Despite the historical upheaval in the retail industry, it remains one of radio’s largest contributors to national advertising. As retailers reassess their ad spending in response to how the pandemic has changed America’s shopping habits, a new Nielsen study commissioned by Westwood One ought to help get radio a second look.
The analysis was done on a campaign for an undisclosed retailer who purchased both radio and television during a one-month period in April and May 2018. The budget included an $11.9 million investment on radio and $9 million for TV. Using the Portable People Meter panel of 80,000 respondents, Nielsen was able to measure exposure to every single radio and TV spot down to a per-person level. That commercial exposure was then matched to actual spend using credit and debit card spending from the home address.
The analysis showed that using both radio and TV boosted the reach of the retailer’s message. During the one-month flight, 57% of those exposed to the ad were reached both by the TV and AM/FM radio campaign while 23% only saw the TV ads and 20% only heard the AM/FM spot. And Nielsen said that the study found radio boosted the TV campaign’s reach by 24%.
“The majority of those only reached by the AM/FM radio campaign were light TV viewers,” said Westwood One Chief Insights Officer Pierre Bouvard. He pointed out in a blog post that the data revealed two-thirds of those who only heard the radio spots were light TV viewers while just 10% were heavy TV watchers. The data also showed the younger the demographic, the greater impact AM/FM radio had in lifting the incremental reach, according to Bouvard.
The expanded reach of the radio and TV combination was an important factor as the campaign generated a 6.2% increase in sales, most of which came from customer growth. Nielsen’s numbers showed there was a 5.2% increase in the retailer’s customer base, along with a more modest 1% gain in spending from each household.
But Bouvard said the sales lift of the two media was not the same. The Nielsen data showed the radio-only segment had three-times the sales lift when compared to consumers only reached by the television ads. The segment exposed solely to the radio ads had a 13.4% increase in sales for the retailer compared to a 4.6% bounce for those who only saw the TV ads. And among those that were exposed to the retailer’s commercials on both mediums, Nielsen said the lift was 4.8%.
Looked at another way, Bouvard said the data showed that 42% of the entire incremental sales lift came from the 20% of the total campaign reach who were only exposed to the radio ads. “One point of AM/FM radio-only reach generated two points of incremental sales,” he said.
The aim of the analysis is, of course, to convince national retailers to allocate more of their advertising budget to radio. But the Nielsen figure that may have the biggest impact may not be how reach and frequency numbers are boosted by adding AM/FM to the media plan. Instead, the biggest takeaway is potentially the bottom line finding that showed for every dollar invested in AM/FM radio, there was $28.82 of incremental sales generated. This was twice the return on ad spend of television, which had $13.51 of incremental sales generated for every dollar spent on TV ads.
It is not the first brand lift study done on radio, but it was the first-ever TV and radio cross-media sales effect study for the retail category. Westwood One said it was also only the fourth time that a study has been done on ad campaign that used both radio and television.
Bouvard said it is not uncommon for brands to report that AM/FM radio does not perform well in media mix modeling studies. That is because radio is often such a small part of many national brand campaigns that a media mix model has a hard time generating a “stable and reliable” analysis on how radio performed. Bouvard thinks a study like this is a better read of how radio performs since it connects actual media exposure to actual consumer spend. The result is Nielsen is able to calculate the actual sales effect and ROI from a radio flight.