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Why Advertisers Need Broadcast Radio For Incremental Reach And Light TV Viewers.

As audience viewing habits shift from linear TV to ad-free streaming platforms, the television landscape is undergoing profound change. As audiences shrink and cord cutting climbs, radio industry leaders are pitching broadcast radio as a way to make up for the audience holes in media plans that have traditionally been built around TV.

Consider this overwhelming body of evidence assembled by Westwood One Chief Insights Officer Pierre Bouvard: Linear television’s weekly reach among persons 25-54 has dropped from 85% in Q3 2018 to 77% in Q3 2020. This means one out of four persons 25-54 cannot be reached on linear TV. Bouvard calls 2020 the “worst year ever” for cord-cutting as pay TV lost 5.5 million subscribers in 2020.

Meanwhile, MoffettNathanson reports that residential penetration of traditional pay TV is down to 61% of occupied households. That’s a steep slide from pay TV’s peak 89% penetration in 2009.

Bouvard uses ad-supported linear TV’s downward trajectory to lobby for radio as a way to fill in the missing audience pieces for brand marketers. To make his case, he uses the Nielsen Media Impact (NMI) media planning tool to determine how reallocating a portion of an advertiser’s budget to AM/FM radio would affect how many consumers are reached by the campaign.

“Many herald OTT and connected TV, ad-supported streaming TV, as the solution to all of linear TV’s woes,” Bouvard writers. But connected TV ads are “expensive and scarce,” he notes, and can only solve for a small amount of TV’s erosion. Putting AM/FM radio in the plan generates triple the reach of connected TV, he shows by using the NMI tool. Adding 50 points of AM/FM radio to 250 points of TV (225 linear TV Gross Rating Points (GRPs) and 50 connected TV GRPs) generates a 24% increase in reach, triple the incremental reach lift that connected TV can add alone.

In a bit of irony, WeatherTech, a retailer that sells floor mats, trunk liners, and other products for cars, shuns AM/FM radio. It instead uses TV, billboards and digital to markets its wares.In February 2020, it spent $11.4 million in TV, generating a 48% reach among persons 25-54. Using NMI, Bouvard shows how shifting just 20% of WeatherTech’s TV budget to AM/FM radio would have increased its audience reach from 48% to 78% among persons 25-54.

CPG giant Procter & Gamble uses radio to expand audience reach for a litany of its consumer products on a regular basis. One of its executives, John Fix, explained the rationale at the 2017 Radio Show. P&G wants to reach as much of America as it can, once a week, he said, as first reported by Inside Radio. While TV has been its media cornerstone, it’s a costly investment to use television to reach 72% of the U.S. “The brands are looking to get the reach they want and they can’t get it with TV,” Fix said. “Knowing that, radio seemed to be an option.”

NMI data shows the average P&G brand experiences a 38% increase in reach due to AM/FM radio campaigns. The younger the demographic, the greater the incremental reach lift generated by AM/FM radio. “Hundreds of NMI reports for dozens of brands and categories all reveal the same findings. AM/FM radio can supplement the older skew of linear TV with significant reach lift under the age of 60,” Bouvard says.

The blog post closes with the conclusion that AM/FM radio makes TV campaigns better by reaching light TV viewer. Citing Nielsen Scarborough data, it shows AM/FM radio reaches 83% of the light TV viewer audience across all demographics. Read the entire post HERE.

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