Commercial radio history: Advertising on the airwaves

Have you ever wondered why you’re more likely to hear advertising on Capital FM than you are on BBC Radio 1?

Perhaps you’ve noticed that there’s a lot more advertising on radio channels in the US than there is in the UK, too.

It all comes down to the different kinds of radio stations that exist.

The medium has evolved since the first radio sets emerged, designed by Guglielmo Marconi (or Nikola Tesla, depending on your position).

We don’t just use radio waves to communicate with each other anymore. Instead, we rely on the airwaves to broadcast entertainment, news, and information.

For decades, stations have been building programs around the things that their audience wants to hear when they’re driving to work or eating their dinner. However, these stations need a way to remain profitable.

While some groups like the BBC are funded by national taxing systems, like the British Television License, others take a different approach.

Commercial stations rely on the sponsorships and payments they get from other companies. That’s why these channels are packed with advertisements for local and national brands.

So, what’s the difference between commercial and non-commercial radio? For that matter, where did commercial radio broadcasting begin?

We’re going to answer all of your questions today with an exploration of commercial radio history.

What is commercial radio, anyway?

Commercial radio refers to radio stations that primarily generate revenue through sponsorship deals and advertising. These stations frequently play ads, jingles, and sponsorship mentions on the airwaves.

Commercial radio broadcasting has different names.  For instance, it might be referred to as private broadcasting in the US. 

In the UK, commercial radio history began with the rise of “independent radio stations.” In other words, these were the stations that didn’t belong to the BBC – the corporation that monopolized radio for decades.

Commercial broadcasting began much earlier in some parts of the world than others. For instance, in the US, the first iterations of radio commercials began appearing during the early 1920s. In the UK, we didn’t have commercial radio until the early 1970s.

BBC Sounds also allows users to sample what exists beyond radio. The app offers access to curated collections of speech, such as comedy and documentaries, as well as other music themes like dance or rock.

You’ll also still be able to stream through Car Play or other devices thanks to Chromecast. 

While commercial broadcasting has seen some criticism over the years, it’s a very popular medium. Initially, companies and consumer groups believed that the presence of radio commercials would make it difficult for them to enjoy their favorite shows.

However, just like you may have gotten used to the ads you see between programs on television, listeners gradually grew accustomed to the presence of radio advertising.

For a while, the average radio station existed entirely without commercials. However, as time went on, people started to object less to promotional material on the airwaves, and regulations appeared to govern the appearance of ads.

Today, commercial radio offers some of the most popular channels on the market. Since commercial stations take their operating budget from the sale of advertising, the only way to attract big spenders is through excellent ratings.

In other words, commercial stations need to commit to always producing new shows and ideas to attract potential listeners. While the same could be said for non-commercial stations, commercial broadcasters are more reliant on their listener numbers to earn money.

On the other hand, non-commercial radio, like the National Public Radio or the BBC, doesn’t depend nearly as much on advertising.

While you might hear the occasional promotion, the marketing messages are broadly spaced out, and they’re not the primary source of funding for the brands. Most non-commercial stations rely on nonprofit financing, subsidies, or even government support.

What was the first commercial radio station in the US?

Commercial radio history began much earlier in the United States than it did elsewhere.

Perhaps the country was more open to promotional material than the UK.

On the other hand, the rise of earlier commercial broadcasting options in the US could have something to do with the broader range of local radio stations.

While radio started commercial-free in the US, just like it did in other parts of the world, about 30 different local stations emerged on the airwaves in the 1920s, just after the end of the war.

Most of these local stations were developed as a result of amateur operations, and they had far fewer restrictions around them than UK channels.

When the ban on the radio was lifted in 1919, stations uncovered new ways to use some of the latest technology that had been developed during the war for broadcasting purposes. To keep their stations up and running, they needed either financial investment or free music to play.

Long before the first commercial station officially appeared in the US, broadcasters were agreeing to mention local companies in exchange for free records and access to music.

One engineer in Pittsburgh, Frank Conrad, launched a small station with the call sign of 8XK. When Conrad started transmitting music played from phonograph records on his station, he got so much attention that he began broadcasting on an official schedule.

Frank’s station even caught the eye of a local merchant, who promised to supply Conrad with records for free if he would mention the store on the air.

Soon after, a local department store learned about the popularity of the program, and the manufacturer of radio receivers in the area, Westinghouse, started building a broadcasting station at their plant.

