Study Shows AM/FM Radio, Digital Audio Outperform ROI Average for All Media.

A just-released analysis from WPP Media shows that both AM/FM radio and digital audio deliver a return on ad spend significantly higher than the average of 11 advertising media, with digital audio ranking third and AM/FM fourth in ROI among those media.

WPP’s study sought not just to compare broadcast radio and digital audio return on investment to other media, but also to quantify both short- and long-term audio ROI, and to take a closer look at how multiplatform audio amplifies overall media campaign ROI.

The study involved $2.2 billion in media spend analyzed over a two-year post-pandemic period (2021-2023), including 142 brands, 14 sectors, 10 media channels and 53 brands matched pre- and post-COVID, using marketing mix modeling to link ad spend to incremental profit.

“Marketing mix modeling is the gold standard for understanding media effectiveness,” Cumulus Media/Westwood One Audio Active Group Chief Insights Officer Pierre Bouvard says in Westwood One’s blog. “It’s a statistical modelling approach that isolates the contribution of advertising from other factors that drive a business (pricing, distribution, seasonality, etc.).”

WPP focused on seven brands that have studied the impact of AM/FM radio and digital audio, with diverse media mixes including TV, out-of-home, social, search, and online video. Together, broadcast radio and digital audio accounted for 15% of total media spend for those seven. The outputs of these marketing mix models were then linked to the dataset to provide a comparison to other media channels.

The study found that over the two-year period, AM/FM radio’s long-term ROI outperforms the 11-media average by 22% ($6.55, vs. $5.38), while digital audio outscores the average by 27% ($6.81). Only print and linear TV show a higher two-year ROI than AM/FM and digital audio.

Looking at short-term ROI over a 13-week period, digital audio and broadcast radio tie for first and third respectively in ROI, with digital audio outperforming the all-media average by 44% ($3.54, vs. $2.45) and broadcast radio 23% ahead of the average ($3.01).

“Audio is both a driver of short-term sales effect as well as long-term sales effect,” Bouvard says, noting the study’s finding that when a cross-platform buy reallocates 15% of spend to include 10% broadcast radio and 5% digital audio, one-to-13-week ROI sees a 5% lift, while a shift to 24% audio brings that lift to 8.2%. Either way, Bouvard says, “Audio elevates the media plan.”

It is important to note, however, that as a brand’s profits increase, its ROI declines. “The advertising world easily throws the word ‘ROI’ around,” Bouvard says. “We mistakenly use it as a catch-all for every good business outcome: sales growth, profit growth, and customer growth, [but those] are effectiveness measures [while] ROI is an efficiency measure. To determine ROI, divide short-term revenue growth by media investment. As ad spend goes up, so does profit, [while] ROI reduces.”