Public radio: marketing without commercials

American Demographics, Sept, 1996 by Tibbett L. Speer

IT FIRST WENT ON THE AIR IN 1971 with live coverage of the Senate hearings on Vietnam. Since then, National Public Radio (NPR) has served as a major source for the programming available on noncommercial radio. NPR's 25-year anniversary should be a triumphant time for the producer and distributor of such programs as "All Things Considered," "Car Talk," and "Performance Today." But even though 540 radio stations buy NPR programs and 12 million Americans listen every week, public radio's future is unclear.

The public radio stations that help support NPR get a big share of their funds from the Corporation for Public Broadcasting (CPB), a private nonprofit group entirely funded by Congress to the tune of about $250 million a year. But congressional budget-cutters are threatening to end funding for public broadcasting after existing allocations run out in 1999. NPR, as the largest single programming provider, receives about one-fourth of the total, most of it indirectly through member stations that receive money from CPB and decide to pay it to NPR in the form of membership fees.

These fees provide about 60 percent of NPR revenues; grants and underwriting, some of which come directly from CPB, bring in most of the rest. In an effort to counter the threatened budget cuts, CPB is using market research to convince lawmakers of its worth. Its most powerful tool is AreaPop II, a market analysis system developed for the corporation by TETRAD Computer Applications of Bellingham, Washington. The system combines three pieces of software--PCensus, Maplnfo, and FoxPro--with which CPB can map each public radio station's broadcast range and analyze the demographics of its potential audience.

About 91 percent of American homes were reached by a public radio station in 1995, up from 86 percent in 1989, says Wendy Charlton, manager of information industry resources for CPB. Most can receive the signals of three or more public radio stations. Eliminating some of these overlapping signals would save money without cutting services, but this isn't the best option in all situations in view of differing audience demographics. "When a public station with a big African-American or Latino audience overlaps with a station that has a largely white audience, you have more things to consider," says Charlton.

AreaPop II also gives CPB a better idea of how well each station is reaching potential listeners and members. "If a station's audience penetration is not good enough, it could lose our funding," says Charlton. "AreaPop lets us identify problem stations and work with them to improve."

Some NPR member stations use numbers from AreaPop themselves, as well as audience ratings data from Arbitron. Most are taking crash courses in direct marketing. The reason is simple. "Eventually the federal funds are going away," says NPR spokeswoman Kathleen Scott. "We'll have to have something else in place."

NPR stations have power in their markets, because their relatively small listener base has demographics to die for. Listeners are twice as likely as the average American to be college graduates. One in three weekday listeners works in a professional or managerial position. Two-thirds of listeners are aged 25 to 54. More than 70 percent own their homes.

On the other hand, NPR is committed to commercial-free programs. So far, its leaders have held firm against pressures to accept advertising, although last year they began allowing corporate underwriters to broadcast slogans that sometimes seem to border on mini-commercials. But board members believe that true commercials would offend NPR's audience and drive away the very people sponsors want to reach in the first place. NPR programs are intelligent and uninterrupted, and that makes its listeners fiercely loyal.

Faced with a loss of tax dollars, public broadcasting might be supported through the creation of a trust fund that would be capitalized with proceeds from the auction of unused radio spectrum or bandwidths. A bill incorporating this concept is under consideration in the House of Representatives. Public broadcast executives support the general idea, but they criticize the specific proposal as inadequate and too damaging to local station interests.

Meanwhile, NPR has come up with supplementary moneymaking ideas on its own. One is a record label called "NPR Classics" that will release much-loved programs on compact disks. It already offers a toll-free, music-ordering service (1-1800-75MUSIC), which helps support NPR operations. Individual member stations are undertaking fund-raising initiatives of their own, too. In Binghamton, New York, WSKG rents its recording studios and expertise to a local company that produces music and makes commercials.

It's tough to turn an idealistic, nonprofit outfit into a company of entrepreneurs. But NPR, led by former Bell Atlantic Washington chief Delano Lewis, is trying. It now goes to the hinterlands to teach member stations the latest fund-raising strategies and techniques. It also explores how best to use the Internet to communicate with listeners, donors, and customers. Meanwhile, CPB's new research tool is shoring up support for public radio on Capitol Hill. AreaPop II "has been extremely useful to us in the Congressional debate," says Wendy Charlton. "Without it, we would be doing much worse."