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Top Four Factors That Affect Radio Advertising Rates


We’re all familiar with TV’s upfronts; they take place at the beginning of summer and usually wrap up by July. But, have you heard of the radio upfronts? Unlike their TV counterpart, they take place in September and October, giving radio stations and advertisers a chance to connect, see the new content planned for the upcoming year, and strategically allocate advertising dollars. It’s a great opportunity for everyone. Radio stations can book ads at scale, and advertisers are able to lock in premium inventory at some of the best radio advertising rates they’ll encounter all year.


Like most things in the ad industry, the rates that marketers pay to advertise over the radio aren’t set in stone. In fact, they tend to vary widely, and the reasons for that are not always in our control. Case in point: the COVID-19 pandemic in 2020 caused radio advertising rates to drop, but they rebounded by 12% in 2021, faster than anyone expected (earlier forecasts had only predicted 1% growth).


Not everything with radio is as out of our control or unpredictable as a global pandemic. By understanding what factors have the greatest impact on ad rates, you can make better use of your budget and resources. Whether you participate in the upfronts or reach out to a radio station throughout the year, these four factors laid out below should remain top of mind.


1. Time of Day


Throughout the day, the audience of any given radio station will fluctuate. To help sort these fluctuations, radio stations divide days into different dayparts. Dayparting makes it easier for radio stations and advertisers to schedule programming and ads — as some content may not be appropriate for younger listeners or may be more interesting to older audiences. Of course, this structure works much better during the week when people are going to school or work. On the weekends, the schedule is much more flexible.

​AM Drive

​6:00 a.m. – 10:00 a.m

​Mid-Day

​10:00 a.m. – 3:00 p.m.

​PM Drive

​3:00 p.m. – 7:00 p.m.

​Evening

​7:00 p.m. – 12:00 p.m.

​Overnight

​12:00 p.m. – 6:00 a.m.

Unsurprisingly, peak listening hours tend to be during morning and evening commutes when more of us are in our cars, so when you’re trying to decide what time of day to air your ad, your first instinct is probably to choose the morning or afternoon drive. Of course, if you’re thinking that, so is everyone else, which makes these the most expensive times to air your ad. Along with being the most competitive, they may not even be the best time of the day to connect with your audience. For instance, older populations are likely to listen to the radio throughout the day, and plenty of businesses such as convenience stores always have the radio playing in the background while customers shop. If you’re trying to catch someone while they’re making a late-night snack run, a later daypart would be more effective.


2. Market Size


Not all radio markets are made equal, and the size of your chosen market has a huge impact on how much an ad will cost. This is because radio ads are priced based on the number of people listening multiplied by the cost per a thousand impressions, or CPM. In a larger market, you have the potential to reach thousands of more listeners, so naturally, the overall cost will be higher. Take the top market in the US, for instance: New York, NY. According to Nielsen, the 12+ population for this market is 16,110,500, significantly more than the audience size of smaller markets such as Abilene, TX, which only has 145,300 listeners.


Of course, if the prospect of advertising in larger markets seems intimidating, we’re sorry to tell you that smaller markets aren’t always cheaper. Because the audience size is smaller, the cost in radio ad sales per person is higher due to the increased competition you’ll face with other advertisers. According to BIA/Kelsey, every city in BIA’s top ten billing markets based on revenue per population are outside of Nielsen’s top 150 largest markets.


What’s the takeaway? Whether your market is small or large, the level of competition you’re up against will coordinate with local radio advertising rates. Think strategically about which segment of the market you most want to target and which stations you want to prioritize.


3. Contract Length


It should be a no-brainer that for an ad to be successful, it needs to be played more than once or twice. Listeners need to hear your message consistently to truly remember it. To make sure they're hitting the right frequency, advertisers usually follow the 21/52 rule, which means playing an ad 21 times a week (3 times each day) for all 52 weeks of the year. If you plan to play your ad at such a frequency for such a long period of time, then you may want to commit to buying this inventory from the very beginning.


This is beneficial for you for several reasons. First, committing to a long-term contract and nearly two dozen ad spots a week will put a huge smile on any radio station’s face. By forming a relationship with them that is expected to last for many months or years, they’ll be more likely to reward your loyalty by offering you discounts and other opportunities. Second, by purchasing your ad placements now, you’re able to lock in the current radio advertising rates. If rates happen to increase within the next year, you won’t have to worry about paying more even if you don’t actually pay for each ad until after the ad airs.


4. Negotiating Prowess


Radio advertising rates are notoriously slippery. They change from region to region, from station to station, and even from advertiser to advertiser depending on your negotiating abilities. If you accept the pricing on their rate cards without any discussion, then you likely aren’t getting the best deal. How can you negotiate favorable terms for yourself, though? Here are a few tips:

  • Ask around with other stations to learn what the average rates are in the area. This gives you a good starting point for negotiating.

  • It never hurts to ask for discounts and other freebies.

  • Offer to do giveaways. By providing free services or products in exchange for airtime, you can cover some of your costs this way.

  • If the time of day is not as important to you, allowing the station to choose when the ad runs, known as run of the station (ROS) commercials, will lower your rates.

  • Most ads are sold in 30-second units, but some stations may offer shorter units that will be more affordable and give you airtime during competitive periods.

  • Think outside of the typical commercial. Sponsoring on-air or off-air events will be lower-cost, and the station will appreciate your flexibility.

  • As we mentioned before, opting for a longer contract will yield volume discounts and value-adds.

The Secret to Getting the Best Radio Advertising Rates? Stewardship.


Unlike digital advertising, scheduling a radio ad can’t be done in a few simple clicks. It involves a lengthier process with market research, RFPs, and back-and-forth negotiations with station reps. For someone new to the world of radio, this quickly becomes overwhelming to do alone. That’s why the media stewards exist in the first place. Over our 3+ decades serving the ad industry, we’ve accumulated a wealth of knowledge and experience and formed lasting relationships with radio professionals across the country. To make sure you’re utilizing this advertising channel to its fullest potential and getting the best value, partner with a media agency that will treat your ad budget as if it were our own. Contact The Ward Group today to get started.