Tuesday, February 13, 2007

More Spending, More On-Air Fundraising

It's been a busy few weeks. There are quite a few pledge drives going on already. Most that I'm aware of are meeting goal or at least outperforming last year's Winter drives. It does seem more stations are running at least three drives each year. A surprising number of stations are still running 10-14 day drives just to meet current financial needs.

This doesn't bode well for a public radio station's ability to compete in the future media marketplace. More on-air fundraising risks sending listeners to current and new competitors.
At the same time, the cost of doing business will go up as stations spend more money to provide more local programming, HD channels, and downloadable content. All of these endeavors will deliver less overall audience than stations have today and will be less efficient at turning that audience's listening into revenue.

It would be nice to believe that those new financial needs could be met without having to increase the burden on pledge drives, but that's unlikely to happen. There are indications that direct mail performance is slipping at stations with mature direct mail programs. Telemarketing has limited growth potential where it is already properly implemented. My experience is that stations not using telemarketing now are wary of starting.

On-line giving has tremendous potential but on-line etiquette is much tougher on e-mail appeals than on-air etiquette is on pledge drives. We would never think about sending 2 or 3 daily e-mail fundraising appeals to a listener over 7 to 10 days but we rarely blink at the similar intrusion created by on-air pledge drives. On-line fundraising will never match the shear volume of asks delivered by on-air fundraising. It is no replacement for pledge drives.

Major giving is an underdeveloped revenue stream. One problem I see cropping up with major giving is that stations are using it to cover revenue shortfalls in operating expenses. So those $5,000, $10,000, and $25,000 gifts are not going into an endowment, they're becoming anticipated operating income. It's going to be difficult to sustain new programming initiatives if they require finding a few new $25,000 annual donors in perpetuity.

What's likely to happen is that stations will try to develop alternative forms of income such as car donation programs, on-line shopping affiliate programs, and the direct selling of products to listeners (think NPR shop). Stations will sell more underwriting too. It will appear on-air, on-line, in downloadable content, and in e-mails to listeners and donors.

Even if all this activity yields enough revenue to cover all the new expenses, it is likely to yield a zero sum game with pledge drives. Stations won't be able to reduce the amount of on-air fundraising. If anything, stations will do more because pledge drives are fast money when other forms of revenue generation fail to meet goal.

I don't see less on-air fundraising in public radio's future without a major change in public radio's budgeting model. We spend a lot of time as an industry trying to figure out how to be efficient at raising money and turn a blind eye when asked to look at how efficiently we spend it. That has to change or public radio will find itself traveling the same road as public TV; increasing the disruption of its core service just to stay afloat.

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