Why Isn't Sirius XM Utilizing Effective Marketing Strategies?

By Demian Russian

Sirius XM (SIRI) hasn’t been spending much on advertising — they don’t think it’s worth it. The satellite radio provider reported that sales and marketing costs were down 34% last Q4, and the company continued to slash away even further at their advertising budget in Q1. During the Q4 earnings call, Sirius XM’s CFO explained that the company had “curtailed media spending in an economic environment where we did not think it made sense to spend it.” Sirius XM’s Chief Content Officer echoed the same sentiment during the Q1 earnings call stating; “We firmly believe in maximizing inherent opportunities with our major talent and programming as substitutes for marketing dollars.”

Sirius XM has shifted its advertising focus to its existing subscribers with aggressive marketing of its new “Best Of” packages. While this up-selling strategy is extremely cost-effective and has helped raise the revenue necessary to fuel back-to-back EBITDA positive quarters, the company also needs to utilize similar cost-effective strategies to continue to grow its subscriber base. While Sirius XM’s launch of its official YouTube channel and the company’s recent utilization of Twitter to promote its content are steps in the right direction, some of the best and most cost-effective marketing strategies still remain untapped.

Bumper Stickers

Have you ever seen a Sirius XM bumper sticker? After several cross-country road trips, I’ve never seen even one. Why is this? Maybe it’s because there aren’t any. You can’t even buy a Sirius XM bumper sticker. Neither of Sirius’ or XM’s online stores offer bumper stickers for sale, nor do their resellers. The Sirius online store does have a snappy track jacket on sale for $39.99 — that’s $10 off folks! Unfortunately, it’s 100% polyester, making it unsuitable for vigorous breakdancing.

Bumper stickers cost next to nothing to produce. If the company is worried about the cost, they should at least make them available for purchase. There are many loyal subscribers and SIRI stockholders that would slap a Sirius XM bumper sticker on their car in a second. Note to Sirius XM’s marketing department: Give these people the tools to help you! It’s quite ridiculous that the company hasn’t even made bumper stickers available for purchase to their fans yet.

Imagine if Sirius and XM had included bumper stickers with every radio these last several years. How many drivers stuck in bumper-to-bumper traffic, listening to commercial-laden terrestrial radio, might have noticed a Sirius XM bumper sticker and been intrigued enough to try out the service? How many subscribers would Sirius XM have now? We will never know…

Refer a Friend

Netflix (NFLX) is a prime example of how a successful subscription-based business should be run. Sirius XM needs to take a page out of their winning playbook. One of the secrets to Netflix’ early success was their “Refer a Friend” marketing campaign. Netflix gave incentives to its subscribers to get all of their friends and family to sign up for the service. Deftly using their existing subscriber base to market the company for them, combined with aggressive online affiliate marketing initiatives, Netflix swelled their subscriber base almost overnight.

If Sirius XM offered a free month of service for every new customer that an existing subscriber signed up, it could be a huge subscriber growth driver with absolutely no cost or risk to the company. If an existing subscriber signed up five people, they would get five free months of service, but the company would get five new paying subscribers. Why isn’t Sirius XM utilizing this successful marketing strategy? Why?

Does Sirius XM even have a marketing department? The lack of execution makes one wonder. These are just a couple of the many successful cost-effective strategies the company has yet to utilize. Sirius XM has an incredible product — how about letting John Q Public know about it?

Disclosure: Long SIRI, No Position NFLX

Comments

[learn to think]

Simple,sober,and brilliant. Kudos on a great article.

2009 May 24 11:46 AM

[lightning]

AMEN! I was one of those people out there who heard of sat. radio but didn't understand what it was til I bought a new car with it. Didn't affect my decision to buy the car at all and thought I'd let it go after the 3 month trial, but this was the most pleasant surprise of the whole purchase. Wouldn't give it up for anything, now!
Also a subscriber to Netflix and see many similarities between the two companies-have felt for a while now Siri could learn a lot from Netflix' marketing techniques.
Marketing doesn't have to be expensive. As a shareholder I agree Siri's marketing dept. does a poor job.

2009 May 24 12:45 PM

[Wolf Child]

The reason you don't see Sirius bumper stickers on cars is because no one wants a Sirius Satellite Radio bumper sticker on their car.

Now on the other hand, some may be more inclined to put a Howard Stern sticker on their car that could have a strategically placed Sirius Logo on it. The same could be said for Oprah and other top draw personalities, news or sports channels.

Also, while some forms of advertising aren't cost effective in relation to amount of new business they bring in, simple product placement can be very affordable. For $150 I've had my business logo placed on the shorts of a UFC fighter on a PPV event. My customers made mention of seeing that logo for months after it aired.

I'm sure Mel & Co. will figure out the best formula for ads soon. They are just barely out of the financial woe stage, let's give them a little time.

