Stan Katz opens MTN Radio Awards 2013 launch

Stan Katz

"They buy something that will deliver a measurable return on investment (ROI). This comes down to how many new customers an advertiser needs in the first instance to cover the cost of the campaign." This is the worst-case scenario. In short: radio needs to quantify ROI. According to Katz, ROI entails having the right message in the right place at the right time, enough times.

One of the reasons radio does not get its fair share of the advertising pie, despite its proven track record of delivering results, is that radio is difficult to buy. "Radio stations need to make it easier to buy radio." Media buying agencies suffer from time poverty and paper-thin margins. He suggested that radio stations should do the "heavy lifting." Radio stations can take on more responsibility for planning advertising schedules, but they need to receive a thorough brief from advertisers. He quoted the iconic adman, the late David Ogilvy, when he uttered the immortal words, "Give me the freedom of a tight brief".

"The thing that works in advertising is what you say multiplied by how many times you say it. Don't count the people you reach, reach the people who count." He emphasised the importance of delivering high frequency against the target market.

Calculating a measurable ROI

He provided a formula for calculating a measurable ROI, the one thing advertisers are demanding in these hard-pressed economic times. This formula incorporates the value of the average sale in a business, the closing ratio (how many sales result from all the prospects that enter the store) and the profit margin. It not only indicates how many customers are needed to break even, but also the value of each additional customer that enters the store.

Using this formula, he showed how every prospective customer that enters the store, whether they buy or not, has a measurable "sales value" based on the store's closing ratio. From there it is relatively easy to calculate the anticipated ROI.

He pointed out that in a retail environment radio's only job is to increase footfall. After that, it is up to the store's personnel and point-of-sale devices to close the sale. "Radio's power lies in its ability to increase the number of customers and frequency of repurchase. The rest is up to the store," he says in his book Radio Advertising. A sound investment. 10 Key Principles for Maximising Returns, which was launched simultaneously with the awards.

Jeremy Maggs, broadcaster and founder of the MTN Radio Awards, in his foreword to the book wrote: "Stan Katz is to radio what pasta is to Italy, what Castle is to South Africans and what warm beer is to Britain. Over many decades he almost single-handedly reinvented, redefined and recalibrated the way we think about commercial radio."

The book is available from Exclusive Books, Amazon.com (eBook) and many other book stores countrywide.