Radio Drives ROI

Phase 3 of the ‘Radio. It’s a Love Thing’ brand campaign was launched in June 2015 and incorporates findings from an independent ROI study undertaken by Colmar Brunton. The research is the first known ROI study of its kind in Australia. The objective of the study was to confirm that a relationship does exist between media channels and campaign performance, and to understand the nature of this relationship. In undertaking the study, Colmar Brunton sought to demonstrate the impact of media advertising on ROI by looking at three specific media channels - radio, TV and online.

21 national brands, including 17 FMCG brands and four service and government providers participated in the study. The brands are some of the largest and most established in Australia. The 17 FMCG brands included products that would typically be found in the aisles of leading national supermarkets, collectively making up a shopping trolley of items, generally one from each supermarket aisle. This allowed for an accurate snapshot across a broad range of FMCG categories. The research included 116 campaigns and 2,310 data points over an 18 month period between January 2013 to June 2014. 

The study involved a comprehensive two-stage process. Regression analysis was conducted for individual brands and campaigns in order to identify and understand the strength of the relationship between media usage and campaign performance. For this analysis, transaction volume/value metrics were used as the dependent variables (sales value, sales volume and enquiry volume) and media channel use and spend were used as the independent or explanatory variables. This confirmed the hypothesis that media use and media channel can explain some of the variance in a brand’s campaign performance.

The second stage of the process went on to look at sales during periods when radio, TV and online advertising campaigns were active and not active. Sales measurement (or scan data) was used to calculate the dollar value of sales for the 17 FMCG brands. This data was sourced from Nielsen and represented actual sales data; what was scanned at the checkouts in major supermarkets across Australia. The volume of enquiries was collected for the four services providers, who offered a service rather than a tangible product. The service providers confirmed the volume of enquiries pre, during and post advertising campaigns.



In determining the return for each campaign, Colmar Brunton used the below formula. 

Value of transactional change – Value of media spend = Net impact (ROI) 

In more simple terms, the ROI measured the amount by which each brand’s sales (scan data or volume of enquiries) increased minus the dollar value spent on media advertising.

Key Findings 

Colmar Brunton was able to conclude that a relationship does exist between media channels and campaign performance. Furthermore, they were able to confirm the return (ROI) achieved by each media channel, when used on its own and in combination with other channels.

The findings for radio were extremely positive, when used as a single channel or in combination with TV and/or online. 

-    Radio advertising delivers an average ROI of +17%, more than online (14%) and TV (13%)
-    Radio and online is the strongest two channel combination, delivering an average ROI of +23%, nearly three times more than TV and online (+9%) 
-    Radio is the only channel that consistently increases ROI; the results for radio are always positive

Radio has always been considered one of the most economical and effective call-to-action mediums. The findings of the study highlight this further by confirming that adding radio to a media mix helps brands to increase their ROI.
 
For more information, please contact Shannan Parker (Marketing Manager) at shannan.parker@commercialradio.com.au or on 02 9281 6577.

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