The account's incumbent, Interpublic Group of Cos.' Mullen, Wenham, Mass., will continue to handle the media planning-and-buying portion of the business. The new shop is expected to begin work as soon as September.
A Mullen representative confirmed the agency is keeping the media business and is not defending the creative portion of XM's account . Asked why, he said, "It was a mutual decision by our agency management team and the decision-makers at XM."
Cost of adding subscribers
XM -- with 7 million subscribers, the larger of the two satellite radio services -- is engaged in a fierce battle for customers with rival Sirius. But both players in the satellite industry are under pressure to show Wall Street they can gain subscribers efficiently. XM came under fire earlier this year after its cost per gross addition -- or CPGA -- grew to $109 per new subscriber in 2005, up from $100 in 2004. CPGA reflects the marketing costs required to add on subscribers.
Around the same time, XM Director Pierce J. Roberts resigned after differing with the company on cost-control measures. He thought the company should spend less on marketing, programming and promotions so that it could more quickly achieve positive cash flow.
Select Resources International, Santa Monica, Calif., is handling the review.