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NPR, the New Podcasting Ruler

Expansion Continues Into Broadband Video and a Mobile Network

By Published on .

NEW YORK (AdAge.com) -- The cream of digital media gathered at New York's Cipriani restaurant last week for the Webbys, otherwise known as the online Oscars, to see winners including Google Earth, MySpace.com and ... National Public Radio.
NPR's already a powerhouse podcaster and it plans to add broadband video in the second half of 2007.
NPR's already a powerhouse podcaster and it plans to add broadband video in the second half of 2007.

Yes, 36-year-old NPR scooped up five awards, more than any other broadcaster, reward for sweeping changes that have transformed it from a cash-strapped public broadcaster to a bona fide digital-media force to be reckoned with. Next up? Video.

Launched in 1970 with 30 employees, National Public Radio was set up to feed programming to 90 charter stations. Now the Washington-based broadcaster, buoyed by a $200 million gift from Joan Kroc, widow of McDonald's founder Ray Kroc, is opening overseas bureaus, hiring new staff and delivering its shows in places not even imagined when it launched during the Nixon administration. Despite its history as a publicly funded, largely commercial-free radio network, it's also one of the few traditional-media companies to figure out how to convert podcasts into ad dollars.

NPR's already a powerhouse podcaster -- and is possibly the biggest media organization in the nascent audio-download business, with 52 shows on Apple's iTunes and 313 titles in its online podcast directory. Popular podcasts include "All Songs Considered," "NPR Movies" and "NPR Technology."

Edgier fare under Alt.npr
In late May, the broadcaster introduced a service with edgier fare under the banner Alt.npr, with shows such as "Press Start," about the culture of video games. It also now has two digital radio channels on Sirius Satellite Radio and a major wireless agreement with MobiTV's MobiRadio service, which will bring NPR to cellphones. A sophisticated website reaches 3 million unique users a month with news and features complete with photos and streaming audio. In the second half of 2007, NPR plans to add broadband video. To the delight of music fans, the offering most likely will start with concerts or performances at NPR studios.

"The endgame is pretty clear. We do audio very well, and we're going to exploit it to our advantage. We are looking to experiment in multimedia-to round out the offering beyond our core advantages in domestic news-to expand out globally from news to music," said Ken Stern, NPR's chief operating officer. "It is what public radio does. It creates a meaningful presence in the world."

Selling this high-end cornucopia of audio goodies is Blake Truitt, who's been with NPR for 10 years and previously sold TV and radio for Walt Disney Co.'s ABC. "I had always been a fan and a listener, and after the funding crisis of 1994, I started doing personal research, assuming there would be a larger need for corporate money," he said. "I talked them into hiring me."

Revenue streams
Ad revenue, or "sponsorship revenue," as NPR calls it, accounts for almost one-third of NPR's annual income. For the fiscal year ended Sept. 30, 2005, sponsorship revenue was $37.7 million, up from $24 million two years earlier. "For our 2007 estimates, we're looking at an increase between 5% and 10%," Mr. Truitt said. NPR's 2006 budget is $150 million, with the rest coming from membership drives ($65 million) and foundations ($17 million), among other sources.

Revenue from new-media operations accounts for around 10% of the total but is likely to grow as a portion of the whole pie. One of NPR's most successful new business models is its podcasts, which launched just nine months ago. Automaker Acura was a founding sponsor of NPR's podcasts and just renewed for another six months.

Susie Rossick, national ad manager of American Honda Motor Co.'s Acura division, said the company wanted to reach educated males. "We had been involved with NPR for a long time, and we wanted to be part of podcasting." After Acura's experiment in podcasting, NPR not only knew that listeners were highly aware of the identity of the Acura auto brand, but it discovered they also remembered the model and specific copy points.

Ms. Rossick reports that more than 25 million Acura-sponsored NPR podcasts have been downloaded since September, a figure backed up by NPR, which has also worked with Time Warner's HBO, Intel and Vanguard.

