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Though the show doesn’t hit Sirius until January, sales executives are tentatively talking pricing with media buyers, and their asking rate suggests that Sirius CEO Mel Karmazin has bold ambitions for his star talker. One buyer reported being pitched a $20,000 price tag for a live read on Mr. Stern’s new show; another suggested the fee was a bit lower.
A live read, in which the show’s host uses a provided script to endorse a product, is typically about twice as expensive as a 30-second spot. The floated price of $20,000 is close to what it currently costs to advertise on Mr. Stern’s current show, which is sold through Infinity Broadcasting.
Half the audience
His terrestrial radio show is estimated to reach 6 to 7 million weekly listeners. Since Sirius isn’t Arbitron-rated, it’s not possible to project the number of listeners for Mr. Stern's upcoming satellite radio program. Sirius estimates 3 million subscribers for the service by year’s end.
Sirius wouldn’t comment on the Stern show's pricing. “Howard will garner a large, loyal audience and he’ll be priced appropriately,” said Sam Benrubi, senior vice president of advertising sales for Sirius. Sirius bought the rights to the show last year in a five-year, $550 million deal.
Most of Mr. Stern’s current advertisers are local but Sirius will tap the pool of national advertising for the program, as well as for its other properties, including NFL games and Martha Stewart Living Radio, launching in September. “We could serve any advertiser with any individual product,” Mr. Benrubi said.
Media buyers eye satellite radio as an experimentation zone, a place to try out concepts, such as program sponsorships, that aren’t driven by ratings. And they often don’t have a choice: Sirius isn’t Arbitron-rated, and instead uses customer satisfaction services to gauge who’s listening to what. XM, meanwhile, has hired Arbitron to produce custom panels, which it supplies agencies on request. “We don’t buy it for the ratings,” said Pearl Choi, national broadcast supervisor for Carat, Los Angeles. “But we think it’s our responsibility to explore new opportunities for clients, including satellite.”
Non-music property ads
Both XM and Sirius offer advertising on their non-music properties; XM has 86 such channels, plus 21 with local traffic and weather, and Sirius has 55. The two companies sell sponsorship packages and regularly sell cluster channels that attract the same demographic. The satellite networks promise advertisers less cluttered environments, and media buyers pay between $7 and $20 a spot, depending on the channel and volume of the buy.
Advertisers are open to small, targeted buys, but the lack of independent, third-party audience research is a hindrance, especially when it comes to return on investment and accountability. Most advertisers are allocating small portions -- 1% to 2% -- of their national radio dollars to the medium. In 2004, national advertisers spent $3.4 billion on radio, according to the Radio Advertising Bureau.
Audience metrics: 'Dealing with an unknown'
“We’re still dealing with an unknown because radio advertising has historically been predicated on Arbitron,” said April Horace, an analyst with Hoeffer Arnett. “You could analogize advertising back to very early days of cable before cable had metrics.”
And still, said Matthew Warnecke, vice president and director of network and local radio for MediaCom, today’s unrated cable networks draw more advertising dollars than satellite radio. It’s not surprising, he said, that Sirius would ask top dollar for what most expect to be its biggest show. “It’s our job as negotiators to negotiate strongly, to find the best price but also to find the best inventory,” he said.