Underwriting sales held down by under-staffing,
Underwriting sales held down by under-staffing, say experts
Originally published in Current,
June 30, 2003
Public radio stations could boost revenue with underwriting sales, but most lack enough salespeople to cash in.
That’s the opinion of underwriting consultants and development execs, who say bulking up sales staffs could help stations through a weak economy and ensure a brighter future when finances improve.
Others in public radio agree that underwriting departments are under-staffed. Responding to a survey, attendees at May’s Public Radio Conference ranked low investment in development staff as a top threat to the system’s financial health. That concern again tops the agenda at this month’s Public Radio Development and Marketing Conference.
Hiring more sales reps in an economic downturn may seem counterintuitive, not to mention difficult. States are slashing budgets, universities are freezing new hires and scraping together money for another salary may tax stations.
But researchers say stations that can spring for an extra salary won’t regret it. A recent Public Radio Management survey of 23 stations showed that after a slight drop in 2002, the pace of growth in underwriting sales rose sharply to 15 percent. Underwriting directors at stations also report strong sales.
“The growth has been so strong that it obviously is telling us there’s more opportunity out there,” says Jim Taszarek Jr., president of Public Radio Partners, a Phoenix-based underwriting sales firm.
Development execs at stations agree. “If you told me I had to make an extra $500,000 in the next six months, I would definitely try to make it through underwriting” rather than from members, says Sylvia Carson, assistant station director for marketing and development at KUT in Austin.
Public TV stations, on the other hand, report flagging underwriting sales. Joint licensees say that as public radio sales remain high, television trails. Local TV sales at Boston’s WGBH are down 15 percent, says Jon Abbott, g.m. Other TV stations also cited shrinking underwriting revenue while laying off employees.
“A good year for TV now just appears to be flat,” says Taszarek. Public radio’s success, he says, can be attributed to its growing audience. A 1999 study by Public Radio Underwriting Partners, not related to Taszarek’s firm, found that about 80 percent of underwriters are also listeners, Taszarek says. It follows that as public radio’s audience grows, so should its underwriting base.
Taszarek’s PRP sells underwriting for five public radio stations and just inked a deal with its first public TV station, KAET in Phoenix. His firm has been adding reps in all markets.
Payoffs of adding staff
Observers say stations have turned increasingly to underwriting for relief from falling federal, state and institutional support—pressures unlikely to ease any time soon.
Underwriting has accounted for a growing chunk of pubradio station
income in recent years, according to CPB data. Gross revenue from sales
grew to almost $118 million in 2001, up 34 percent from 1999.
“Stations are now really seeing that it’s important to analyze if you have the right goals and right staff, and monitor what’s working and what’s not working on the underwriting side of things, the same way that they do in membership,” Harman says.
Yet staffing remains lower than it ought to be, according to the PRM report. Thirty-five surveyed stations employed an average of 2.6 sales staffers each. Harman echoed a 1999 Public Radio Underwriting Partners study that recommended stations employ at least three full-time sales staff.
In commercial radio, by comparison, an average station fields as many as 10 sellers, says consultant Paul Jacobs, who contributed to Harman’s report.
Low staffing could also hurt pubradio stations’ sales, the report suggests. Stations with bigger sales staffs saw the fastest revenue growth this year (see chart) and also billed the most per full-time employee.
The biggest stations, with an average sales staff of 4.5 employees, billed about $460,000 per staffer; the smallest, with 1.9 employees on average, brought in just shy of $100,000.
“When you look at the numbers, there aren’t a lot of sellers relative to the growing revenue demands in public radio,” says Jacobs. “Having two or three sellers responsible to cover an entire market, regardless of market size, is a pretty daunting task.”
“When you look at the evolution of underwriting sales, in some ways, we’re at the beginning of the process,” he says.
Knowing where to aim
Adding sales staff may be out of the question for some stations. Some university licensees must scale mountains of bureaucracy just to expand their staffs or pay on commission.
Hiring more sales reps at KUT, Carson says, would have taken months. Just getting the University of Texas to okay a job description would have taken two months, she says.
Instead, KUT signed on with Taszarek’s Public Radio Partners, which recently put two sales staff in KUT’s offices. The station billed $115,000 for the month of June after just three weeks—60 percent more than for the whole month of June 2002, Carson says.
Some observers say stations, not their overseers, deserve the blame for other obstacles. “Awareness, or lack of awareness, is the key issue that drives staffing,” says Gray Smith, director of corporate support for the Public Radio Partnership in Louisville, Ky.
Public radio needs to get better at gauging potential underwriting growth, he says. Too few stations are able to identify revenue goals or staffing needs.
He suggests one benchmark also recommended by Taszarek: measuring a station’s potential underwriting revenue by its audience share. If a station commands 6 percent of a market’s listeners, for example, it should bring in the same percentage of the market’s total dollars spent on radio advertising. Another factor, he says, is the station’s inventory—how many spots it sells in its schedule.
“Unless you understand your potential, there’s no way you can begin to staff up for it,” he says.
There are other ways to set goals. KUT bases targets on data from previous years, such as revenue, staff size and number of calls made to potential buyers.
KPBS in San Diego uses a cost-benefit ratio, says Bruce Bauer, corporate development director. The station spends about 25 cents to raise a dollar, he says. If the average spending drops, he takes that as a sign he can and should hire more staff.
“The cost to raise a dollar will go up again,” Bauer says, but in theory the new hire will get up to speed and inch the ratio downward again. A new hire usually begins paying off in six months to two years, say Bauer and others in the field.
Facing a weak market in national radio sales, NPR hired a consultant to gauge its prospects. The findings prompted the network to spend $300,000 to expand its sales staff from six to 10. It stationed the new reps in Chicago, New York, Los Angeles and San Francisco, centers of advertising business.
National ad sales for radio have taken a beating since the economy soured, and media forecasters predicted only single-digit growth this year. But NPR has tried to boost revenue after ending last fiscal year with an $8.5 million shortfall.
Consultant ZS Associates interviewed NPR’s current and prospective underwriters and surmised the network could boost sales. But it said NPR needed to tap new customers, suggesting banks, car manufacturers, insurance and tech companies, and financial service providers. Companies already underwriting on NPR were unlikely to spend more on spots.
After its latest hiring in the spring, NPR might not see a payoff until next fiscal year, says Vice President of Development Barbara Hall. But, like its stations, NPR has an eye on the long term.
“We’re laying the foundation for the future,” Hall