According to the latest survey by Borrell Associates, approximately half of local direct ad buyers (49%) and three-fourths of local ad agencies (78%) are purchasing AM/FM radio advertising.
The survey, which included 2,318 local ad buyers and ad agencies and was conducted from March to May 2023, revealed that among local direct buyers, only social media (65%) and event/sponsorships (54%) were more widely used than AM/FM radio among the 19 types of advertising included.
For agency buyers, AM/FM radio tied with social media as the most used media channel. The research is comprised of two separate surveys with 1,983 respondents from direct buyers and 359 respondents from ad agencies.
While radio ranked within the top three for usage, it placed sixth in terms of spending rate. On average, local direct radio buyers invested $34,167 annually in the medium.
In terms of streaming audio, 15% of local direct ad buyers reported purchasing it, with an average investment of $18,307 in the channel. This includes digital pure-plays, online streams of broadcast radio stations, and podcasts. Although podcasting and streaming audio usage continue to grow, most of the streaming ad dollars come from ad agencies rather than local direct ad buyers.
The study reveals that, on average, these buyers allocate $128,300 per year towards advertising, which accounts for approximately 4.6% of their gross revenue. However, a significant majority of respondents, more than 50%, reported spending less than 2% of their gross revenue on advertising.
During a webinar presentation of the results, Gordon Borrell, CEO of Borrell Associates stated, “It’s remarkable to me they can stay in business spending less than 2% of gross revenues on advertising. That’s probably why their business is shrinking, or at least flatlined,” he said.
“It’s a big opportunity here to convince advertisers that you are a marketing expert, you have some information that can help them, and advertising is an investment that is going to help their business grow.”