XM commissioned the study from OTX to test the impact of its text display function -- officially known as Program Assisted Display, or PAD. While the text display features artist and song information on the music channels, it can also be used to display a URL, brand name or telephone number during an ad message.
|XM used three groups to test recall of ads with text messages on the display pad. Those who saw the text ads had a 47% recall rate, those with an XM receiver without a text display had a 39% recall rate and those who listened to terrestrial radio had a 32% rate.
Virtual driving experience
For the study, OTX created a virtual driving experience in which respondents listened to the radio and heard four ad messages -- three promos and one spot for debt relief. One group of respondents had an XM receiver with a text-enabled screen present on the dashboard in their driving experience and another group had a terrestrial radio receiver. A third group had an XM receiver without a text-enabled screen.
OTX then asked the respondents what they recalled hearing advertised during their virtual drive. Those who saw the text ads had a 47% recall rate, those with an XM receiver without a text display had a 39% recall rate and those who listened to terrestrial radio had a 32% rate.
“We think the PAD devices are a breakthrough in that they’re allowing XM listeners to be further engaged,” said D. Scott Karnedy, senior VP-sales and marketing solutions for XM Satellite Radio. “It comes down to reinforcement.”
Applicable to high-definition radio
And while the study may be a boon for the satellite radio ad sales proposition, terrestrial radio executives can also be encouraged by the results as they look toward the day when HD digital radio becomes a viable ad-supported medium. Like many satellite radio receivers, HD radio receivers will have a text screen. And like the signals satellite radio companies broadcast, HD digital radio signals will allow radio broadcasters to send visual and text information.
Of course, the satellite radio companies expect to stay ahead of the curve. The next iteration of the XM devices will have the ability to feature logos, and Mr. Karnedy said he “fully anticipates they’ll continue to evolve and provide that visual play.”
Video is next step
A year ago at the Consumer Electronics Show video was a hot topic for satellite radio companies. XM debuted its video capabilities at the show and has accumulated extra bandwidth that could easily be used to broadcast video signals. Meanwhile, Sirius announced at the 2005 CES it would add video programming by the end of 2006. CEO Mel Karmazin has talked specifically about the value of broadcasting children’s video programming to screens in the back seats of vehicles.