The radio industry's problem is its inability to monetize its product, iHeartMedia Chairman Bob Pittman said Wednesday.
"Nielsen came out with a study of [radio's] return of investment [which shows] a 6-to-1 ROI [for every dollar invested in radio], which by most estimates is much greater than television or digital," he told CNBC's "Squawk on the Street." "What's happened in radio is that it has done a very poor job of monetizing what they have."
Pittman said the industry's high return of investment is due to the lack of fragmentation within the market. "Years ago, when I was in the TV business, we were saying 'Oh my gosh, there are 50 radio stations in a market. How fragmented. There are only 10 TV networks.' Now there are thousands of TV networks and suddenly radio looks very mass market compared to TV and digital," he said.
Read More Name that tune: Shazam to bring app to wearables
He also said that about 92 percent of people in the U.S. still listen to radio every week. "It's part of people's lives. It's your best friend sitting in that empty seat next to you in the car," he said, adding the industry is making progress to improve monetization.
"The good news about our business is that we don't need a new product to generate more revenue. We just need to monetize better what we have," he said. "What's happened forever is that we've dealt with the radio agencies, who do not determine how much money goes to radio. They just spend what's allocated. We didn't have the relationship with the people who determine the allocations, and we didn't have the research to back up our claims."