Why Local Advertisers are Sticking with AM/FM Radio Over Digital Audio

The average small and medium-sized business spent $18,100 on broadcast radio in 2024, according to a survey by Borrell Associates. Notably, a third of these businesses invested in AM/FM advertising this year, which is three times more than the 11% that turned to streaming audio services, where the average budget was $15,000.

Key Findings from the Survey

• 56% of small and medium-sized businesses allocated funds towards events and sponsorships, with an average investment of $17,700.
• 54% utilized social media for customer engagement.
• The most significant average budget was for out-of-home and outdoor advertising at $54,400, although fewer than one in five local businesses engaged in this form of advertising.
• Streaming video also had a hefty budget with an average of $44,600, drawing funds away from broadcast television.
• Surprisingly, 38% of local advertisers still invested in magazines, while 35% spent on newspapers.

Ben Bouslog, VP of Business Development at Adcellerant, commented, “The real surprise is that cheaper advertising forms don’t necessarily attract large advertiser groups. Advertisers are willing to invest significantly in advertising they believe is effective.”

In a video discussing the Borrell findings, Bouslog highlighted that outdoor and video commercials excel at top-of-the-funnel advertising, while search engine marketing effectively captures bottom-of-the-funnel consumers.

If radio wants to enhance its local ad market share, it must better demonstrate its effectiveness. Currently, one in three local businesses rates AM/FM radio as either “extremely” or “very” effective. In contrast, only 18% of those who used streaming audio ads rated them highly for effectiveness.

Moreover, events and sponsorships are gaining traction as they allow local businesses to complement their virtual marketing with real-life interactions.

Overall, the survey found that search engine marketing is perceived as the most effective, followed closely by social media. Bouslog noted that direct mail also ranked surprisingly high, reflecting the importance of attribution capabilities in measuring effectiveness.

The survey indicates that 36% of local businesses view radio sales reps as having superior marketing knowledge, although this figure has declined from 41% in 2021, highlighting a growing concern regarding digital expertise among sales reps.

The findings stem from Borrell’s fall 2024 survey, which included 1,130 direct ad buyers and 122 local ad agencies.