[2] Commercial advertising by audio services goes back to even before the introduction of radio broadcasting, beginning with the 1893 establishment of telephone-based Telefon Hírmondó of Budapest, Hungary.
As of 1901, this "telephone newspaper" was selling twelve-second spots for one forint each to reach the subscribers listening to the service's programming.
[3] The first radio stations, introduced in the late 1800s, used crude spark transmitters, which could only transmit the dots-and-dashes of Morse code.
Beginning in the early 1900s, the first transmitters capable of audio transmissions were invented, and although initially these were primarily used for point-to-point communication, there was concurrent experimentation with the broadcasting of news and entertainment.
[5] The debut program was aired on October 26, 1916[6] and it was announced that nightly transmissions of news interspersed with Columbia recordings would be sent from de Forest's Highbridge laboratory beginning on November 1.
[7] At the time, a commentator in QST magazine noted that 2XG's efforts showcased the practicality of "conducting regular advertising and news talks by radio" which was "decidedly something to think about".
This ban was lifted in October 1919, and some additional promotional record broadcasts took place, including Westinghouse engineer Frank Conrad over experimental station 8XK, located at his home in Wilkinsburg, Pennsylvania, who provided on-air acknowledgements to the Brunswick Shop in exchange for the store supplying him with recently released records.
In February 1922, the American Telephone & Telegraph Company (AT&T) announced it planned to begin establishing stations that would be dedicated to selling their airtime to interested parties, which AT&T called "toll broadcasting".
[11] Its primary station, WEAF in New York (now WFAN), aired its first paid radio commercial on August 28, 1922 for the Queensboro Corporation, advertising a new apartment complex in Jackson Heights, Queens, near the just-completed #7 subway line.
[12] Based on a series of industry cross-licensing agreements, AT&T initially claimed that its patent rights gave it a monopoly on commercial radio transmissions.
Although the courts upheld this contention, the practice was widely disliked, and AT&T soon came up with a licensing scheme to allow individual stations to begin selling airtime.
[14][15] Additionally, on April 4, 1922 Alvan T. Fuller reportedly purchased time on WGI of Medford Hillside, Massachusetts, in order to promote his Packard automobile dealership.
An article in the November 1922 issue of Radio Broadcast magazine lamented that "driblets of advertising... are floating through the ether every day" and expressed concern that "The woods are full of opportunists who are restrained by no scruples when the scent of profit comes down the wind.
While radio had the obvious limitation of being restricted to sound, as the industry developed, large stations began to experiment with different formats.
Comedian and voice actor Stan Freberg demonstrated this point on his radio show in 1957,[21] using sound effects to dramatize the towing of a 10-ton maraschino cherry by the Royal Canadian Air Force, who dropped it onto a 700-ft. mountain of whipped cream floating in hot-chocolate filled Lake Michigan, to the cheering of 25,000 extras.
[24] Although consumers have more choices today, a 2009 study reported that 92% of listeners stay tuned in when commercials break into their programming.
[27] Produced commercial formats include: straight read with sound effects or background music, dialogue, monologue (where the voice talent portrays a character, as opposed to an announcer), jingles, and combinations of these.
[29] Radio stations today generally run their advertising in clusters or sets, scattered throughout the broadcasting hour.
Most radio stations and advertising agencies subscribe to this paid service, because ratings are key in the broadcast industry.
Besides the basic numbers, most radio stations have access to other data, such as Scarborough Research, that details more about the listening audience than just what age group they fall into.
[33] While commercial levels are nowhere near as high today, with the average station running approximately nine minutes of ads per hour,[34] peak periods can and do sell out.
CBS announced it would begin airing 'live reads' in its streaming radio broadcasts, sold and voiced separately from the stations' regular spots, noting the efficacy of live endorsements.
[39] Live endorsements are growing in popularity, as advertisers seek new means to reach consumers and cut through the surrounding clutter.
[40] Studies show that live reads have recall and response rates higher than the typical recorded spot.
The Federal Trade Commission is also responsible for broadcast industry regulation, in terms of false or misleading advertising practices.