March 17th, 2006
As Sponsorship Sales Blossom, Public Radio Walks a Fine Line
By Sarah McBride
Wall Street Journal
As much of the media industry languishes in an advertising slump, public radio is on a tear, scooping up new sponsorship by mimicking the tactics of commercial broadcasters. On offer is public radio’s coveted, gold-plated audience.
But the increase in corporate messages is a delicate marketing strategy, since many of those prized listeners gravitated to public stations looking for the exact opposite: an escape from advertising’s constant hum.
Catherine Scott, 33 years old, a ski-shop worker in Mansfield, Ohio, says her relationship with Kent State University-based WKSU has wilted in recent years. Her local station’s tagline, "NPR. Classical. Other Smart Stuff" drives her crazy. And she doesn’t like the messages from businesses, which she thinks have increased.
"NPR’s mission is supposed to be the voice of the people," Ms. Scott complains. "The advertisers are pandering to the elite." Bob Burford, a spokesman for WKSU, says the station is "very proud of the wide array of sponsors" it has, including car dealerships and a bike shop.
Public radio started becoming more professional about sponsorship sales as its federal funding came under threat. Local stations have recruited ad sales executives from commercial-radio giants such as Clear Channel Communications Inc., replacing grant-writing types. More on-air sponsorships are now weaved into programming breaks rather than lumped at the end of each show. And more minutes per hour are now given over to these announcements, a sweetener for all concerned because such underwriting is tax-deductible.
Touting their relatively wealthy and educated audiences, public-radio stations now count 18% of their revenue from businesses, compared with 11% from the federal government, according to Tom Thomas, co-chief executive of Station Resource Group, a Takoma Park, Md., public-radio consulting firm. That’s a big change from 1980, when almost a third of public-radio stations’ funding came from the federal level and just 8% from businesses.
Public-radio executives are aware of the fine line they must tread. They don’t even call it advertising—to them, it’s "sponsorship" or "underwriting." Listeners "are very resistant to being sold anything," says Kevin Klose, president and chief executive of National Public Radio Inc. "That’s not what they come to public radio for." Mr. Klose says the line is hard to spot, but thinks NPR hasn’t crossed it.
If Mr. Klose is wrong, listeners might not only change the channel but could also stop donating to public radio. Such contributions make up more than a third of public radio’s annual revenue. Heather Reed, 31, an ecologist in Providence, R.I., says she has given her local station only $30 in the past two years instead of the roughly $100 she had been pledging annually because of the increase in sponsorship.
Dan Connell, 61, a professor of journalism and African Studies at Simmons College in Boston, has cut his listening time in half to an hour a day, annoyed at what he calls the "hypocrisy" of his local station’s identification as a noncommercial outfit. "I find myself so irritated at the lengthy public-service announcements," he says. "They’ve moved on and don’t need me anymore."
Of the thousands of noncommercial stations in the U.S., 800 get their programming from Washington, D.C.-based NPR, which makes shows such as "Morning Edition" and "All Things Considered." NPR also sells sponsorship that’s embedded in these programs. NPR’s member stations pay $6,000 in annual dues, plus programming fees based on audience size that can run into millions of dollars. The stations also run their own local programming and local sponsorship messages.
Other companies that produce or distribute programming for public-radio stations include Minnesota Public Radio, a 37-member station group. It produces "A Prairie Home Companion."
KPCC in Pasadena, Calif., has adopted many of the ad sales strategies of commercial radio. KPCC is a subsidiary of American Public Media, St. Paul, Minn., a nonprofit company that also owns Minnesota Public Radio. The station’s director of underwriting sales, Sandy Hollischer Brull, previously worked for Clear Channel, the U.S.’s No. 1 radio company.
On a recent afternoon, Ms. Brull pitched Children’s Hospital of Los Angeles, a private, nonprofit institution, using a bound presentation promoting the demographics of her station’s listeners, including their income, education level and career status. Ms. Brull proposed several campaigns for the hospital, including sponsoring a podcast on health issues. She flipped through charts showing how KPCC listeners are more likely to drive a luxury foreign car than other radio fans in Los Angeles, and how likely they are to shop at Sears.
Over a lunch, Ken Wildes, a vice president for the hospital, said he’d buy airtime for a campaign that could start at the end of April. Since Ms. Brull joined KPCC in 2001, underwriting income has increased to $3 million a year from $561,000, far outstripping the rate of growth in audience support or foundation grants.
So far, the increasing sponsorship hasn’t dented KPCC’s audience. The station counts 400,000 listeners per week, compared with 225,000 in 2000.
Corporate underwriting has been ticking upward since the Federal Communications Commission in the 1980s allowed companies to reveal more on air than simply their name and location. In the 1990s, in the wake of several attempts to eliminate public broadcasting’s funding, public radio stepped up its efforts.
