Mel Karmazin was noticeably frustrated with the current state of advertising sales on today's conference call with analysts.
Sirius Satellite Radio Inc. reached nearly $35 million in advertising sales revenue for the year (see financials here).
Still, the company's CEO was admittedly displeased with their performance when asked about the longterm potential of advertising revenue.
"It's been a source of frustration for me because I believe that we ought to be generating significantly more advertising revenue than we have done so far," said Karmazin.
"We're doing about $35 million and it's up dramatically and I can give you the spin story that says how well we've done but when you take a look at having Howard Stern for the first time in his career having a pure national platform and being as strong as he is, we ought to be doing a better job in selling Howard."We ought to be doing a better job than we are doing now," he added.
"I had said on a call two years ago that I would like to see advertising represent 10% of our revenue. That is something that we've not achieved. There is no reason that I can think of as to why we shouldn't one day be able to achieve it and that's doing it without ever putting a commercial on our commercial free music stations.
"We ought to be doing a far better job of convincing advertisers that satellite radio, this new industry deserves to get more of their advertising dollars."
Anyone know if Sirius (or XM, for that matter) is represented by a national sales company or not? I've always found it interesting as well that I don't hear any mainstream companies advertising on the various talk and sports channels. I would think Howard, the NFL, and NASCAR would draw some big name advertisers for Sirius, and Major League Baseball and the various college broadcasts for XM. Seems like all I ever hear on both platforms are nothing more than spam type of companies advertising.
"We ought to be doing a far better job of convincing advertisers that satellite radio, this new industry deserves to get more of their advertising dollars."
Try getting a bigger audience and maybe advertisers will pay more attention to satellite radio.
Its tough to dedicate advertizing dollars without a real number of listeners. We know that Sirius currently has near 1,000,000 subscribers that are really just a car in a dealers lot. Its tough to beleive them when they say they have "8.3 million SUBSCRIBERS" or when they multiply that number by to to get total listeners when XM multiplys theirs by 1.8.
Again, Sirius is PAID for the Sub so there is no reason not to count them as subs, Its just not a listener and listeners are what Advertizers want to get to.
The other edge of the sword is that this is a national medim. You will not get the local bar advertizing whats up on saturday night or what local car dealer is running a sale.
I smell a flame war a-comin'... there's a couple quotes in there just askin' for it...
Jeff- They probably have better data than terr. radio. Subscribers have to equate to listeners maybe they don't know exactly what channel at what time but neither does any other form of ad supported programming.
I would hope it is just business model problem that needs tweakin. Also National ad campaigns should bring in more revenue plenty of advertisers out there for that. I think Mel is right they haven't done a good job selling the idea. There is plenty to gain especially on Howard, Martha and Sports Talk.
That pic of Mel is just begging to be the subject of a "write the caption."
jeff, I don't really agree with your first part, since the terrestrials have their own convoluted way of estimating listeners.
And as for the second part, I think that Karmazin is talking about trying to get away from the small time guys all together. When he talks about wanting to boost ad revs, he likely wants the big boys like auto makers, pharma and McDonald's and Coke to start getting ads rather that the lineup of third line trinket and widget sellers that advertise now.
What I'm disappointed in is that Karmazin didn't outline what steps he was taking, or going to take to boost ad revs. Sure he complained and chewed out his own ad selling department, but that's discouraging at best. Karmazin, tell us your plan.... and if you didn't tell us, I can only assume that you don't have one.
Karmazin wants ads to be 10% of revenue, so estimate for 2008, about $130 Million. This really shouldn't be too hard. Go to Sprint, Coke, Pepsi, Ford and Pfizer and sell them some blocks of $10 million for a years worth of national advertising. And with the presidential campaign this year, damn, sell some national air time, even if you have to give them a bargain. When you talk about advertising for a large company, $130 million in a year is nothing.
this is bullshit. so much for commercial free radio. could this guy be any more of a jew?
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/mike walker
Ryan, I love your site but can you do anything about the racist pigs like snick422 and the others. I and I know a lot of other people are sick of these racist comments.
Ryan, I love your site but can you do anything about the racist pigs like snick422 and the others. I and I know a lot of other people are sick of these racist comments.
The only thing that Mel is frustrated about is the merger. His advertising performance it is not even an issue.
