Auction stalwarts innovate to wring out more revenues
Originally published in Current,
May 13, 1991
Though auctions have become aging dinosaurs in the view of many public broadcasters -- and are already extinct in many markets -- some stations are forcing their fundraisers to evolve for survival in the '90s.
After increasing rapidly during the '70s, public broadcasting's auction revenues crested in 1985 at $24.5 million and have since decreased every year to $21.9 million in 1990. [By fiscal 2000, the auctions' revenues fell to $15.2 million, according to CPB.]
At the same time, the number of stations holding auctions has dropped from a peak near 100 in the early 1980s to the current 87.
Auctions bring in perhaps 10 percent of the revenues of public TV stations that hold them, but only 3 percent for the entire public TV field, including stations that do not hold auctions.
Many stations have maintained the old excitement surrounding their auctions, and for some the income has meant the difference between life and death. Bill Matthews, director of corporate giving for KTEH, San Jose, Cal., says his station would not be around if not for their auction, which is now in its third year.
''We were in desperate need of dollars,'' said Matthews. ''It's a cash cow -- you don't have to wait for pledge money to roll in. The board was hesitant. They told us we had to guarantee a $30,000 profit the first time. We were pretty nervous, but we had no choice. After it was all over, we had grossed $258,000 against projected costs of $100,000.''
Nonbelievers study the costs
Others are more skeptical about claims of auction bounty. ''People just don't want to cost these things out,'' said Jon Abbott, v.p. of marketing and development at San Francisco's KQED-FM/TV. ''They are a very expensive production that take us away from our mission. All the preparation, the salaries of the people that recruit underwriting, the cameramen, directors, and support crew! Look at the time the standing staff puts in, and the follow-up -- all these things add up.''
''Not only that,'' Abbott added. ''The volunteer pools are drying up, demanding even more staff time, and your traditional audience disappears during the auction, and it takes time to get them back.''
Many development professionals seem to agree that the predominance of the two-income family has made volunteers harder to find. This has combined with increased competition for viewership, rising production costs and a recession, to demand a stronger emphasis on dollars raised per auction hour, said Lisa Greig, associate director of development at PBS.
In the last few years, stations that stayed with auctions have diversified with sophisticated marketing efforts. They have developed alternative revenue sources within the auction framework, improved their efficiency, developed new underwriting policies and drifted towards what one broadcaster called Bergdorf Goodman-style auctions, adding houses, cars and stock portfolios to their inventories of merchandise.
New auction revenue sources
In the face of flat returns on retail value -- usually a little over 50 percent -- it has become important to find new ways to bring in funds with auctions.
Nine stations, for example, have added a 900-number game first used by WGBH-TV, Boston, called The Auction Game. This game, promoted during the on-air auction as well as in other media, charges contestants $2.50 a minute to play. Each day the station airs a spot displaying five items of merchandise -- anything from trips to electronic goods. The contestant is given five chances to guess the items' total retail value, down to the cent. The contestant then must guess the value of a bonus item. The first person to guess correctly wins all the items.
The game's proceeds are split between the station, which gets 51 percent, and its marketer, Transnational Marketing Services, which splits 49 percent with the phone company. Last year the station's share at WGBH was $60,000.
WQED, Pittsburgh, has added a revenue source by throwing a party in conjunction with its last four auctions. The Prices Plaything Party is a black-tie affair with live and silent auction items. The $125-a-plate dinner brought in $90,000 this year from 275 participants.
In another gambit, WGBH has put together a cookbook to sell during the auction for $25. ''This is the sort of thing that helps drive up our revenues-per-minute ratio, because it is in addition to bidding. We hope to raise $20,000 from the book this year,'' said Edye Baker, auction manager at WGBH.
Stations have also moved to increase efficiency and cut costs. Many stations are now charging bidders a fee for express bid numbers -- advance registration for the auction. ''We're taking money in before the auction to help us bring in money faster during the auction,'' said Matthews.
KTEH had more than 400 express bidders this year who paid $7.50 or $10 for their own ID numbers. ''This way they get their bid in more times, and we don't have to spend the time taking their name, address and phone number,'' Matthews added.
Express bids are also an excellent source for a mailing list, pointed out PBS's Greig. The donors have shown interest in the station and given their addresses.
WQED found last year that the number of bids coming in slumped around 11 p.m. and started to pick up again after midnight. ''We started a shift called 'midnight madness' that ran from 12 to 3. We had no idea that it would get as busy as it did. We had to recruit the security people and cleaning people to help us take in bids. It's a whole new market that we were unaware of,'' said Sylvia Adams-Prebort, auction manager for the station.
Stations are also tending to use less entertainment -- allowing them to offer more items at a time -- and are cutting the number of cameras used for the telecasts.
To maintain underwriting levels in the face of corporate cutbacks, WGBH now gives on-air credits for underwriting donations as small as $1,500, down from a $6,000 minimum. ''We've made up our loss of major corporations with [additional] small companies,'' said Baker.
Most backers of auctions believe that auctions also represent the best way for the station to bring the community together in a united effort for the station.
''We were concerned about our volunteers, too,'' said Abbott. ''We explained the situation to them, laid out the facts and they agreed that it was time to drop the auction. Many have remained active with us in other ways.''
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