How radio delivers ROI and sales lift for CPG brands

02/25/2022

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Background information

Radio Connects (the not-for-profit trade association for the Canadian Radio Industry) commissioned Nielsen to conduct a review of the activity of major CPG brands in Canada that used radio as part of their media mix over the last 5 years. Nielsen looked at more than 1000 case studies from 2015 to 2020. They evaluated ROI using their Marketing Mix Modelling (MMM) norms across TV, radio, OOH, online and trade activity to understand how radio impacted total market ROI. Nielsen also analysed how radio worked in synergy with other media to improve sales volumes for CPG brands.

CPG brands and radio

Canadian CPG marketers face budget challenges with the majority of brand support falling below the line. Only 4% of Canadian CPG short-term sales are driven by media budgets, compared to 10% in the US. It is, however, comparable to European markets where media represents between 2-4% of marketing spend for CPGs according to Nielsen. Canada’s consolidated retail landscape puts pressure on advertisers across all categories to invest more in trade each year.

Despite being a high-reach tactic, with fantastic short-term ROI, radio receives the lowest media investment share from CPG brands in Canada. Dollars invested in radio are disproportionate to the amount of media time consumers spend with the medium.

Chart showing that despite its high reach and great short-term ROI, radio receives the lowest media investment share from CPG brands

Main findings

In the Canadian study, Nielsen found that, despite having the lowest share of investment from the observed media types, radio actually delivered the highest ROI for the CPG category. Radio ROI outperformed total media ROI by 128% and adding radio to CPG brand activity improved the total ROI by 2%. Radio also brought an uplift in sales volumes and improved sales outcomes overall.

Chart showing that in case of CPG brands, radio outperformed total media, total medio ROI is higher with radio in the mix and sales volumes increase with radio

Radio delivers high ROI and amplifies other media

When Nielsen compared radio ROI to other media channels, it performed 1.3x times better. Radio delivered 2.35 dollars (CAD) for every dollar spent versus 1.83 dollars when all media was combined.

When Nielsen looked at the brands that did not use radio as part of the media mix, the total ROI was in fact lower. Including radio in the media mix improved the ROI for all media activity by 2%. An increased spend in radio advertising further improves the overall media ROI.

Chart showing that radio's ROI is higher than other media

Radio’s halo effect

Nielsen also investigated radio’s synergy with other media to drive sales volume. All media tactics saw an increase of sales volume when radio was added. Specifically OOH and TV saw the largest increase of volume due to the addition of radio in the media mix.

The largest driver of synergy volume was the combination of radio and trade promotions resulting in the highest volume lift – 2.56 times better than all media. Radio in tandem with television delivered incremental sales lift of 1.47%.

Overall, the study proved that adding radio to CPG brand activity improves total media ROI, increases trade activity synergies and returns in overall improved sales outcomes.

This and other studies proving radio’s effectiveness will be presented at egta’s MIM on 9th March.

Chart showing that radio in combination with TV and out-of-home drive the largest incremental sales volume for CPG brands