Pricey CPM
Those podcasts don't come cheap, either. Cost-per-thousand rates for NPR's popular podcasts, such as "Story of the Day," range from $50 to $60, much higher than the industry average for podcasts, which is around $20 to $30. In addition to selling traditional on-air sponsorship messages and podcast sponsorships, NPR also sells sponsorships of the streaming audio on its website, which carries 10 years of archived programming. Mainstream marketers, such as beer brand Pabst Blue Ribbon, target music-lovers through both on-air and online sponsorships.

Chris Allen, VP-associate director of national broadcast at GSD&M, works with client BMW, which just signed up to be the exclusive sponsor of NPR's RSS feeds. "Their podcasts are a pristine environment," Mr. Allen said. "They have a tremendous amount of traction. They're almost always top-ranked on iTunes. You reach a more elite audience."

But not everyone sees the podcasting and its digital push as a positive. NPR's 700 affiliate radio stations are engaged in an ongoing debate about the potential negative effects of digital ventures on local listenership. One concern is that fewer people will be listening during on-air funding drives if more of the audience is downloading podcasts of popular shows.

NPR's Mr. Stern acknowledges the naysayers' arguments, but also believes "channel conflict is something every broadcast organization faces. What we've tried to do is work with our stations to provide access through different distributions. We are in the public-service business and in the business of getting the best content into the hands of everyone."

While NPR is enjoying a renaissance of sorts, funding for its affiliate stations from the Corporation for Public Broadcasting is again under attack from Capitol Hill. That makes corporate-sponsorship dollars even more important.

Already Mr. Truitt reports strong interest in NPR's potential broadband-video offerings. "We have to balance coming attractions with expectations," he said, though he understands agencies are planning for 2007 now. "We move faster than we've done in years past, but we've been deliberate, and when that's resolved technically and philosophically," he'll be ready to talk to advertisers.

Going mobile
Mobile-phone delivery also is being built with the expectation that it will have to accommodate sponsors. "When we've defined the user experience, that's when we'll add sponsors to the mix," Mr. Truitt said.

"It makes sense that they'd venture into [broadband]," said Mark McCrery, president and co-founder of Podtrac, a company that helps match advertisers to independent podcast properties. "From a marketing standpoint, it's maximizing the portal. They have an incredibly strong brand and a loyal following, so the expectation among advertisers is that the same audience would follow them."

Prudential Retirement spends a third of its annual budget on NPR sponsorships, mainly on "Morning Edition" and "All Things Considered." Prudential first appeared as an advertiser 18 months ago and is considering podcasts as part of its mix come fall.

"When we first started working with NPR, we wanted to raise awareness with NPR's demographics. Their reputation in the business community and general public is really superb," said Jim Mallozzi, Prudential Retirement's senior VP-marketing. "We had positive name recognition within four days. I work with cable agencies, and we've tried Dow Jones, CNN, The Wall Street Journal and Fortune. We didn't have a positive response as quickly as NPR."

NPR's halo effect
NPR's in-depth audience research often helps seal the deal with marketers. One fact: Eight of 10 listeners say the sponsorships have an influence on whom they do business with. Mr. Truitt talks of the "halo" effect on companies that come on air to support NPR. "It's not ad speak. It is not just a warm and fuzzy notion. It can mean good business."

The public broadcaster is attracting interest among marketers that otherwise might not have considered NPR as an ad vehicle but whose iTunes experience has brought them to the podcasts. "The digital interests have spurred on-air business. People see us on iTunes, and then they've thought about it. That's created opportunity, but a lot of those clients don't have a radio budget. We don't want the conversation to end if they don't have a defined radio strategy," Mr. Truitt said. Consequently, a flight on NPR is unlikely to be funded from a traditional radio budget; instead money comes more often from print and cable budgets.

To those who say NPR is getting too commercial, Mr. Truitt has firm words: "Unlike other media, sponsorship doesn't drive programming decisions. Podcasting bore out that process. We found out how long the audience wanted podcasts and which topics."

~ ~ ~
Going Digital
National Public Radio
  • Founded: 1970, with 30 staffers
  • Current employees: 700
  • Current sales staff: 9
  • Sponsorship revenue: 2005: $37.7 million 2004: $31.4 million
  • Most popular shows: "Morning Edition," "All Things Considered"
  • Weekly listeners: 1995: 13 million 2005: 26 million
  • Number of podcasts: 52
  • Overseas news bureaus: 16
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