Marketing: Living Up and Down the Dial

As more companies pump up the volume of their radio advertising, here are 10 tips for making the most of your airtime.

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Radio has been very good to the Vermont Teddy Bear Company. By advertising its stuffed animals on stations nationwide, the business has grown from $5 million to $39 million in sales. "We do some stuff in other media, but 95% of our advertising has been with radio," says Gerry Howatt, the company's media-buying manager. "We started doing a lot of it in 1991, and the company took off." Today, Howatt oversees a staff of five and a budget of $9.1 million a year -- a rich 23% of total revenue. "We're in 140 major markets, and I know all their radio stations and which ones work for us," Howatt says.

Sure, the Shelburne, Vt., company's focus on radio is extreme, but it is not alone. Spending on radio ads is expected to grow 6% to 8% in 2003. And while a lot of that growth is likely to come from campaigns for beer and new movies, smaller businesses are flocking to the airwaves, too. "By my experience, we've seen dramatically more local businesses this past year," says Jeff Delvaux, who manages six stations in Duluth, Minn., for Midwest Communications.

In an era of permission e-mail and even cell-phone marketing campaigns, why are companies taking to the airwaves? Because radio is just so dependable -- it can be bought overnight, it can be relatively cheap to get into, and it's a medium where the basics run deep. Here are 10 tips to work it:

Be smart when setting a budget. The cost of buying radio time varies regionally and is based on factors such as the time of day and the size of the market. Delvaux advises service companies to set aside 6% to 8% of gross sales for radio ads. And he counsels retailers to take 12% of projected gross sales, subtract the cost of rent, and voila: the result should be their ad budget. This formula, which Delvaux credits to ad guru Roy Williams, generally works for retail companies that sell at a 100% markup. Delvaux likes the plan because it takes into account the value of foot traffic. If you're paying a premium for rent, you shouldn't have to spend as much on advertising; but if you're off the beaten track, you'll have to advertise more to get noticed. (For more on budgets, see bellow.)

Hold production costs to zero. Radio stations will happily produce most ads for free and even pass them over to competing stations as a favor to their clients. "With MP3s it's easy to e-mail them, and it costs the radio station next to nothing," Delvaux says.

Keep the script simple. "Radio is good for generating excitement, although it's lousy for giving details," say Peter Kern, who, with his wife, Pamela, runs Kern Media, a media-buying company in New Gloucester, Maine. Radio spots can be effective even if they're not especially clever -- the slightly insulting ads you've heard a thousand times (think guy screaming about car sales) really do work. Use radio to tout discounted merchandise or the launch of a new service. Save details for newspapers or direct mail.

Avoid the rush hour and long commercial breaks. Kern advises his clients to buy time in the morning and at midday, when the rates are cheaper and stations have more listeners, rather than at 5 p.m., the time that many advertisers request. He also suggests picking radio stations that limit the number of ad spots they run to 14 an hour. Ideal is a station that runs from three to four spot breaks an hour, with four to five commercials per break. Stay away from those stations that carry 8 to 10 spots per break because your ad will just get lost on them.

Saturate the airways. "The biggest mistake businesses make is not buying a lot [of radio ads] in a continuous period of time," says Kern. "You should be buying more frequently over two weeks instead of spread out over a month, and buying 30 spots on two stations instead of 18 spots on three." A rough rule of thumb, he says, is that listeners need to hear your ad a minimum of three times a week "before you start to break through the clutter." This is particularly true if your company is relatively unknown. "Burger King doesn't have to tell you who they are," says Kern. "But most businesses need to convey where they're located, what they do, and what the special is."

Follow the numbers. Dan Paisner, president of the 10-location car-wash chain ScrubaDub Auto Wash Centers Inc., looks carefully at station demographics, ratings, and ad costs. He then calculates his cost-per-ratings point, which helps him figure out where he needs to advertise to most efficiently reach men and women ages 25 to 54 without duplication. "It's like any dollar invested in your business," says Paisner, whose company is based in Natick, Mass."You want the greatest return from it."

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