What We Learned by Gathering Underwriting Information From Stations

What We Learned by
Gathering Underwriting
Information from Stations

"Programming causes audience."
– AUDIENCE 88

"We don’t sell underwriting by program, so we can’t get that information."
– Numerous public radio station professionals

Public radio relies more heavily on underwriting income with each passing year. Programming causes the audience that underwriters "buy." The AUDIENCE 98^Ž Underwriting Survey is the first system-wide attempt to link underwriting to the programming that causes it.

There are two reasons why managers at stations would want to link underwriting income to specific programming. First, it allows them to track their full financial return from each programming investment. Second, it provides tools with which to compare financial returns across all programming in their schedule.

The Underwriting Survey

AUDIENCE 98 invited 112 stations to augment their estimates of listener support with program-specific information about underwriting (defined here as any financial support for programming in return for on-air mention of that support). In the process of gathering this information we learned valuable lessons about record keeping and information management at stations.

Several stations generated underwriting figures by program quickly and easily. But for most it was a challenge, due primarily to

insufficient record keeping, inadequate software, or the belief that program-specific income figures are not relevant because underwriting is sold by dayparts and program packages.

From its inception, the AUDIENCE 98 Underwriting Survey was seen as a pilot project to inform subsequent endeavors. The need to set industry standards for tracking underwriting support by program must clearly be addressed before this key relationship can be studied and moved forward.

However, these limitations have not kept us from forming the following impressions during our discussions with stations.

Factors Affecting Underwriting Income

A station’s ability to generate underwriting rests on a combination of factors: audience, program format, market conditions, strategy, and effort.

Audience is a result of having the right program on the right station at the right time. The number of hours a program is on the air, the available audience, and the program’s power affect the size and qualities of the audience served during an individual program or daypart or package. This influences pricing and selling strategies.

Program Format influences the number of credit avails in each hour. Some programs offer more avails and as such offer greater potential for income.

Market Conditions such as exclusivity, uniqueness, competition, and sell-through rates can influence underwriters’ demand for a program. This offers the opportunity for flexibility in the rates charged by a station.

Strategies vary across stations and programs more than any other factor.

Some stations offer ten-second credits in drive time while others run only thirty-second credits.

Some offer combinations of fifteen-second credits and thirty-second paid announcements.

Some sell at the market cost-per-point while others sell well above or below that benchmark.

Some place bonus spots in weaker programs; this can help close deals but it also lowers the return on the average credit.

Analyzing underwriting income by program lets a station evaluate the success of its strategies.

Effort also varies greatly across stations and programs.

Some stations are aggressive in generating new business.

Others wait for the phone to ring.

Several stations admit selling just the "easy" dayparts and programs.

Some have only one part-time person making sales calls while others have full-time staffs of four or five.

Average Rates and Cost-Per-Thousand

While AUDIENCE 98 did not collect information about avails, units sold, or credit rates, discussions with participating stations suggest that we need to clarify two concepts before we can make meaningful comparisons among programs and across stations. These are the "True Average Rate" and the "True Cost-Per-Thousand."

True Average Rate is a station’s underwriting income divided by the total number of credits or spots broadcast. This includes bonus spots. We noticed during this process that most stations referred to their rate cards to report their average rate. Since many of these stations also made liberal use of bonus spots, the True Average Rate was significantly less than the published rate.

The True Cost-Per-Thousand is determined by dividing a program’s, format’s, or daypart’s True Average Rate by its average quarter-hour audience.

True Average Rates and True Cost-Per-Thousand are the foundations we need to compare the effectiveness of different programs and stations in generating underwriting income, and their potential for underwriting growth.

– John Sutton
AUDIENCE 98 Associate

Audience Research Analysis
Copyright Š ARA and CPB. All rights reserved.
Revised: September 01, 2000 12:38 PM.