Radio advertising costs are highly negotiable and extremely volatile. In the majority of cases, stations do not have posted rates or rate cards to refer to. Commercial ad rates are dependent upon many factors including ratings, inventory supply and inventory demand. Radio ratings are determined by portable people meters or PPM. These pager like devices record listening habits of those in the survey sample. The service is coordinated by Arbitron and ratings are updated every month.
The objective of every radio station is to garner the highest ratings so that they can increase the value of their commercial inventory. Depending on the station format there could be anywhere from 8 to 18 commercial units per hour. Unit values can be calculated on a cost per rating point or cost per thousand impressions. Ratings are based on average quarter hour listening as compared to the market population in various age and sex demographic cells. But in simple terms, if radio station A is priced too high, then radio station B may be a better option. It is always a good idea to have two or three stations bid for your business. This is where you should consider working with a media broker or advertising agency.
Ad agencies and media buying firms have the relationships inside the stations to assure them that the rates they are offered are the lowest possible. Agencies also have access and an understanding of the ratings data to be able to negotiate rates on your behalf. These firms will be able to do all of the media planning, negotiating and placement for you at no added cost. Radio and TV stations offer a standard agency commission to media brokers and agencies. The end result is that you get access to the lowest possible rate and the agency does all the work.
Radio advertising costs change constantly. Be aware of market conditions and make sure you are represented by a qualified media buying firm or advertising agency.