XM SATELLITE RADIO OPENS REVIEW

Ad Budget Declined as Account Moved In-house

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SAN FRANCISCO (AdAge.com) -- XM, struggling to crack the market for subscription satellite radio service, has placed its $50 million plus account in review.

XM, like competitor Sirius Satellite Radio, is under pressure to sign up millions of listeners over the next few years as car manufacturers roll out new models with factory-installed satellite radio systems. As of Jan. 8, XM had more 360,000 subscribers.

Among the manufacturers

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installing radios or offering them as options is General Motors Corp. for 44 models including Buick and Cadillac (GM is an investor in XM); American Honda Motor Co.'s Accord and Toyota Motor Sales USA's youth-oriented Scion brand.

TBWA/Chiat/Day
Omnicom Group's TBWA/Chiat/Day, Playa del Rey, Calif., was XM's first agency, launching the brand at the end of 2000 with cinema and TV spots featuring musical performers such as Snoop Doggy Dog and David Bowie. In recent months, the advertising budget declined and the work was moved in-house, executives familiar with the situation said.

Pile & Co., Boston, is the consultant handling the review.

Chance Patterson, vice president of corporate affairs of XM Satellite Radio Holdings, said the marketer is looking for an East Coast-based agency and the review will include media.

"Chiat did a solid job for us as we were launching the business. Now as we move to the operational phase we are looking for an East Coast agency to support those efforts," he said.

Campbell-Ewald
He declined to define a budget or state other details of the search. However, he noted that Interpublic Group of Cos.' Campbell-Ewald, Detroit, currently is working on a TV, print and direct-marketing campaign backing GM's installation of XM in select cars.

XM spent $55.2 million in measured media for the first 11 months of 2002, according to Taylor Nelson Sofres' CMR.

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