Radio Advertising Costs

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June 26, 2016

Published by Tom Smith at June 12, 2016

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The cost of radio advertising depends on what you're having.

How much does it cost to advertise on radio?

That’s like asking; how much does it cost to go out for a couple drinks with friends?

Do you want to hit a hole in the wall tavern in Davenport, IA or are you going Frank Sinatra style – starting the evening in Palm Springs, taking the helicopter up to Los Angeles and then hoping a private jet to hit an all-night club in Las Vegas?

The budgetary requirements for these two evenings are very different. Likewise, the cost of radio advertising can be very different.

If you’re reading this you are probably a business owner or executive seeking to take your business to the next level. And you feel your firm is truly ready for accelerated growth.

It’s likely that you’ve maxed-out the effectiveness of your online advertising or are simply tired of the high cost of a single click. Perhaps you’re ready to do more top-of-the-sales-funnel marketing and drive consideration and purchase intent before your customers even begin their online research.

Whatever the reason for your interest in radio advertising – you’re likely to find it’s very different from any marketing you’ve practiced in the past. There are different costs associated with advertising on local radio, network radio, internet, satellite, traffic, sports, music, news, talk, podcasts and variations of them all. The cost combinations are limitless however, radio is not a medium you will be successful in without making a commitment to a 90-day plan and seeing it through.

Not Quite Sinatra-Style

For this example; we’re going to discuss advertising on local radio. Typically, local radio campaigns include more than one radio station. But, to simplify this example we’re going to look at the costs for a single (but top) newstalk radio station here in Los Angeles – KFI-AM 640.

KFI is very highly regarded in the radio industry. On-air talent as well as off-air professionals and executives consider working at KFI to be the pinnacle of their careers. The station dominates the newstalk radio landscape in Los Angeles and serves as both a model and benchmark for similarly formatted radio stations across the country.

Advertisers on KFI experience extraordinary levels of success. That success is due to many factors. Every business is different and every campaign is customized to the business it runs for. (Call me to discuss specific case studies – contact info in footer.)

Radio is a 24-hour proposition. Commercial advertisements (also known as spots) can run at any time of the day. Of course there are far more people listening to KFI, and all radio stations, during the day rather than in the middle of the night. And of course the more listeners you are reaching the more it costs to run a single commercial. You never-ever run a single commercial by itself – you schedule many to run each week and for many weeks, months or a year at a time.

And since there is only a finite amount of time available for commercials to run daily – the rates charged for those commercials fluctuate with demand. And, demand for advertising time on KFI is always high because the station works so good for advertisers. Demand, however, can also be impacted by many other factors such as; political campaigns and elections, severe weather, natural disasters, holidays, etc.

For an advertising schedule with effective frequency (number of spots) on a radio station like KFI an advertiser can expect to spend around $10,000 a week. That $10k will probably include a blend of 30-second and 60-second spots. Could an advertising schedule on KFI cost less? Sure, but it could easily cost more as well. It all depends on the objective of the campaign.

Entry-Level Sinatra-Style

What’s not included in the $10k cost discussed above is a talent fee for one of KFI’s personalities to endorse the product or service that you’re selling. Endorsements are always the most effective and efficient way to drive the very best results for your ad campaign – especially on a radio station like KFI-AM 640. Talent fees, aka endorsement fees, are separate from the cost of the media and can increase the overall cost of the campaign by about 35% or more. It’s common for a personality to be paid over $3,000 a month in talent fees from a single advertiser.

And when you are running an endorsement campaign there are a few other factors to weigh into the equation:

Talent Approval

The talent must approve the product or service that they are endorsing and helping you to sell. This comes as a surprise to some new advertisers – but it makes sense. The personalities are putting their credibility on the line with the audience they work so hard to develop. They never want to jeopardize their good name with their listeners – not at any price.

Station Approval

The station must also approve the endorsement. The station and the talent are almost always on the same page with this but it’s a factor to consider nonetheless. The station management has the ultimate power to accept or decline any endorsement campaign – as well as any advertiser or advertisement overall.

Exclusivity

Endorsement campaigns are exclusive and long-term contractual agreements. When talent like Bill Handel, Gary & Shannon, John & Ken, Tim Conway Jr. or Neil Saavedra put their good names behind a specific company they do so exclusively and are out of the market for at least the next 12-months.

Premium Media

Because they deliver the best results for advertisers and due to the aforementioned factors, the station puts a premium which increases the cost of each commercial by anywhere from 25-50%. So that estimated $10k weekly media cost increases accordingly.

As you can see, endorsement campaigns are quite involved – as is any radio advertising really – but they work exponentially well. So well that some advertisers on a station like KFI will run campaigns for well over a decade – because the return on investment is really that good!

Wrapping it up…

Local radio advertising is just one of the many options – but it is also one of the more common entry points.

Other costs of radio advertising include copy writing, commercial production or the production of a jingle or audible signature. These costs can sometimes be included and handled internally by the media company.

One of my personal specialties is working closely with clients and on-air personalities through endorsement contracts. We constantly test and optimize ad campaign copy, schedules and calls to action. We never stop working to maximize return on advertising investment.

Finally, there are a few miscellaneous costs you may incur with your radio advertising that might not be paid to the media company. These include; methods by which to track your advertising such as toll-free phone numbers, call monitoring service, landing pages and or the ability to enter special offer codes for your website. You may also want to include the cost of whatever special offer you include as the call to action within your commercial’s creative messaging.

If you’d like to learn more about advertising options, scroll to the bottom of the page for my contact information and reach out. But, when you do please have a budgetary idea in mind so I can best direct you. Will it be Davenport, IA (no less thank $5k-weekly in Los Angeles) or something closer to Sinatra-style? And BTW: What’s full-blown Sinatra-style in LA? $30k-$60k-weekly, and perhaps a bit more. This buys you multiple stations with multiple endorsers and, when done right, massive influence.