying from them. I did a total 'Colombo' Oh, just one more question; how many of your friends and family have come into the store and purchased furniture from you? He just smiled and wished us a good day.

I would have loved to witness that conversation,Kelly A. Most merchants and others working in the store have no clue of what advertising is doing for them. For some reason, furniture stores I've dealt with tend to strive to attribute sales to the source of advertising over and above any other type of business I dealt with. I won't say the digital advertising is a waste.I'm sure it is working for them. I'd think radio in general has better reach in raw numbers and may be better attuned to hone in on a target demographic than most media options. It boils down to cost per thousand to reach the target audience that buys your product.

For example, I was selling radio in a market where I competed with a regional FM. It wasn't that they weren't popular just as our station was. In fact we hit adults too in that small market where the advertiser buys more on reaching adults than that youth oriented station. I simply talked cost of getting the customer in the store. With the 100,000 watt station the business paid to reach people who would never become their customer along with their target group. With the station I worked for, a class A, our reach and pricing was based on the trade area for our community. We were priced accordingly. The business could spend less for the same schedule with us knowing all our listeners were in their trade area or pay more to reach many who would never become their customer on the 100,000 watt regional FM. Once I got them, it was time to find those things I could do that they liked emotionally and increase that budget a bit.

I agree with b-turner. I cant imagine why anyone would want to be the third car commercial in a row. For that matter, the "stop set" doesn't make good sense either, but it is the norm. I've heard as many as 14 spots, psa's and promos in a row in my market. Who would want to pay to be #8 of 14 in a row?