Radio struggles up in the air

By Published on .

Satellite radio is responding to pressure to attract listeners with new ad campaigns and trial promotions.

And whether consumers are ready or not, thousands of new cars this year will have one of the services built in-with a flurry of promotions for crystal-clear radio reception anywhere.

Two rival marketers of satellite radio, XM Satellite Radio and Sirius Satellite Radio, must sign up millions of new customers over the next two years or the $2 billion invested so far in the technology will be a bust.

XM will freshen print ads via Omnicom Group's TBWA/Chiat/ Day, Playa del Rey, Calif., and early this year, Sirius will break a national ad campaign from its new agency, Maxxcom-backed Crispin Porter & Bogusky, Miami. Media plans have not been disclosed.

Analysts remain skeptical about satellite radio's prospects.

"Satellite radio will appeal to a certain niche audience, but it won't be wildly popular. Terrestrial radio has nothing to fear," says Mark Fratrik, VP at radio researcher BIAfn.

more competition

Just as satellite radio ramps up to bill itself as a clear signal solution, the arrival of digital terrestrial radio is providing a fresh distraction for XM and Sirius.

Approved by the Federal Communications Commission last year, digital radio promises to deliver the clearest possible terrestrial radio signals, though it's still hampered by distance limitations.

Digital radio equipment for cars and home use containing software licensed from iBiquity Digital Corp.will debut in the second quarter of this year, says Joe D'Angelo, director of business development.

Like cable TV, satellite radio claims to draw a more upscale audience, which has already invested in a high-tech radio and paid a monthly subscription fee. Both XM and Sirius are pitching that elite demographic to media buyers for a limited amount of national commercial advertising each is selling.

Sirius vows no commercials will run on its 60 music channels, but it airs ads on news, talk and other entertainment channels. XM sells commercials on half its 70 music channels, but no more than 6 minutes per hour.

Media buyers say the cost of commercial time on satellite radio is very low. XM and Sirius say their prices vary, based on the scope of commitment. XM boasts advertisers including Anheuser-Busch Cos.; Sears, Roebuck & Co.; and J.C. Penney Co.

Most major advertisers from last year have signed on again for 2003, says Bob Lion, VP-ad sales for XM. Insiders estimate initial buys total less than $10,000.

Carat North America has been testing satellite radio advertising for more than a year, says Catherine Warburton-Scott, senior VP-associate director of national broadcast at the New York-based media buying unit of Aegis Group. She notes many Carat clients have been in the market for a year.

Although satellite radio is not yet measured, she says it shows potential for delivering a promising audience. Ms. Warburton-Scott contends: "It's like the early days of cable TV when we didn't know who the potential viewer was, but it's clearly worth the investment."

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