Most radio stations are free to listen to because listeners are not the customers; they are the product being sold and make up the radio station’s audience. The listening audience, similar to a TV audience and social media users, are the product being sold to advertisers. This is how radio stations make money; through advertising. Extra income also comes from sponsored content and events (however, this is also a form of a advertising) as well as charging callers.
On-air advertising make up a great proportion of radio station’s revenue. Stations sell airtime to companies who want to reach an audience with messages about their products or services. The positioning of advertising spots; the length of each spot; time of day they air; and the show during which the spot airs can each impact its value and price. For example, spots that air immediately after a show moves to commercial or right before the show returns tend to have the highest price. Stations would also charge more for an advertising spot that is aired during a popular show or during peak listening times (e.g. rush hour).
Other types of advertisement can also bring in extra revenue to radio stations. Stations with active and high traffic websites can make a lot of money from placing adverts on their website; this can take the form of banner ads or video ads.
Stations who post a lot of content on social media can also make some extra profit. Stations who post on YouTube (e.g. on-air highlights) can place ads before a video and get money this way.
Another way for radio stations to make money is by having brands pay radio stations to have radio presenters endorse and promote products/services on air. This is a great way for companies to advertise their products because listeners love and trust their favourite radio presenters and so products will appear more appealing. However, it must be clear to listeners that this content is a commercial arrangement. Branded content can also take the form of an article which radio stations can then publish to their website and share on social media.
Sponsored content is a great way to build brand awareness as stations frequently mention the brand’s name and positioning. Furthermore, over time a positive association of the brand can build in the listener’s mind. Sponsored content also reaches an audience in a less direct way so the audience tends not to think of the message as an advertisement but more as a helpful piece of information.
One method radio stations use to make extra income is through charging callers. Stations encourage their listeners to call or text in for a chance to be featured on air or to enter a competition. The station then charges a small fee to each incoming caller and makes a profit through this. However, stations must clearly tell their listeners that callers will be charged.
Radio stations can also make money through hosting an event or supporting an advertising partner’s event. Not only do these sponsored event attract new listeners, but they also bring in extra revenue through merchandising and ticket sales.
Some radio stations, especially those who focus a lot on news, sell news stories to other stations across the country. This way, the stations who buy the news stories do not need to focus on managing reporters and news anchors etc. to broadcast news updates.
As a radio station, you may choose some or all of the above methods. What you do depends on your station’s positioning, your focus and your audience.
To learn about which approach your station could take, sign up for a free consult here.