Advertising on radio has consistently proven to be an effective and efficient medium to help generate brand awareness and grow business for a variety of companies and in a variety of geographical markets. But for small and mid-sized businesses that are on a tight budget, it pays to know some tricks of the trade to keep radio advertising affordable.

"Negotiation is key. You have to go in and negotiate what you want," says J. T. Hroncich, managing director and principal of Capitol Media Solutions, an agency that helps companies buy advertising. "There's a lot more to it than placing a simple print ad. You have to look at the target audience your looking to reach, size of your budget and the ratings of the stations you are interested in purchasing."

The sections below will detail how to understand your options for radio advertising, tips for negotiating deals for radio ads within your budget, and other promotional opportunities on radio.

Dig Deeper: Making Your First Advertising Buy

How to Buy Radio Advertising On a Budget: Understand Radio Advertising Options

Despite the rise of television, cable, and the Internet as advertising platforms, radio advertising "still makes sense," says Hroncich. During the recent economic downturn, some businesses stayed away from radio, fearing that as people lost jobs, there wouldn't be as many commuters during drive-time hours. But that seems to have settled down. "It is still really relevant, but a lot depends on the market. If you're in Atlanta, Washington, D.C., or Los Angeles, where a lot of people still drive to work, it's a good platform to get your advertising message out."

Certain types of companies tend to advertise more on radio – auto dealers, banks, jewelers, salons, and so on. They tend to be local and they often provide a phone number, website, or location so that you can reach them. "At the end of the day a lot of them want you to come into the store," Hroncich says.

Often, radio stations will help produce the commercial for you as part of negotiating an advertising deal. "You can give them the copy and they'll create the ad for you, as long as it's a pretty straightforward type ad," says Hroncich. "Most times it is included in the price. Otherwise you can pay $1,500 to $3,000 and up to have an ad created."

Before negotiating, you have to figure out what target market you are trying to reach and then find radio stations and programs that do a good job of reaching those markets. Advertising agencies are often hired to do the research and the bidding for you, and can often negotiate more "value added" features to a contract.

Dig Deeper: On-Air Endorsements

How to Buy Radio Advertising On a Budget: Tips for Negotiating Radio Advertising Deals

The first rule of thumb to save money on radio advertising is to plan early and negotiate a long-term (13- or 26-week) or yearly contract. "Stations very often provide discounts and/or value added for clients who commit to purchasing a designated amount of advertising in advance," says Wendy A. Schmidt, a 20-year radio sales veteran in the Boston market who is a senior account executive for CBS Radio's premier Boston station, WBZ NewsRadio 1030 AM. "When you lock into a longer term, your rate is guaranteed for that contract period against future rate increases, and you do not pay in advance. Airtime is generally billed weekly or monthly only after the commercials air."
If you don't purchase your radio campaign in advance, you are at the mercy of supply and demand, whereby rates may increase as inventory decreases, Schmidt says. And, you may not be able to run your campaign at all if a station is sold out during busy months.

Here are some other tips for buying radio ads on a budget:

  • Short durations. Many stations, in addition to offering the standard 60-second commercial, offer advertisers the option to purchase shorter commercials – in 30-second, 15-second, or 10-second intervals. Time is money on the radio and these usually cost less during the same time of day. "Some stations may offer just a 'billboard,' or 'blink ad' – a 5-second, name-only mention," Schmidt says. "Shorter durations are particularly attractive to advertisers on a budget as they are often priced below a 60-second commercial, thus stretching your advertising dollars." If you can get your message across quickly, these shorter durations may be for you.
  • Run of station (ROS) commercials. ROS commercials, otherwise known as rotator spots, are lower-priced commercials with a broad window of airtime although there are usually no guarantees when your commercial will air, Schmidt says. The most popular, and thus most expensive, times to run radio ads are during the morning and afternoon "drive time" – the rush hours, when lots of listeners are commuting. But an ROS commercial may air anytime from 6 a.m. to midnight. "While rare, if a station has availability, it is possible to get some prime time commercials at the lower ROS rate," Schmidt says. "Consider purchasing times for which you will be guaranteed to run, and supplement some of your airtime with rotators."
  • Fringe days or times. Fringe are the days (or time of day) that are less in demand, or not as highly rated as other time slots, and thus, are priced accordingly, Schmidt says. "Consider midday, evenings, or weekends, when rates on many stations are generally less expensive than during weekday drive times," Schmidt adds.
  • On-air features. Outside of standard commercial spots, radio stations often allow businesses to sponsor certain on-air features, such as news, traffic, or weather reports. These typically include a sponsorship mention –"This news report is brought you by [company name]." Schmidt says these features are negotiable items which may or may not require a premium. "While a premium carries an incremental cost, it is well worth the investment to get the additional attention a sponsorship provides. The advertiser's company is then highlighted by the sponsorship mention, making the company stand out."

Dig Deeper: Saving Money on Radio Advertising

How to Buy Radio Advertising On a Budget: Other Types of Radio Promotions

Outside of on-air radio spots, there are other opportunities you may have on radio to promote your business. Here are a few:

Radio station promotional events.
To add value to your radio campaign, you may want to sponsor a radio station event as part of your advertising, Schmidt says.  This can be negotiated as part of your advertising package. Make sure to ask about any promotional opportunities. "For example, a radio station may host a business breakfast series in which qualifying advertisers are included as sponsors," Schmidt says.  "Or, a station may also customize a promotion exclusively for your business."

In addition to on-air exposure, you may be able to capitalize on in-person exposure to potential customers. "Your company may be allowed to provide samples or sell product, do demonstrations, and/or distribute promotional materials at the event," Schmidt says. It depends on the client whether sponsoring events makes sense, Hroncich says. "If it's an event featuring the most popular DJ in the area, you're going to have to pay a little more appearance fees, but it may really lend credibility if you have a popular on air personality reading your commercial or endorsing your product," he says. "That goes a long way."

Cross promotions with other advertisers. Schmidt recommends that businesses ask the radio station sales representative about other advertisers who may be interested in cross promotions. "Each advertiser would mention the other in their advertising, often providing an offer such as something free or discounted with purchase," she says.  "For example, a supermarket may advertise a discounted ticket to an area attraction with the purchase of specific food items. The attraction, similarly, would promote the supermarket." Cross promotions can be rewarding for both advertisers, as they are increasing their airtime and exposure, while simultaneously providing a consumer incentive to help drive sales for both businesses.

Determine if you qualify for co-op advertising funds. Schmidt says co-op advertising funds may be provided by a manufacturer whose products the retailer sells. "The amount of funding the retailer receives is generally based upon meeting a sales benchmark of the manufacturer's product," she says. "For example, a particular brand may pay a percentage of the store's advertising, provided that the radio commercial mentions the brand and/or slogan a designated amount of times." Co-op funds may accrue yearly or quarterly, but have specific deadlines in which to use the funds, otherwise they lapse. "It's important for retailers not to overlook this valuable potential source of advertising funding," Schmidt adds.

Tap into the radio station's online audience.
Most radio stations have websites, and "stream" or broadcast their programming online. Generally, for a minimal investment, advertisers can add value to their on-air radio campaign by also advertising on the station's website. Sometimes, Hroncich says, radio stations will sometimes throw in website advertising as part of the "value add" in an advertising contract.



How to Buy Radio Advertising On a Budget: Recommended Resources

The Radio Advertising Bureau
The sales and marketing arm of the radio industry, the RAB has nearly 7,000 members including some 6,000 stations in the U.S.

Radio Locator
The most comprehensive radio station search engine on the Internet.

Radio Ad Lab
An independent organization funded by radio industry companies to further the understanding of how radio advertising works and to measure radio's effectiveness.

A media and marketing research firm serving the media -- radio, television, cable and out-of-home -- as well as advertisers and advertising agencies.