The Westinghouse team broadcasted programs every night, complete with advertisements from local brands. In 1920, the company received the first official US broadcasting license for a “commercial” station.

The license was similar to a “ham” license, but it was designed for commercial broadcasting.

Before the radio commercial was born, ham radio licenses were available to anyone who wanted to run a radio station as either a local service or a hobby.

The Westinghouse company branded their station as the “KDKA” – a channel that quickly became famous for airing the presidential election results of 1920.

The KDKA brought Frank Conrad into their engineering team to help them strengthen their equipment, and the Golden Age of Radio began in the US.

The first official radio commercial to air for the KDKA was for real estate in New York City. Within a matter of months, radio advertising became a natural part of the broadcasting landscape.

What was the first commercial radio broadcast in the UK?

Compared to other countries, the UK was a very late bloomer when it came to commercial radio broadcasting.

For instance, Australia launched its first commercial radio station in Sydney in November 1923, soon after the US.

On the other hand, the UK was unable to explore the possibilities of commercial radio due to the presence of the BBC.

The British Broadcasting Company appeared in 1922 when radio broadcasting was still in its infancy. To begin with, the station only offered shows to local areas – partially for technical reasons.

It wasn’t until the 1930s that the BBC started to introduce its first national and regional services.

To keep commercial radio advertising to a minimum, the BBC obtained funding through the Television License for the UK. That meant that ads weren’t necessary to keep the channel running.

Because the government provided the BBC with a complete monopoly over radio waves, it was impossible for any other “official” commercial stations to get a piece of the action.

Although pirate radio stations began to emerge to offer alternative music and programming, it would be a long while before we saw the rise of commercial stations.

Around 18 years after the BBC started to contend with the competition of television, independent radio started to form. In 1973, Edward Heath’s government formed, and the radio policy began to change as a result.

The government needed to respond to new demand for different kinds of entertainment after pirate radios were shut down during the late 1960s.

The minister of Post and Telecommunications at the time announced the arrival of a bill that would allow for the first commercial radio station to enter Britain.

The UK’s first commercial radio broadcast was regulated in a similar way to the existing ITV service and competed with recently developed local radios for the BBC – rather than competing with national broadcasting.

The Independent Broadcasting Authority emerged, planning a new service that would offer opportunities to launch new commercial radio entertainment in areas like Glasgow and London.

For the most part, the government tried to keep commercial stations to only one broadcast per city. However, there was an exception to this rule in London, where Capital Radio broadcast entertainment, and the LBC was responsible for information and news.

The rest of the commercial stations that popped up around the country were varied – offering a wide range of chat, music, and entertainment.

By 1988, there were a total of 69 local commercial stations to choose from. In the same year, the government also allowed commercial groups to start broadcasting in new formats and frequencies.

By 1992, national commercial radio appeared for the first time in the UK, with three stations licensed in total: Virgin Radio, Talk Radio, and Classic FM.

Commercial radio history: The first radio commercial (ever)

In the US and other regions where commercial radio history started in the early 1920s and 30s, the advertisements available would be nothing like the ads you hear today. Initially, the only hint of promotion you’d hear was a company’s name mentioned at the end of a song.

Even before commercial radio broadcasting officially started, stations like the Charles Herrold company in 1912 announced that their music came from the Wiley B. Allen brand each week.

To answer the question, “What was the first radio commercial?” you’ll need to decide how you classify advertising as a medium of sales.

For instance, outside of the United States, there was a telephone broadcasting company in Hungary that sold 12-second spots on their show to companies in 1893.

These spots didn’t feature jingles or ad-reads, but they allowed businesses to pay for their names to be mentioned live on air for 50 cents per slot.

In 1916, the De Forest Station in the US also showcased some of the first examples of advertising in radio history. At the end of each song the company played on their 2XG station, they announced the name of a Columbia Gramophone company that supplied their music.

If you’re looking for something more obvious from the first commercial radio broadcast, then the most common choice for the first radio commercial comes from the WEAF organization in the US.

This group, in collaboration with AT&T, offered local brands a chance to appear as a mention on their radio channels in exchange for $50 per slot. The first sponsor to take advantage of this deal was a real estate company in New York named the Queensboro Corporation.

The ad appeared in 1922, and various similar advertisements followed suit.

At the same time, the Remick music store in Seattle was paying for sponsorship spots on the KFC radio, allowing their company’s name to be mentioned in between programming and music slots.

There was even a car dealer in Massachusetts using a similar promotional strategy to purchase time slots on a radio station called WGI in the same year. However, the US Department of Commerce quickly shut this deal down after stating that it violated advertising standards.

