Maybe all the research tools we have now didn't exist then, but yes, radio stations and advertisers did know about demographics. I do remember a billboard for a BM format called "Music for the Two of Us" that featured a young looking couple (upper 20s/early 30s) with glasses of wine, the implication being that it's perfect music for a romantic evening, and it didn't include putting your teeth in a glass. David, you answered a question I had about how a smaller company like Kalamusic (which o/oed stations in Kalamazoo MI and Ft Wayne IN) had music "recorded especially" for them.
I remember reading an article in the 80s about the BM format and how the demographic was aging out of saleability. Apparently one of the nation's highest rated BM stations commissioned a study about marketing the format to younger demos and the conclusion was that there was no way to interest large numbers of people under the age of 35 in listening to that format (in truth, if BM still existed on the radio, we'd be talking a 70+ format now). A good share of BMers had abandoned the format by the early 90s, some that still had good numbers. WHIO-FM in Dayton (the original, not the current news/talk simulcast) still had double digit shares when they pulled the plug in 1989. They were even blasted by the media critic of their co-owned newspaper. The Country format that replaced it achieved double digit shares very quickly, and has for the most part been number one ever since. A station in Piqua picked up the format (they had been BM for years themselves, but started marketing to Dayton), but abandoned it themselves within a couple of years. It seems that when the big BMer dropped the format in many markets, someone picked it up but didn't stay with it very long (I'm trying to remember how long the "new" WXTZ in Indianapolis lasted).