This has been the way agencies have worked... based on market-by-market buys... for over four or five decades.It's no wonder that radio, and AM in particular, is in trouble. I mean, if ad agencies are ignoring where a possible plurality, if not majority, of a radio station's audience is actually located...
(Very few AMs today even cover their home market adequately day and night... there are so few cases where there is significant out of market audience that it is not worth anyone's time to look for exceptions.
Few stations buy ratings in markets outside their home market. Lots of money, little or no revenue. They don't buy those out of market ratings because in so very, very few cases would that expenditure create added revenue.
And agencies buy the largest markets first. Many buys only cover the top 25, 30, 40 or 50 markets. They don't care about the smallish remainder of the population not reached in the remaining markets.
In very few cases does a station in one market have more listening in a nearby one than in their home market. Offhand, I can not think of any...
And this is not an issue created or controlled by radio. Ad agencies use "markets" as the basis for campaigns because their clients use market and distribution areas to evaluate, promote and generate sales. The whole advantage of radio historically has been its localism, which means the ability to focus marketing campaigns very specifically by market.
And most local direct accounts have no interest in adjacent markets. A car dealer cares about people within a reasonable driving distance. A supermarket or health club focus even closer to home of their potential customers.
Real case: Nearly none of the LA stations buy the ratings for the next-door Riverside-San Bernardino market because agencies will buy the local stations at much lower rates than trying to reach local residents via stations that are much more expensive and volatile in ratings.