Getting radio advertising on board, like P&G: A way to success for marketers!
Published: March 16, 2023
Procter & Gamble is a major player in the packaged consumer goods industry. In spite of having multiple options to reach target audiences, the US FMCG giant has now taken radio as their prominent choice.
According to Vivix, P&G increased its radio spending by 43% last year to $235 million, with local radio accounting for the majority of the increase. This caused the company, under pressure from rising costs and attempts to limit price increases, to reduce measured spending by more than 10% to $2.2 billion.
While radio does not appear to be as fashionable as other linear TV alternatives, it is becoming an important part of P&G's plans. Even before last year's significant increase, P&G was the largest radio spender in the United States by 2021.
We continue to adjust where we invest as part of our overall strategy to reach our consumers where they are, when they are receptive, and in media that resonates with them.
The cost per thousand (CPM) to reach audiences through connected TV is high, often ranging from $35 to $65. YouTube video CPMs range from $20 to $25, while linear TV CPMs range from $10 to $15. However, radio can be purchased for $5–6 CPM.
According to Nielsen TAR data, radio outperforms linear TV particularly with younger (18-34) and Hispanic audiences. Based on the study conducted by Cumulus and Nielsen, radio enhanced reach over that of linear TV by an average of 44% for P&G brands in May 2022.
P&G's spending on radio increased as AM/FM radio surprisingly approached linear TV in time spent among people 18-49 in the United States. And, it happens for the first time since Nielsen Total Audience Report data was collected.
What does P&G’s audio spending data imply to marketers?
It is the unwritten formula that brands will reach their audiences when they hang out where their audiences hang out.
As audiences are slowly shifting to OTT platforms, especially post-pandemic, it amplifies the popularity of CTV and OTT advertising. Though it has a plethora of benefits, the catch with CTV advertising is its expense.
At this point in time, P&G has made a cost-effective move by taking radio advertising into its own hands. Though radio advertising is nothing new, P&G has revamped its strategy with audio advertising and quantified the results. It reiterates that marketers have yet to unlock the full potential of radio advertising.
In fact, the recent statistics from Radiocentre show commercial radio had a record year for revenue in the UK with 2.8% growth in 2022.
Although radio audiences are not growing, they are far more stable. More than anything else, it is primarily free to consume for audiences, unlike OTT platforms or linear TV.
Especially for FMCG brands, where the target market base is wide, including radio in the marketing mix can definitely be an effective option. It increases brand salience over TV advertising and influences the purchasing decisions of audiences.
More importantly, the competition for marketers is relatively less in radio. And marketers are able to gain audience attention at a lower cost than on other platforms. According to P&G data, it costs less than half the price of linear TV and less than a fifth of the price of targeted CTV to reach people.
It is apparent that radio's relative strength is not losing audiences to streaming competition at the same rate that television is losing cable and satellite subscribers. Most marketers are unaware of this and not ready to invest in radio ads. However, P&G’s data emphasizes the hidden fact.
In a nutshell, radio advertising is still an efficient pathway for marketers to reach their target audiences and amp up their sales. If it has yet to be incorporated into your marketing strategy, now is the time. The sooner, the better.
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