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Direct response radio advertising, at its core, works in the same way regardless of what type of business you are in. Whether you own a direct-to-consumer model business, a retail business, a web business, or some combination thereof, direct response radio advertising can help you grow. And grow profitably. The fundamentals of direct response radio, then, must start with a discussion of how radio advertising works within the context of a basic business model. The purpose of this article is to convey the fundamentals of direct response radio advertising that apply across businesses.
First, Two Important Concepts
Throw out all you think you know about advertising, radio advertising, and especially direct response advertising. It’s best to begin with a clean slate, a blank whiteboard so-to-speak. There are two important concepts I want to introduce before moving forward.
Concept One: Radio as A Highway From Your Business to Your Potential Customers
Think of radio advertising as a 5,000 lane highway from your business to groups (station audiences) of your potential customers. The many lanes on this highway are the many different radio stations and radio networks that are available for you air your radio advertisement. It is on these “lanes” that you send your message to your customers.
The lanes are clustered in such a way that they reach groups collections of customers who have similar tastes and demographic profiles. Therefore, some of these lanes lead to groups that have a high concentration of people who match your target customer profile. As a result, advertising on those lanes (stations) is more profitable than others with a lower concentration of your target customer profile. These groupings are the radio formats, which are used in radio advertising to enhance the efficiency of, or return on, advertising efforts. For more about radio formats, see our summary at website
Concept Two: Radio Advertising is a Profit-Driver, Not a Cost Center
At this juncture, the one thing many business people can’t seem to put out of their mind is the one of “how much does it cost” to advertise on radio. We’ve written extensively about this question because it is one of the most common that we get. The problem is that embedded in this question is the presupposition that radio advertising is a cost. The concept that one needs to fully grasp is that radio advertising is not a cost center. That is, it does not stand alone without any relation to revenue or profit. It is detrimental to think of direct response radio advertising as a cost because that leads to managing as though it’s a cost, which means minimizing or eliminating it. Contrast this with managing it like it’s an investment, and maximizing the return you realize on it.
Direct response radio advertising – by its very definition – is a profit-driver. If it’s not driving a profit, it would not exist – or at the very least it would not be called direct response radio advertising but instead “brand” or “awareness” advertising. Profitability is a fundamental aspect of direct response radio advertising.
On To the Fundamentals
Now that we’ve cleared our minds and allowed for two basic concepts about how to think about radio advertising, let’s move on to the meat of the fundamentals of direct response radio advertising.
The Basic Formula
We’ll begin with the basic formula involved in all direct response advertising:
You buy placement in radio media to air your radio ad, which gets your message broadcast to a certain number of people. This results in a cost per person reached with your message. In advertising this is known as CPM, or cost per thousand impressions of your ad.
Some percentage of those people will respond (call, visit your web site, visit your store), giving you a response rate.
Of those who respond (otherwise known as leads), a percentage will be converted into customers (orders), and by that conversion rate generate profit and revenue.
From this formula, you will derive your media “CPO”, or “cost per order”, which is found by dividing media spend by the number of orders achieved with that spend (media spend in the numerator/number of orders in the denominator). This is the amount it costs you in radio advertising to acquire one new customer, which is why it is also called “cost per acquisition” (“CPA”).
The important question at this point is this: Is the lifetime value (“LTV”) of each of your customers, on average, greater than this CPO? This fundamental question applies whether your business is a direct response advertising business (which includes radio advertising, print advertising, DRTV, catalog, or internet) or a traditional retailer. Every business pays to acquire a customer, and every business has a certain propensity to retain that customer over a period of time in a relationship consisting of subsequent purchases and therefore profit streams. Regardless of whether your business uses direct response radio to acquire new customers, or it uses one of the other approaches to customer acquisition, your success will be fundamentally based on whether your business model facilitates a strongly positive lifetime value. If it does not, there is little that radio advertising, or any other form of advertising, can do to change this.
