Advertising Volume And Advertising Effectiveness

Next to the Internet, radio is my favorite medium. It’s one-to-one and personal in a way that no other traditional medium can duplicate.

My favorite radio personality is Neal Boortz, a nationally syndicated talk-show host who broadcasts out of Atlanta on 171 stations. I listen to Boortz every morning during the commute to my office in Roswell.

Yet at the top of the hour, I turn off my radio and don’t turn it back on until 8 minutes after the hour. Why? Because that’s radio’s black hole. Eight solid minutes of commercials, traffic, weather, news and more commercials.

The second black hole occurs at the bottom of the hour, but it’s not quite as bad. I turn off my radio for only 6 minutes.

For every ad that radio stations used to run, it now seems like they run two. Radio, in my opinion, has become Radiado, an extra ‘ad’ inserted at every possible point in the programming.

There’s a relationship between advertising volume and advertising effectiveness. The greater the volume the less effective any individual advertisement is likely to be.

A number of magazine readership studies have shown, for example, that an advertisement in a thin issue of a publication is more likely to be noticed and read than the same advertisement in a thick issue of the same publication.

In the long run, the health of the advertising industry is related to effectiveness. As the increasing clutter reduces the effectiveness of advertising, clients are turning to other ways to promote their products and services. So today we have advertising on blimps, ATMs, gas pumps, eggs, commodes, even beach sand. And there’s a developing market in stadium naming rights and product placements in television, movies and videogames.

The New York Mets and Citigroup have signed a 20-year deal to call the team’s new stadium CitiField. According to press reports, the deal is worth at least $20 million a year, a record for stadium rights.

The Port Authority of New York and New Jersey signed a contract with Geico to place billboards and other advertisements on the George Washington Bridge. Less than a week after the contract was announced, the Port Authority backed out of the deal citing the hostility the plan had received. ‘We misjudged the negative reaction to this,’ said a Port Authority spokesperson.

If the New York community can get upset about a few signs on a bridge, why doesn’t the advertising industry get upset about the increasing clutter on traditional media? Especially since the arrival of new technologies that let consumers take charge of their own ‘clutter reduction’ tactics.

If I were running a radio station today, I’d worry more about Sirius XM Satellite Radio than I would about my direct competitors. So far, the merged satellite systems have signed up 18.5 million subscribers. (For $16.95 a month, you can say farewell forever to Radiado. Maybe not forever, since advertising is starting to creep into the satellite radio medium.)

If I were running a television station today, I’d worry more about TiVo (and other digital video recorders) than I would about my direct competitors. At the end of 2005, according to Forrester Research, 12.2 percent of households had DVRs. That number is expected to skyrocket.

Radio was my first love, both from a consumer and a business point of view. As a matter of fact, our agency was the first advertising agency ever hired by the Radio Advertising Bureau.

‘Radio is red-hot’ was the theme of our first campaign. In spite of radio’s lack of visuals, the campaign tried to make the point that radio is a primary medium because the objective of a marketing program should be to ‘own a word in the mind.’

Own A Word. Not A Visual.

Are visuals helpful? Sure, but the objective of the visual should be to associate the brand with a word. Volvo drives an automobile into a wall in order to drive the word ‘safety’ into the consumer’s mind.

Radio isn’t exactly red-hot today, but it has held its own among major media. In 1978 (when we first went to work for the Radio Advertising Bureau) radio accounted for 6.7 percent of total media expenditures. Today it’s 6.9 percent, a gain of 3 percent.

Newspapers, on the other hand, are down 42 percent. Magazines are down 20 percent.

Radio is a powerful medium with great selectivity at relatively low costs, but Radiado threatens the very existence of the medium. Too much is too much.

One could make the point that radio has nothing to worry about. That advertising in general has not been increasing and in one sense this is true. For the last 60 years, U.S. advertising spending has averaged about 2 percent of the gross domestic product. (In 2005, it was 2.18 percent, the smallest percentage since 1994.)

That misses the point. The last 60 years have witnessed an explosion in the average family’s income. Yesterday’s luxuries have become today’s necessities. Today the average family has the money to buy air conditioners, microwave ovens, dishwashers and cellphones. Today, the average family has the money to spend on restaurant meals, multiple cars, jewelry, watches and other luxury items.

With an expanding income comes a declining percentage of a family’s income spent on food, housing and other essentials. Expenditures for food, for example, have been consistently falling. From 15.1 percent of the average family’s income in 1990 to about 13 percent today.

With rising incomes, the percentage of a country’s gross domestic product spent on essentials should be falling. Nobody should be saying, what most families need in America is more to eat. Or more advertising to consume.

The biggest health problem in America today is obesity. The biggest advertising problem in America today is obesity, too.

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