Radio Advertising

Commercial radio stations make most of their revenue selling “airtime” to advertisers. Of total media expenditures, radio accounts for 6.9%.Radio advertisements or “spots” are available when a business or service provides valuable consideration, usually cash, in exchange for the station airing their spot or mentioning them on air. The United States Federal Communications Commission (FCC), established under the Communications Act of 1934,Federal Communications Commission regulates commercial broadcasting, and the laws regarding radio advertisements remain relatively unchanged from the original Radio Act of 1927, enacted to deal with increasing problems of signal interference as more and more stations sprung up around the country.

Radio advertisements are purchased either “locally” or “nationally”. National advertising refers to ads that run in several markets, such as those for chain stores. Radio advertising is typically sold either “directly”, where a business purchases the airtime directly from the radio station, or through an advertising agency that purchases the ad and produces the commercial for the business. When a client purchases spots directly from the station, most stations will produce a commercial for the advertiser at no charge. Advertisers can also go to independent companies for production of their commercial message.

Radio stations today generally run their advertising in clusters or sets, scattered throughout the broadcasting hour. Studies show that the first or second commercial to air during a commercial break has higher recall than those airing later in the set. Most radio stations and advertising agencies subscribe to this paid service, because ratings are key in the broadcast industry. Ad agencies generally purchase radio based on a target demographic. For example, their client may want to reach men between 18 and 49 years old. The ratings enable advertisers to select a specific segment of the listening audience and purchase airtime accordingly. Ratings are also referred to as “numbers” in the business.