How Do You Set Your Prices for Radio Advertising?

It’s a question I was asked this week by an advertising partner.

“How Do You Set Your Prices for Advertising?“, he asked as we were reviewing options for a couple of events this month.

I’ll tell you what I told him.  And a bit more.

Like all businesses, we have certain fixed costs to operate. Some we can control, others are out of our hands.  The number of employees is flexible. The electric bill, not so much.

I work for Federated Media which owns and operates a bunch of Indiana radio stations including WOWO radio in Fort Wayne which is my focus, along with our ESPN Radio stations.  Federated Media also has a digital solutions division, an entertainment division and they also own the Elkart Truth newspaper.

It’s a family owned company.  No big Wall Street Bankers to answer to, just the Dillie family.

Our company is supported solely by the sale of advertising and marketing products.  Everyone in management, in the office, on the air, all the support people are an expense.  The sales people are responsible for bringing money into the company to pay everyone. Not just themselves, but everyone and everything.

That’s the way it works in most businesses.  You have to sell stuff to pay your people and pay your bills.

With that background, let me answer the question, “How Do You Set Your Prices for Advertising?“.

We charge what the market will pay is a general guideline.  That is how we came up with the $100 per minute guideline on Fort Wayne’s WOWO radio.

There are other factors that come in to play too.

We have a limited number of minutes for commercials, as do all radio stations, and tv stations. When we are close to being sold out, our prices are the highest.  While most of our inventory is sold on long term, annual agreements, we always have enough to add shorter term advertising schedules.  But if you wait too long you will either have to pay a premium (over $100) or miss out.

Unlike other places, we don’t have last minute sales and drop our prices for advertising for next week.  We have advertising partners who have in their contracts with us, the ability to get their ads in those otherwise unsold spots.

Now when you compare our prices with other Fort Wayne radio stations, we are appropriately priced for the market when looking at raw numbers such as total number of listeners your ads will reach.  But in some cases, we are truly a bargain and should be charging more.  Like I’ve said before, I know what the other stations charge and some of them are really overpriced for Fort Wayne.

But some stations will go the other way and charge less, way less it seems.  There are reasons for that.  I used to work for some stations in Fort Wayne that would take whatever they could get.  The reason they offer significantly lower prices is usually because they have significantly fewer desirable listeners.  What is a desirable listener?  Depends on who you as a business need to attract as a customer. Most businesses need adults age 25 and older.

According to the latest data from the rating service we subscribe to, WOWO has over 123,000 total listeners age 12 and older in Metro Fort Wayne.  97% are age 25 and older. That’s almost 120,000 different people who listen to WOWO each week who are age 25 and older.

There is one other station, according to that same data that has over 100,000 listeners each week. WJFK has about 115,000 according to the Fall 2014 survey from Eastlan.  How many are desirable listeners for businesses that want to attract adults age 25 and older? Just 40%. Less than 47,000 adults age 25+ listen to WJFX.  There are eight other Fort Wayne radio stations with more adult listeners than WJFX, and WOWO leads the pack if that is the desired demographic for your business.

Another reason some stations charge significantly lower prices is they are unproven.  Last year nearly 1/2 the Fort Wayne radio stations changed format or frequency or name or all of the above.  My company, Federated Media, has done none of those with our Fort Wayne stations in a very long time.  WOWO is nearly 90 years old and has been a News Talk station for around 20 years.  The biggest change we made a few years ago was we added an FM frequency so listeners can hear us on 92.3 FM along with 1190AM.  You can listen online too.

Did I answer your question?  Is there anything else you would like to know?  Ask me: