Radio advertising refers to paid commercial announcements aired by a radio station. Advertising is often the primary source of business income for commercial radio stations. Ads on radio broadcasts were first introduced in the 1920s. New York radio station WEAF, operated by the American Telephone and Telegraph (AT&T), is considered to have aired the first radio advertisement on August 28, 1922. Queensboro Corporation paid WEAF $100 for a 15-minute ad on a new real estate venture.
Although radio advertising was developing slowly, several factors supported its popularization in the United States by the end of the 1920s: the development of national networks; decreased interference; improved and cheaper radio receivers; the launch of scientific researches into radio audience; the acknowledgement by advertisers of the potential of radio stations and the increased interest of advertising agencies; the general acceptance by the public of the practice of media being run as a commercial.
The first book on radio advertising was published in 1927. The Great Depression following the Wall Street Crash of 1929 further accelerated the development of radio advertising. Its share grew to 11 percent of national ad sales in 1932, from just 2 percent in 1928. World War II further contributed to the prosperity of radio advertising, as print media was limited by paper rationing. By mid-20th century, radio advertising had gained half of all ad sales, despite competition from television.
By the 1980s, FM radio had become the most common audio advertising medium. The advantage of radio advertising compared with print media is that it is more dynamic and allows advertisers to "talk," to consumers. Therefore, although a radio ad can cost as much as an advertisement in a metropolitan newspaper, many small businesses deem an entertaining and informative radio ad may represent a major asset. However, most advertisers do not rely on radio alone to sell their products and services, but usually support radio campaigns at least with some newspaper or magazine ads.
Advertisers can reach the targeted audience by selecting the radio station that is oriented to the "right," group of people, determined by the age of the station's regular audience, and depending on their social grouping. Radio stations attract different audience depending on the choice of music genres and talk format. Radio ads are relatively inexpensive to make and to place, which allows advertisers to place their announcements on more than one station. Radio advertising also boasts flexibility as the commercial content can be easily changed if the market or business targets require it. Such factor also determines the price of radio advertising slots.
Generally, there are four time slots on radio: morning drive (a high-rate, premium period, usually because audiences are at their daily peak at this time); daytime; afternoon drive (the second biggest audience of a weekday); and evening. It is calculated that radio reaches three-quarters of consumers every day, or approximately 95 percent of consumers during a whole week, which surpasses both the percentage of newspaper readers and television viewers. People spend an average three hours a day listening to radio.
Radio stations air four types of announcements: commercials; station promotional announcements (also called promos); non-revenue generating announcements to boost radio listening; and public service announcements (PSAs). All four types of announcements are referred to as spots and their length is an average 60 seconds. Ads are aired in blocks of six or more and thus a spot may last for five minutes of airtime. In 2002, spending on radio advertising in the United States totalled $19.5 billion.
Advertisers consider radio an "ear listening" business. That is to say radio stations have to make sure that the audience will hear the advertisers' message and eventually buy the advertised product. Radio advertising, however, involves certain disadvantages, including: competitor clutter; major costs related to long-term radio spots; the fleeting feature of radio content. In addition, radio is often considered a "background medium," meaning listeners tend to "tune out," advertisements or even change the station during commercial spots. Furthermore, listeners are usually not able to remember informational content such as telephone numbers or addresses while driving a car.
Radio listeners are divided into three basic client groups: local, regional and national. Small-sized radio stations usually air ads targeting local consumers, while successful radio stations covering large markets air regional and national ads.