By the late 1930s and early 1940s, radio industry advertising had already become a natural part of the broadcasting landscape for the US. Meanwhile, in the UK, the first commercial radio station was still decades away from being formed.

In Britain, it wasn’t until 1973 that we saw the arrival of the first radio commercial, which came from the London Broadcasting Company (LBC). The ad was for Birdseye Frozen Foods.

Commercial radio vs. non-commercial radio

If both commercial and non-commercial radio networks share advertisements and sponsorship spots, what makes them so different from each other?

When it comes to understanding commercial radio history, you first need to know that advertising gave smaller and local radio stations the chance to enter the airwaves.

In the US, the UK, and other parts of the world, it ensured that groups that didn’t get their money from non-profit funding and government grants could still enter the broadcasting space.

In a way, the rise of the commercial radio industry is why we have such a wide range of channels to choose from today. Without the first commercial radio broadcasts and the ads that came after, our radio networks would be pretty bland.

However, commercial radio stations don’t have the same freedom as non-commercial channels when it comes to what they play.

These groups need to carefully choose their target audience – just like any marketing team, and make sure that they’re playing music that’s going to attract the right kind of listener.

Many commercial radios will even avoid playing music by new artists if it hasn’t already been backed with a valuable promotional campaign.

Usually, commercial radio broadcasting stations work closely with promoters and labels to ensure that they get the best return on investment for the songs they play.

Smaller commercial radio stations, on the other hand, can also provide young and upcoming artists with an easier way to access the radio waves.

While larger government-funded groups will have a lot of rules and restrictions in place to the kind of music they play, commercial stations can essentially play whatever they choose, provided the artist can pay their fee.

Smaller local groups will often provide minimal prices for new bands, and some even have a section of their daily show dedicated to up-and-coming music.

The BBC and non-commercial radio stations can also offer entry points for new artists who want to make their way into the music scene. One of the best-known segments on the BBC is “BBC Music Introducing” which supports and elevates the songs from up-and-coming artists.

Often, non-commercial stations have a lot more freedom when it comes to playing different sounds and even controversial talk shows because they’re not as reliant on commercial advertising and ratings to keep them going.

Though the BBC might struggle to come back from a show that upsets its listeners because of reputation issues, it doesn’t have to worry about scaring off people who might want to buy ad slots.

Is commercial radio broadcasting on the rise?

Although non-commercial radio stations have more freedom than their ad-touting counterparts, they may be losing their popularity, according to recent statistics.

Advertising revenue on commercial radio networks in the UK reached £713.3 million in 2018, as corporate investments in the radio industry and media continue to rise.

Commercial radio has also published some of its highest listening figures since 2001, according to the Radio Joint Audience Research (RAJAR).

The rising demand for commercial radio may be a sign that today’s listeners prefer to seek out music and channels that respond to their niche interests.

After all, non-commercial radios funded by the government, non-profits, and other sources of income are often designed to be as general and broad-reaching as possible. Think of the BBC and how their channels appeal to the mass millions rather than smaller groups.

To stand out in a growing sea of radio networks, commercial companies need to make sure that they’re doing something different. They need to continually come up with new ideas to attract not only listeners but also advertising bodies.

The more attention these groups can earn from their chosen niche, the more they can charge for advertising slots.

RAJAR figures suggest that the BBC still holds the greatest share of listening time in the UK, at 51.7% compared to 45.7%, but the gap is getting narrower. Additionally, in the US, most radio stations are commercial as standard.

There are thousands of different stations in the US, and they mostly rely on advertising to keep them running.

To advance commercial radio, the Federal Communications Commission updated the Low Power FM (LPFM) in June 2020 to enhance directional antenna use and expand the definition of “minor” modification. The move has made it possible for LPFM stations to own FM booster stations. Consequently, this has led to the establishment of more FM radio stations.

In October 2020, the commission allowed AM stations to adopt all digital operations.

Final Thoughts

How do you feel about the rise of commercial radio? Do you think the introduction of commercial content was essential to the history of radio? Let us know on social media and follow Radio Fidelity’s blog for more insights into the incredible world of radio.

To learn more about advertising and its ties to radio, you may want to check out The History of Radio Advertising.

And if you want to dig deeper into what makes those radio jingles so effective and irresistible as ads, our article on What Is A Radio Jingle may be right up your alley!

Radio Fidelity: For the love of radio.