2009 May 24 12:56 PM

[Jerrold Williams]

Sirius XM needs to increase the curiosity about their service to get new subscribers. They need to forget thinking of years ago, where people that buy new cars will try the service, love it, and keep it. People are no longer buying new cars and when they do, they walk in with their Ipods ready to be plugged into the ipod jack. The 3 month trial is great, but the company can no longer depend on this stream of customers. Mel now seems to give up on getting new subscribers to increase profit and to keep bleeding more out of current subscribers. We now pay more for each add on radio, pay for internet streaming, and pay an extra $4.99 for the best of packages. I am a shareholder and customer so i pay it with no problem. This is not a good business move long term however. The company needs to increase subscribers not rely on upselling people that already pay. Mel has worked with personalities to promote sirius xm best of and family packages to people that already have it. Why not have Oprah have an XM banner or some form of promotion on her show! Why not have sirius XM billboards at every sporting event. Sirius XM has paid them tons of money, the least they can do is allow the service to grow. Only Howard Stern seems to have taken on the task to represent Sirius XM at all times wherever he goes. I watched eminem on Jimmie Kimmel all week promoting his album. Why doesnt he mention he has a channel on sirius xm? This service has to be seen as "cool", right now, besides people that subscribe, it is seen as something only fools would use. Pay for radio? that's insane!!! That's the common thinking out there. We need to show why you should pay for "audio entertainment", not radio! Iphone is a start, if promoted, next palm, blackberry, window pc, everyone with portable internet access should be aware and have the opportunity to get premium audio entertainment wherever they go. Without having to spend $200.00 like i did for a portable unit. There has never been a better time to get sirius xm as a customer, You won't need to buy extra hardware, great programming. Check our Sirius "no radio" channel list. I assume this is what will be made available to iphone users. Its awesome, it has music, talk, no need for best of packages, they have oprah and howard. I had my service since 2002, when it wasnt half as good as it is now.

2009 May 24 03:14 PM

[User 419213]

I've had a Sirius sticker in the back window of my SUV for years. It came with the radio -- clear white decal with a picture of the dog and the word "SIRIUS". I put it there not because I love the radio (which I do) but because I wanted this dismal stock to rise. They need to go back to including those -- Apple does it too.

2009 May 24 07:07 PM

[moonhawk13]

What an insightful article! I want Sirius to stay alive & flourish for purely selfish reasons - mainly I can't imagine going back to the limited listening experience both commercial and public radio stations have to offer. It makes sense to me that it doesn't matter how fabulous your programming is, if consumers are unaware of the service or your offerings. I particularly think the "Friends & Family" approach has been proven to be effective in other arenas and would lend itself nicely to the satellite radio market. People who enjoy this service would be more motivated to share their experience with others in their circle if doing so provided benefit to them. Now that I think of it, I would not be aware of the existence of this technology if my son had not allowed me to sample his service during a visit. So, now that the rocky merger and immediate financial woes are under control for the moment, lets see Sirius XM tap into increasing public awareness of this amazing venue by taking to heart some of the insightful suggestions in this article or come up with some of their own. Note: If one is not a satellite radio subscriber, where would one obtain info about the service and terrific lineup of channels available?

2009 May 25 02:18 AM

[I'm Not Jim Cramer]

Bumper stickers and refer a friend???????????? Who IS this guy, and how did he miss the whole chotchkie angle?

2009 May 25 03:32 AM

[MLSiri]

I don’t believe we will see Sirius XM bumper stickers or any other concerted promotional push until there is an “official” Sirius XM logo. Currently, there are two logos: XM and Sirius.

Check out the logo on the Sirius site - no mention of XM in the logo. Go to the XM site - no mention of Sirius in its logo. Somebody at Sirius XM better be working on this because right now there is no Sirius XM logo.

This also goes for the creation of a unified web site; the current dual site is too confusing to the uninitiated - most of whom believe SIRI has gone, or is going bankrupt.

2009 May 25 06:20 PM

[BigVinnie]

Slashing the advertising showed the significant loss of subscribers in the Q1 of this year. Even though the loss was from non paying subs, there was no allowable offset that showed achievable growth. NO growth at slashed advertising is bad. Its been proven that the most successful companies, became successful during hard economic times from advertising. there is no proof that increasing advertising would of hurt the EBITDA.

Besides sirus/xm radio is doing commercial advertising with audi, and BMW. The advertising is directed towrds people that aren't effected by recessions.

FYI I bought 2 sirius satellite radio bumper stickers on ebay. Theres always counterfeit sellers on ebay. If cant get the real deal I will atleast show some love with the counterfeit promo stickers.

2009 May 25 11:27 PM

[sbones]

This arugment made by Damien is a common frustration amoung Sirius stock holders. The general public can't comment on it however because they have no idea what Sirius XM is...

2009 May 26 01:19 PM

[itsjust$]

once again, sell ads on the TV Channels-
Siriously 70's- by Dr. Pepper.....(example)
charge them by the hour or the month
????????-
Siriusly Sinatra- by Depends....etc....(just kidding)
5k a day or 50k a month-----Right now its a Blank screen or
the song and artist....even at 5k a month its over 4 million dollars.
or SiriusXM at Best Buy for ...

2009 May 26 04:49 PM

[CGP]

That they've been pre-occupied with merger and working out the financing have been understandable excuses but time marches on, can we expect something with the annual meeting?

How about a viral marketing campaign? Free 3 mos access for lapsed users?.........

2009 May 26 06:37 PM