If your LTV is not greater that your CPO, your business isn’t profitable and you’ll want to stop advertising so you can make the changes to both the advertising and the business model that will result in profitability. Even if LTV is greater than CPO, you will want to increase that amount to maximize your profitability. To do this, you’ll need to increase LTV and/or decrease CPO. This process is called business (or campaign) profitability optimization, and it is absolutely essential to the long term success of any direct responses radio advertising effort.
Improving Lifetime Value
There are a number of ways to increase the LTV of each customer. Let’s look at three of the main ways:
1. Increase price without increasing cost. One way to do this is by increasing the percentage of orders that include high-margin upsells. Retailers do this all the time. They put super high margin items right at the checkout. Direct response advertisers can learn a lot from this. Identify widely appealing, complementary items and ensure they are offered as part of the sales process.
2. Increase repeat purchase. You have paid to acquire that customer, now develop a relationship and continue to meet their needs to drive repeat purchase. If they only buy once from you, you don’t have a very viable business unless that first purchase is incredibly high margin.
3. Reduce your cost structure. Take advantage of your increased volume to negotiate better product costs, shipping costs, etc.
Improving Cost Per Order
In its shortened version, aerial advertising refers to any form of outdoor advertising where the ad message appears in the sky somewhere. It includes advertising found on blimps, banners pulled by airplanes or in skywriting.
Airplane advertising (also called aerial advertising or, sometimes, beach advertising) is a medium through which thousands of people can be exposed to the ad at one time. Airplane advertising refers to banner towing at the back of an airplane. These banners can be long and thin, or large and rectangular. They are often bright and colorful and carry simple, easy-to-read and easy-to-digest messages.
Aerial ads are usually targeted to specific groups at beaches during the summer and spring break and at sporting events. The benefit of airplane signs over other types of aerial advertising is the sheer novelty of the form and the attention it naturally gets when people see an airplane message down below.
Video has emerged of the moment residents and shopkeepers brought down thieves attempting a jewellery store smash and grab in North London.
Watch the foiled getaway here.
Locals raised the alarm after four mopeds arrived on the scene, carrying eight men armed with an axe and a sledgehammer.
The residents in Kingsbury had some weapons of their own however, as people are seen wielding anything they can find to halt the criminals, from advertising swing-boards to trollies in order to prevent the getaway.
Two men were caught but only one was kept long enough to be arrested, having been pinned to the floor by wooden pallets among other items from the street.
Let�s suggest that we have a unique product to be advertised.
Why do they create a bad advertising for this fine quality product? It is still a mystery that to me. But we will attempt to figure out why it happens. First of all let�s define what we mean under bad advertising. It is an advertising that has not worked. That is it.
The aim of the advertising might be not only traditional increase of sales � sometimes it is necessary to maintain sales rate at the definite level and under certain circumstances to slow down the rate of sales drop. Among the targets of an advertising campaign we distinguish: informing the public about something new in the product, creating a sense of brand awareness, adding or doing away with some values in the product image � that is enhancing the emotional charm of the item.
And so on�Well, why then advertising fails to attain its target.
The first and probably the main problem it has not been noticed. It is not the matter of scanty advertising budget. It often happens that advertising is done in the so- called �category format�. Some advertisers believe that if the competitors choose this strategy, then they are likely to know their business and they rely on somebody else�s choice, thinking that it will work.
The most terrifying consequence of such an approach is that consumers have a subconscious image of advertising of a certain product, for example mascara. And even if to create an impressive storyboard and present it to the focus groups, the clients are likely to say� Well, mascara advertising should look quite different�.
Such clich�s exist almost in every category: beautiful cars, speeding along the picturesque landscape as well as impassable roads; happy men drinking beer in the pub; worried students not knowing what to do with their custom term paper research; ideal families sitting at dinner to taste new mayonnaise or drink refreshing juice.It is like exclusive circle, which can be broken by a mutual wish of the client and the advertising agency.