How Sirius XM Can Take Groupon To The Next Level While Boosting Ad Revenue
It is no secret. Sirius XM (NASDAQ:SIRI) does not get a lot of money from advertising. This is not a huge issue because the company gets a huge amount of revenue from subscription fees. When people think of Sirius XM they tend to think commercial free. Perhaps it is one of Sirius XM's biggest marketing wins over the years, but that perception has made selling ads on non-music channels a real challenge for the company.
There was a time when CEO Mel Karmazin stated a goal that ad revenue would make up 10% of the total revenue. The company has never even come close to meeting that goal. One huge challenge is selling ads that are applicable on a national basis. Sirius XM loses the ability to have local businesses advertise on their platform.
What Sirius XM needs to consider doing is thinking outside the box. Rather than trying to convince companies to spend their ad dollars on the satellite radio platform, why not simply convince a national company that does business on a local level to do it for you?
Groupon, the social media coupon site is a huge success with smartphone users, and has gained such popularity that their business has spilled over into being used by non-smartphone users as well via computer. The concept is simple. Users select the locality they are in and Groupon presents several deals each day that are substantially discounted in hopes of getting huge sales volume. The concept works. A sample deal in the Boston Market today was $20 for $40 worth of Cambodian or French cuisine at the restaurant Elephant Walk. An incredible 5,487 people have already bought the deal. Customers simply save their profile, including payment method and can participate with the press of a "BUY NOW" button.
So how can Groupon and Sirius XM make music together? Well actually in several ways, but the most obvious is inserting a Groupon segment on the traffic and weather channels. Sirius XM has traffic and weather reporting in 22 major markets. They run the traffic report, the weather report, and then a Groupon ad that spells out the top 5 deals in the appropriate market. They repeat the process throughout the day. Groupon could even be named as the sponsor of Sirius XM's traffic and weather channels.
Groupon is great, but at this point is limited to smartphones and the web. Sometimes nothing triggers instant buying better than hearing it talked about on radio. Groupon would be able to sell "premium placement" that includes apps, web, and radio. It is another way for Groupon to increase not only their exposure, but revenue as well. Sirius XM can get a viral sponsor paying good money to get to the satellite radio audience.
This type of "marriage" makes great sense, and perhaps can grow into something more with reminders on other channels as well. It also has the potential to be a major advertising deal that can open new doors for Sirius XM as well. Taking it a step further, Sirius XM could place localized Groupon deals on non-music themed channels on their website.
Targeted advertising is becoming more and more popular. Getting local is the first step in becoming targeted. I happen to think this type of concept is worth a try. Sirius XM should give it consideration before terrestrial, or Internet radio jump onto an idea like this.
Position - Long Sirius XM
I watch the ad revenue line on the quarterly statement. It is not yet significant. But, it’s shows good growth and will get stronger as the number of subscribers increases and the ad. rates increase due to a larger audience base.
On subleting the task, I don’t think Mel will ever go along with that. He made his name in advertising and he is going to make it work.
On the going local with advertising, that opportunity presents itself in next year’s elections.
For starters, if siri doesn’g get out there and get Presidential campaign money big time, then somebody else should take over ad. sales. Some of you will recall Congressman Paul ran ads in the 2008 presidential primary campaign.
Then there will be Senate and Governor’s races that could also
enrich the coffers.
Frankly, how the SiriusXM ad people do with this market is going to be my litmus test for them. If they fail, some heads should roll.
It is not really subletting the task. It is simply inking a comprehensive and long term ad deal.
On elections, siri was a disappointment in 2008. Hopefully they can do better this time.
This is simply BRILLIANT! Good job!! Thats why I keep clicking your ads here.
You should send this idea to SiriusXM. I think you’ve just created a way for SXM to sky rocket their ad revenue.
How can we get Sirius’ marketing department to listen and act on these great ideas?
Seems you guys always have great ideas but Sirius doesn’t
The “Duke” knows, everyone knows. Give it up, hack.
“There is a huge story brewing out there. I will sit on it for a while and see if any of those other guys can find it.”
Buzz that is a throw away line. There is always a story brewing out there on every stock I cover. You know what I believe, if BM, Spencer, Cameron and Rushmush wrote a story every week from now until 2013, they still wouldn’t get anything right.
Rotflmao……
Geronimo….I love a good laugh on a sunday morning…..hang on a second…duke is getting me my coffee now…..duke can’t even get that right without constant supervision