Pandora Adding Sponsorships – Should Sirius XM?
Sponsorship can offer many things that benefit consumers as well as corporations. Pandora made a recent announcement that they would have limited interruptions and more music on February 29th thanks to Lexus. The concept, straightforward and simple, almost brings us back to yesteryear when television shows were sponsored by companies for exposure.
Remember Animal Kingdom from Mutual of Omaha? Essentially the popular show was paid for through the exclusive sponsorship from an insurance company rather than a smattering of car and soap advertisements.
The concept of sponsorship and “placement” has grown over the years and sometimes can be done in the most subtle of ways. Ever wonder why E.T. ate Reese’s Pieces instead of M&M’s? Ever wonder why jack Bauer drove Ford vehicles on the hit television show 24? It was placement, or sponsorship that drove these decisions.
When I first invested in Sirius XM I wondered why the company did not consider such a move. Why not get Pepsi to sponsor a station and call it Pepsi Hits 1 instead of Sirius Hits 1? Perhaps the easiest answer as to why this didn’t happen was that at that point in time Sirius needed Pepsi more than Pepsi needed Sirius. Things have changed and satellite radio is more prevalent now. Sirius XM would actually have something to bring to the table.
This article is not about Spencer telling Mel Karmazin how to run the company. It is about thinking outside the box, or visiting possibilities that might help the company generate more top and bottom line growth.
It was last March that Toyota and Pandora partnered up with the largest ad deal Pandora had made to date. Throughout the year consumers could see the Toyota partnership flourish. Toyota even features Pandora in their Entune system and in advertisements for cars. Now Lexus, the luxury arm of Toyota, is adding to the mix.
Sirius XM is sold as carrying commercial free music channels. It is a big selling point for the company, and justification as to why a subscriber might pay a premium to have the service. Certainly there could be an interesting debate about station bumpers and DJ chatter, but in the end it is commercial free. Many readers might be surprised by which audio entertainment company actually plays the most music, but that is a topic for another day.
The question at hand is whether or not Sirius XM could increase revenue by doing some sponsorships and/or placement deals. Would it be that offensive to have a music channel named after a sponsor? Would it shatter the image of commercial free?
What about the Sirius XM website? Would the company placing some ads or banners on the channel pages be taboo? Certainly I do not think most would mind seeing them, and it would help generate additional revenue for the company. Sirius XM’s website garners a lot of traffic, and the company getting a check from a sponsor or Google wouldn’t hurt.
What about the non-music channels on Sirius XM that do carry commercials? Wouldn’t it be cool to have the Raw Dog comedy channel sponsored by Budweiser, or another corporation? Why not have a “limited interruption week on Sirius XM Stars that is sponsored by Geico?
Of course nothing is ever as simple as it seems. Perhaps the company feels they get more revenue from the ads they sell than going the route of a sponsorship, but a few banner ads on the website cost little to implement. No, the dollars would not be huge, but every little bit helps.
In summary, I think there are some avenues available to Sirius XM that may be worth exploring. Toyota has demonstrated a willingness to sponsor and if nothing else that is a feather in Pandora’s cap. I am sure this would be a great cost benefit analysis to see. Sirius XM has a new price increase to drive revenue, but they could potentially be doing some more things to enhance that even more. Perhaps this is an avenue the company may explore some day. Why don’t we get the ball rolling here by answering a few simple questions:
- Would you consider Sirius XM having a sponsor named station as violating the commercial free status?
- Would you consider some banner ads on the Sirius XM web pages as intrusive?
- Would you appreciate limited interruption by sponsorship on non-music channels?
- Do you think some of this is even worth exploring.
I look forward to seeing what the readers have to say.
I too have wondered why SiriusXM has not used sponsorship. I listen to the Classical Pops station a lot and the idea of Steinway sponsoring a segment of broadcasting doesn’t bother me.
I remember for years that Texaco sponsored the Metropolitan Opera on terrestial radio.
Amzazon is a great source of old music recordings. Why couldn’t they sponsor something on the 40s, and 50s channels, or all of the decade channels for that matter.
The 40s channel has no DJ’s, except for the Jonathan Schwartz show. A sponsorship on that channel would be a good thing.
The goal of the Sirius XM website is to convert visitors into paying customers, any conventional ads on their website would certainly lower that very important conversion rate. In the end, the increased ad revenue would unlikely outweigh the potential losses.
Putting display ads on a premium service is generally a bad idea. You want people paying attention to your message and not clicking on a link that takes them someplace else. Not to mention, it’s annoying to people who pay a premium for ad free content.
That said, I am all for unconventional product placement.
SirusXM should not seek sponsorship from any corporaation. That would just be looking at short term income at the expense of long term relevance. One of the main reasons I like my SiriusXM is that their channels are uncensored. If you were to have Pepsi for example, or any other mainstream company sponsor Siriusxm, then certain chanels would come under scrutiny. For example, the first time a rauchy joke or comment based on race, sexuality or any politically incorrect topic is said. People could “boycott” a major “all american” coporation for “sponsoring” that kiind of talk. For example, Don Imus said some contreversial things a few years ago. Al sharpton and others did not say he should be fired for doing anything illegal. Their case was they would hold the sponsors or advertisers responsible for what they associate themselves with and boycott those advertisers..SirusXM does not need sponsors…They are fine with Branded music channels….
Very interesting and novel look at things. As they say, there is no free lunch. Thank you.
There is a difference between “ads” and sponsorship.
When Texaco sponsored the Metropolitan Opera, they simply said, “the Metropolitan Opera is brought to you by Texaco.” Period!
They didn’t start tellling you about their new 40 weight oil.
If you have an asset that has value, exploring that valuation is the act of a responsible trustee of the asset.
Having said that, much of the process is speculation which is why I would do significant focus group analysis across a broad spectrum of demographics before I ventured into negotiations with the BOD about changing this operational position.
I would hate to sell Channel 2 naming rights to Pepsico and after they branded it as “Do the Dew on 2” found that it had unintended consequences of the negative variety.
The next thing that will happen is that they want to run a contest – say the 3rd time on Tuesday that the song “XXXXXX” is played, be the 25th, 50th, or 75th caller to win a trip to the “X-Games” in Aspen.
Now the company is controlling the playlist.
Slippery slope says that before long they’re running ads on the channel.
Just my speculation, of course, but my point is that there could be underlying effects of making such a change.
There is also the challenge of valuation… Does Pepsico want to pay for an association with a product that is so flaky at times?
Ever wonder why Slacker is better than Pandora? Well, now you have another reason. Remember when the clear channel stations on XM started rotating ads and Sirius slammed them in advertising that they offered commercial free music? I had people at work telling me that they were going with Sirius because they’re music was commercial free. Slacker should go for the throat.
Nobody (but me) cares about Slacker deeeeeep playlist, but they do care about not having commercials.