After the dot-com bubble burst, NPR’s Mr. Klose accelerated the process. He wanted to better understand the sponsorship market. It had grown dramatically in prior years and few in the organization had given it serious thought. "When a listener hears an on-air credit, does the degree of listening stay the same?" Mr. Klose recalls asking.
To find out, 21 big public-radio stations hired researchers to ask 30,000 listeners which fund raising tactic they disliked most. Telemarketing ranked highest, followed by on-air fund drives. Most listeners said they weren’t bothered by direct mail or on-air underwriting. The resulting 2004 report, "Annoyance With Fundraising," encouraged public-radio stations to concentrate on those two areas.
Public radio has a good case to put before potential advertisers. NPR says its listeners have an annual median household income of $69,025, about $18,000 higher than the population as a whole. They also tend to travel, dine out, and own financial securities.
To help peddle slots, public-radio stations set up a national underwriting broker, similar to the "rep firms" that match companies with shows and stations in the world of commercial radio. National Public Broadcasting started selling public-radio underwriting in the late 1990s. By 2002, it had 161 clients on the air. In 2005, it had 236. This year, it hopes to sign up close to 300. Sponsors have included Amazon.com Inc., Motorola Inc. and Starbucks Corp.
For stations, sponsorship "has gone from found money to a budget item," says NPB director Bob Williams, a former cable-TV advertising sales executive.
But public radio’s coveted listeners are questioning whether their local stations can still be called commercial-free. Philippa Leach, a 38-year-old full-time mother in Los Angeles and avid listener to public radio’s KCRW, says even on-air pledge drives amount to advertising because so many products are offered as an incentive to give.
During a recent weekend, she and her husband discussed the distinction between sponsorship and commercials. "We concluded that there wasn’t any difference, other than in the minds of the public," she says. Her solution: more government funding.
Public radio’s sponsorships technically aren’t advertising. Under FCC rules, sponsors can describe products and give out their telephone numbers. They can’t, however, mention prices, ask listeners to buy their product or use comparative or qualitative descriptions such as "best."
NPR’s ombudsman, Jeffery Dvorkin, says he hears from dozens of listeners each quarter concerned about corporate influence on programming as well as the number of messages. While complaints about underwriting trail issues such as Middle East coverage, he adds that "listeners are more anxious about this than they ever were."
There is no formal tally of how much advertising is aired on public radio. Individual stations acknowledge they are filling more of the slots set aside for local sponsorship, which average between 90 seconds to three minutes per hour depending on the station and the show.
WBUR in Boston fills as much as 60% of its available slots, compared with around 30% 10 years ago, says station manager Corey Lewis. The unsold ad time is typically filled with music or information about coming programs.
NPR has added 24 seconds an hour of sponsorship to its syndicated programming over the past decade, bringing the total to 1½ minutes an hour. NPR keeps its announcements to 10 seconds long. They are read by an NPR employee in a neutral voice that is supposed to blend in with the programming.
"There are ways to do [sponsorship announcements] that are consistent to the values of public radio," says Ken Stern, NPR’s chief operating officer. "People are turned off by length. People expect them to be informational, not salesmanlike."
The network encourages member stations to be equally sparing. Some commercial-radio stations, by contrast, air more than 15 minutes of advertising an hour.
As public radio’s advertising ambitions grow, commercial competitors, already under pressure, are getting edgy. Commercial radio’s revenue has hovered at $20 billion for the last few years as listeners spend less time with the medium. Executives at the handful of big players in the much-consolidated field worry about competition from emerging media such as Internet radio, satellite radio, iPods and now public radio.
"What you’re seeing is public broadcasting moving toward commercialization, and that is troubling," says Saul Levine, owner of Los Angeles-based Mount Wilson FM Broadcasters Inc. "As they become the equal of commercial stations, they should be treated the same." Public radio gets perks such as tax exemptions.
Public radio is tinkering with how far it can push sponsorship and not alienate listeners. Take "Marketplace," the business show produced and distributed by American Public Media. Norma Cox, APM’s national sales manager, now allows sponsors to buy a few weeks of advertising at a time, instead of the full year required previously. She also allows them to change spots on 48 hours’ notice. Before, sponsors needed to make changes several weeks in advance.
"We are far more responsive to our clients than we used to be," Ms. Cox says. APM has almost doubled its national underwriting revenue to $8.2 million over the past two years.
When she came on board in 2002 from KMSP, a Minneapolis-based News Corp. TV affiliate, "Marketplace" ran 60 seconds of national sponsorship in every half-hour show. Now, it runs 90 seconds of national spots. To make it palatable, Ms. Cox intersperses the sponsorship throughout the show, rather than airing it all at the end, as used to be the case. She also won’t interrupt programming with more than 30 seconds of sponsorship at a time.
Other APM shows such as "Prairie Home Companion" and "The Splendid Table" have made similar changes. Sponsors are happy because they previously felt lost being lumped at the end and Ms. Cox thinks listeners benefit, too. "I think it sounds really good," she says. "It makes the show crisper."