Local Radio vs. Satellite Radio - An Honest Comparison

posted by Bob Leighton

Local radio. Satellite radio. What’s the difference? How popular are each? What's the deal with the Sirius and XM merger? And, most importantly, where should you advertise your business? In this day of ever-changing media, it’s hard to know. But learning more about these two advertising methods and the power of each will help you understand your options before making a decision.

The History of Radio

Local Radio vs. Satellite RadioRadio has been around for almost a century, since the first commercial radio station – KDKA in Pittsburg – took the airwaves in 1920. In those early days, radio was viewed as a way to obtain news quickly (instead of waiting for the newspaper), listen to the same tunes everyone else was listening to, and hear stories of WWI veterans through on-air interviews.

Radio advertising, in those days, focused simply on selling more radios. Two years later, the first radio commercial aired, and a new way to promote business was born.

Read the nine best local advertising strategies in this ebook.

Today, there are more than 15,000 licensed broadcast radio stations in the United States. And according to the latest 2015 Nielson Radio Market Survey, local radio reaches 221.5 million people every week.

Satellite radio is a radio service broadcast from satellites primarily to cars – with a nationwide broadcast signal and covers a wider geographic area than local radio stations. In 1992, the FCC allocated a spectrum for nationwide broadcasting via a satellite-based Digital Audio Radio Service, but it wasn’t until 2001 that the first satellite radio station officially launched. XM, based in Washington DC, opened its doors in September 2001. The following July Sirius, based in New Your City, joined the running. The two companies merged in 2007 to form one giant satellite radio station: SiriusXM which reaches over 50 million listeners with more than 175 channels.

The Cost of Tuning In

So what are the differences between local radio vs. satellite radio?

Local Radio

  • Costs to Customers: Free
  • Accessibility: While most stations rely on listeners tuning in while commuting, working, shopping, or eating at a local establishment, more radio stations are offering free live streams via the Internet and mobile phone applications. Accessing this free content is getting easier for loyal listeners.
  • Reach: Primarily local. Radio advertising is available in three options: local spot, network, and national spots. Spot radio dominates the three classes of radio advertising and allows a wide range of choices. Spot radio reaches well-defined geographic audiences, making it ideal for local retailers and businesses.
  • Your Ad Budget: Comparatively, advertising on the radio is relatively inexpensive compared to other traditional broadcast media, but advertisements can vary greatly depending on the quantity of spots, the length of the spot, and the timeframe it airs. The good news for your ROI however, is that spot radio attracts 80% of all radio advertising dollars spent a year.

Satellite Radio

  • Costs to Customers: As low as $9.99/month UPDATE: This price has since increased to $10.99/mo to listen to "mostly music" in your vehicle. Add the App for another $4.00/mo to listen from your computer, smartphone or tablet. Customers can upgrade to more expensive packages that offer more variety.
  • Accessibility: Many automakers have equipped automobiles with one-button access to satellite radio making it easier than ever to give listeners options. Although the cost to subscribe still applies.
  • Reach: Satellite is geared to promote national brands with its nationwide reach. Marketers can advertise to niche markets defined by demographic, format or lifestyle. True reach is difficult to measure though as the satellite service does not release audience information per channel and almost all SiriusXM channels are commercial-free.
  • Your Ad Budget: The costs will vary depending on the length of the spot and frequency. Access to spots during a star personality’s show will up the price in a hurry.

Determining Your Route

Determining which radio route to take – local or satellite – is going to depend on three important factors:

  1. Your company’s geographic footprint - Is your business local, regional or national?
  2. The goals of your advertising campaign - What are you trying to accomplish?
  3. Your advertising budget - How much have you allocated for advertising, and more importantly – radio advertising?

Still have questions? We’d love to talk with you. We’ll listen to your needs, answer questions you may have, and help you formulate your advertising plan.

NOTE: This post was updated in September of 2016 to reflect new pricing information from SiriusXM

Get the 1st Chapter of Brandsformation Download Now for Free