Monday, February 02, 2015

Difficult Pledge Drive Days Ahead?

It’s getting harder to generate contributions through public radio pledge drives.  Most stations are still getting good overall results, but the cost of getting those results is going up.

Sometimes the cost is more on-air fundraising. It is taking more of the station’s time and more of the listeners’ time to generate a contribution. Sometimes the cost is greater leverage. That is – stations are having to offer more, or more expensive, incentives to generate a contribution.

Probable Causes

Success with monthly Sustaining givers appears to be having an effect on drives by cutting into the potential number of annual renewals received during the drive. Declining AQH (Average Quarter-Hour) audience is another possible cause. Lower AQH means listeners are using the station less. That could result in listeners being less likely to give.  It certainly reduces the number of potential respondents to an on-air fundraising appeal.

There could be external factors as well. People are being asked to immediately part with their money at unprecedented rates these days. The junk mail and telemarketing calls of 25 years ago now follow us out of our homes and find us 24/7. The amount of daily asks is numbing. Public radio pledge drives appeals are fighting through much more clutter just to be considered let alone acted upon.

Measuring Pledge Drive Success

The primary metric we use to measure on-air fundraising success is Listener-Hours to Generate a Contribution. Using Nielsen Audio audience data, we answer the question, “how many hours of listening must we expose to fundraising to get someone to give?”

Or, put another way, how efficiently are we spending our listeners’ time to get a single contribution? A lower number is better. The goal is to maximize the pledge drive return against the expense of the disrupting the listening experience.

In a PPM-measured market, an efficient pledge drive for an NPR News station generates one contribution for every 300 hours of listening exposed to fundraising. That’s like putting 300 people in an auditorium and playing public radio content for an hour, except that their experience will be interrupted 4 to 5 times in that hour with 4 to 6 minute fundraising appeals. At the end of that hour, one of the 300 people will make a contribution in the amount of an average gift.

Two Trends

We see on-air fundraising following two trends. Some stations are adding more fundraising hours and exposing more listening to pledge drives to meet their goals. The fundraising efficiency metrics at these stations don’t improve, they get worse. The stations still meet their goals, or come relatively close, by applying more brute force.

The other trend involves applying more Leverage to the fundraising ask. We haven’t settled on exactly how to best measure Leverage, but we believe the broader concept is sound. For now, consider the Leverage to be the weight of the incentives offered to generate a contribution or to raise a dollar.

Here’s an example. Ten years ago a station offers a dollar-for-dollar match and the fundraising efficiency is 150 Listener-Hours (LH) per Contribution. That means the match is twice as efficient as the average hour of fundraising, which took twice as many LHs (300) to generate a contribution.

Today that match has an efficiency of 200 LHs per Contribution. It’s less efficient at turning listening in to contributions. So the station decides to offer a free tote-bag to anyone who gives during the match in addition to any other thank you gift they take. More listeners respond to the offer and the efficiency returns to its prior number of 150. The station achieved its prior efficiency by applying more Leverage.

This is happening at a lot of stations across the country stations. They are offering more incentives each drive and offering more of them  simultaneously to maintain fundraising efficiencies.

Is the Problem Too Much Talk About Stuff and Not Enough Talk About Mission?

Probably not.

Mission messages are great for convincing listeners that they should give to the station but they aren’t particularly effective at motivating people to actually pause their busy lives to give at that moment. The well-executed “Mission” focused fundraising hours tend to fall in the 400-500 LH efficiency range.

A pure Mission approach to pledge drives would likely require a plan that exposed listeners to 33% to 50% more fundraising to meet the overall drive goal. That’s like turning a 9-day pledge drive into a 12 to 14-day pledge drive. As you might imagine, longer drives tend to drive efficiencies down even more.

What’s Next?

Subsequent postings on this topic will go a little deeper into Leverage, Sustainers, and off-air fundraising including the use of email, social media and database solutions.

One final note. In the past we’ve observed that public radio might have more of a spending problem than a fundraising problem. The money stations are spending on increased local news offerings and digital initiatives is outpacing their ability to monetize those activities. They are currently money losers. That puts pressure on the core radio service to generate “profits” to subsidize those activities.

One of the possible answers to slipping pledge drive efficiencies is to reduce the revenue burden they must bear through smarter spending on local news and digital.

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