After sidestepping the medium for decades, Procter & Gamble, Unilever, Kao Brands and other consumer packaged goods (CPG) giants are dipping a toe back into radio waters. Frustrated by narrow digital-ad targeting, major CPG companies are taking meetings, testing out campaigns and slowly placing buys—leveraging AM/FM’s massive reach.
It’s no coincidence that P&G cut more than $100 million in digital ad spend in its fourth fiscal quarter ending June 30. It’s part of a new major push by CPG’s top advertisers to rethink their multiplatform ad spend and, in some cases, include traditional radio to help reach consumers in a soft market.
“As we tell radio’s analytics story to agencies, particularly the planning and strategy teams, we are seeing a renewed interest in the medium and subsequent requests for research,” says Bob Philips, chief revenue officer at CBS Radio. “This allows us to start a broader conversation and ultimately should lead to increased radio shares and new business.”
Flash back to radio’s earliest days and P&G was a big radio user—its Ovaltine brand was the sole sponsor for “Little Orphan Annie.” But in recent decades radio has received a disproportionately small share of the massive CPG ad category.
Now, finally, that’s slowly starting to change. P&G ran 68,943 radio spots for Tide in the first half of 2017 after placing a paltry 208 during the same period last year, according to Media Monitors. It ran 18,998 ads for Vicks and 19,440 for Tampax, compared to almost no radio in the year-prior period. P&G’s radio outlay for hair care product Pantene was more than 17 times larger than in 2016’s first half.
P&G, the world’s largest advertiser, isn’t alone. Kao Brands doubled its radio allocation for skin care product Bioré to 99,444 spots in H1 2017 and bought 41,723 ads for Jergens, a brand it didn’t advertise on radio in last year’s first half.
Unilever, another giant in the category, ran 56,015 radio ads YTD through June 30 after being a virtual no-show one year earlier. Bimbo Bakeries more than tripled radio placements for Entenmann’s and ran 15,000 more ads for Thomas’. CSC Brands poured 4,696 ads for V8, after none the year before.
Other major players that plowed considerably more dollars into radio include Nestlé Waters North America, Johnson & Johnson and Reynolds.
Much of the action is in the form of network and national buys. But in Los Angeles, personal care products advertisers collectively upped their spend by 41.9% to $1.5 million in the first half according to Miller Kaplan data, as radio grabbed 18% of the category’s market spend. However, TV hauled in more than four times that amount. And YTD radio ad spending through June in L.A. for P&G products fell 51% to $78,000 while TV hauled in $1.2 million, according to data from the Southern California Broadcasters Association.
While radio only gets a drop in the bucket of the billions of ad dollars spent annually by CPG companies, ad decision makers in the category are now showing renewed interest in radio.
“We have big brands that use radio year after year, but we have also seen several returning advertisers increase their spend, and new advertisers in this category as well,” says Christine Travaglini, president of rep firm Katz Radio Group’s Christal Radio and Katz Partnerships divisions. For instance, during the past year, three new milk brands launched radio campaigns through Katz Partnerships. “It makes a huge statement that new milk brands trying to wedge their way into the category are using radio as an integral part of their media mix,” Travaglini says. The buys include both traditional radio branding campaigns and new tactics, such as disc jockey endorsements.
With major players cutting back or questioning their digital ad spends, some are testing radio while others have written the medium into their 2018 media plans, according to Radio Advertising Bureau CEO Erica Farber. “We think that part of the increased interest is a result of recent concerns regarding brand safety, transparency and accuracy in measurement,” Farber says. “Brand managers and their agencies are understanding that radio has the ability to not only provide the consumer reach and engagement they need but also drives traffic to the retail environments where their products are sold.”
Why Radio Companies Must Work Together
As the multibillion-dollar category gives radio a fresh look, industry leaders say broadcasters need to set their competitive instincts aside and become allies, speaking to decision makers in one unified voice. “The large radio companies need to work together, with our most influential spokespeople hitting the streets and approaching the upper echelons of the advertising community to tell the medium’s story,” Philips says.
To get a more meaningful share of CPG dollars, Brad Kelly, managing director of Nielsen Audio, says radio would do well to allocate more resources to the RAB so the trade group can better advocate on behalf of the industry. “Get behind your industry,” he says. “Individually I don’t know if we stand a chance. Collectively we can change the future.”
To that end, the RAB’s Business Development team is working with the industry to communicate radio’s strengths to the major CPG players and address specific goals for individual brands. “Frequency of message and collaboration is key to drive change and an uptick in activity beginning in 2018,” Farber says.
But radio must also challenge itself to think more creatively about how it approaches this potentially lucrative category, CBS Radio’s Philips says. That requires more innovative use of promotions, on-site activation, endorsement extensions and entitlements.
Improving the quality of radio creative is another necessary step, industry leaders say. “We’ve heard from a number of CPG brands who say, ‘We don’t have any benchmarks on audio creativity, we don’t know best practices for audio creativity, we need help,’” says Pierre Bouvard, chief insights officer at Cumulus Media and Westwood One. A Nielsen Catalina study of 500 CPG ad campaigns that ran in 2016 and 2017 reinforces that need. The study found that half of the sales lift (47%) from the campaigns was due to the spot creative.
Having been out of the radio game for so long, some CPG firms don’t have the infrastructure—or expertise—to produce effective radio creative, Nielsen’s Kelly says. The measurement giant works closely with numerous CPG firms through its Buy division, which tracks consumer purchases and advises manufacturers on their media mix. “They say, ‘We have entire teams of people who work on our television and digital creative. We need to step back and retrench on the radio side of it,’” Kelly says. “They accept the fact that without good creative it’s all for naught.”
Better Return Than On Digital
S&P Global senior media analyst Justin Nielson says from a call-to-action standpoint and a ROI perspective marketers are concluding that putting an advertisement on a local radio or TV station has a better return than on digital. “I do feel like there is better tracking and analysis of the return on investment that radio and TV is offering as opposed to digital. I do think that some of that ad spend is going to filter into traditional media,” Nielson says. “It may not be the huge wave that the broadcasters are anticipating, but I do think it’s going to trickle down to that level. There’s going to be a happy medium between digital, mobile and social media and then also traditional broadcast media.”
Looking ahead, Bouvard predicts the category will become “a much bigger national network player” for AM/FM radio. And because CPG advertisers are known for their deep research and analytics, that could have a ripple effect in other ad verticals. “What will happen long-term is people will see more CPG advertising on radio and that will cause other categories to say, ‘What do they know that we don’t know?’ The bigger story is the halo effect of highly respected CPG brands coming into radio and how that will bring other brands in.”