Monday, November 07, 2005

Mixed News: Audience and Revenues

The Station Resource Group (SRG) just posted its analysis of public radio's annual revenue performance and the news is mixed. Because the SRG is working with audited financial data from CPB, the report covers revenues through FY 2004.

The good news is that overall net revenue, controlled for inflation, increased 2.1% despite the audience flattening out in FY 2004. The bottom line: public radio increased its spending power.

All of the growth was in underwriting and grant revenue. Net revenue from listener support dropped $1.6 million due to increased fundraising costs. Public radio's spending power from listener contributions decreased from FY03 to FY04.

Public radio spent 37-cents to raise a listener dollar in FY 04, including gifts from major donors. That's up from 36-cents in FY 03.

This is cause for some concern. The Better Business Bureau recommends that non-profits limit fundraising expense to 35%, or 35 cents on the dollar. Public radio is moving in the wrong direction on this benchmark.

This might be a temporary increase as stations invest in fundraising infrastructure, including major giving initiatives. But given the new CPB Community Service Grant criteria encourage further investment in major giving, the cost of raising a dollar is likely to go up for another few years.

There's one other reason public radio should be concerned about the rising cost of raising listener dollars. Public radio stations do not accurately track and report the true cost of on-air fund drives. CPB makes no attempt to collect this information. So the actual cost of raising a listener dollar is probably more than reported in the SRG analysis.

Conventional wisdom suggests that public radio's fundraising costs should be lower than the typical non-profit because it can use on-air fundraising to reach its potential giver base. The costs of acquiring, retaining, and upgrading a contributor should be much lower in public radio, but it appears as though they are not.

It's only been a few years since public radio really started to think about net fundraising revenue and how to earn money more efficiently. If there is anything to be learned from this latest report, it's that the time for thinking about it is over and the time for acting on it is now.


Blogger Mike Crane said...

John wrote:

" Public radio stations do not accurately track and report the true cost of on-air fund drives."

Right on! Conventional Wisdom sez it's "cheap" because we don't have to pay for the airtime. But we DO pay because we turn off listeners (especially with longer drives), provide a lower-quality, often "improvised" product, etc.

I've often wondered what would happen if we looked at all the hours pitched and considered what it would cost to "buy" that airtime.

And given that so many of the pledgers are renewals anyway (far more than New), you have to wonder why there aren't better strategies such as stronger mail renewal.

There are reasons to do pledge drives of course: you do gather some new pledgers, and some renewers are "pledge drive responsive." Plus, done right you can provide some great messaging that reinforces or corrects peoples' beliefs about public broadcasting.

Thanks Jon for getting this discussion going.

- Mike Crane, WMFE

9:53 AM  

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