Walter S. McDowell and Steven J. Dick (2005). Exploring the dynamics of Power Ratios among U.S. Radio Stations, Journal of Media Business Studies 2(2): 1-15.
Key Words: radio, advertising, audiences, ratings, power ratio, United States
This study explores the dynamics underlying the relationship between a radio station's share of audience and its share of market revenue, recognized by media analysts as a power ratio. This ratings to revenue comparison often serves as a diagnostic tool for evaluating a station's business performance. Relying on what the authors call a principle of parsimony in media buying, an analysis of power ratio data collected from over 1600 U.S. radio stations revealed that as a radio station's share of audience increases, it subsequently earns a disproportionately greater share of market revenue and vice versa. Additionally, certain program formats serve as intervening variables. The article concludes with implications for station decision makers.