Radio advertising in general is down for the last 2 years in a row... getting advertisers to try something "new" such as DARS -- when they're cutting back on radio advertising as it is? Tough sell... even for Mel, who is arguably one of the best in radio sales there is.
@Anon: I'm working on a major overhaul of the comment system in general. I agree, the racist/hateful comments need to brought to an end.
Arguing and disagreeing is one thing, but the persistent stupidity in the comments only entertains the 1% who are writing them, and annoys the 99% who have to sift through them.
I agree with those who say we need to improve the caliber of the ads on both XM and Sirius...I'd be interested to know XM's ad revenue for the year.
I can't speak for Sirius, but I know on XM, wheather I'm listening to The Virus, ESPN, or whatever, most of the "ads" are for other XM channels, "get out of debt" services, get-rich-quick scams (Internet Speedway, anyone?), or ED-treatment products. Let's see some national advertisers like Wal-Mart, Circuit City, Best Buy, Target, and stuff like that get on board...Maybe on the traffic and weather channels, if it's not a FCC violation, advertise some local events for each channel...Concerts, ballgames coming up in that city, things like that. Yes, the whole country would hear it, but chances are, if you're listening to the Seattle traffic channel, you live in Seattle and might be interested to know when Buckcherry is coming to town, or when the next Mariners home game is. I realize the last part's a stretch, but there's no reason they shouldn't be able to go after big-name national sponsors.
If Mel is waiting for a merger, it won't happen this year.
It is absolutely true that national ad sales for radio has really dropped off. Lots of these traditional clients have gone to cable TV or reserve their advertising for targeted programming, like sports. In order to get any of these clients, SDARS must develop a reputation for getting people in the advertiser's doors, buying things. So you can help them out by mentioning satellite radio if you buy things at major chain stores - ask them why they don't advertise on SDARS! But, XM and SIRI are going to have to clean up their acts a lot by not running the bottom-feeder per-inquiry trash commercials (like the debt relief, hair-growth, etc. ads). Not only do these cheap bottom-feeder ads drive listeners away, they also drive legitimate ad sales away because they do not want to be associated with this trash. These commercials make very little cash compared with legit advertisers.
How about focusing on increasing subscriber revenue and decreasing operating costs. Focusing on improving the playlists for your music stations and dumping the DJs and other unnecessary costs will do just that.
This company needs to be run like a real business, not one that is spend-happy. Spend all you want when times are good, but tighten the belt when their not. And since times have never been good, it's time to tighten the belt.
>>> This company needs to be run like a real business, not one that is spend-happy.
Karmizan has done a fantastic job of controlling costs; this is inarguable. But the nature of the costs in satellite radio is that they are largely fixed and sunk -- meaning, once the contracts have been entered into, they can't just be cut. This is why XM just had to pay off Starbucks $22M to get of a contract with them.
This is also the reason the synergies that have been claimed are not going to happen. While savings can be made out of the variable costs, the billions that have been projected are nonsense. There is only so much savings that can be achieved.
It is natural for Mel to be frustrated with the ad revenue; only a couple years ago he was predicting $100M/y in ad revenue, they're not close, and they're not going to GET close until they start increasing the inventory. The problem he faces now is that the number of subscribers has leveled off and that puts a cap on ad revenue.
Wow, snick 422 is a guy who can't make up his mind wether or not he's a racist. Very amusing! As for advertisements, both companies have it bad. It sounds like a lot of them are really small time deals looking to make a few bucks, when in actuality, it's a national service so you'd think the big boys would come to play. but with only a few mill per service, that's not even scratching the surface. and the big question is how it'll be handled post-murger, should that happen.
I can't wait until you get the kind of comment system where you have to log in.
Good points Stack. And not to stir the pot, but Mel's forte' *IS* advertising revenue. If things don't improve drastically in the next couple of years, the music channels may start to see some ads in them (since the majority of listeners are there anyways). Stern's channel on Sirius can only do so much, and are big companies (like Coke) willing to advertise on a channel with questionable content? This may be one of the reasons why you don't hear big-company ads on Stern's or O&A's channels. Honestly, how many more commercials can he squeeze into the non-music channels?
One thing I am surprised I don't hear is the damn automakers ads! Come on, you fucking have people sitting on the board of directors. Drop a couple bucks and mention the new Chevy Malibu, or some shit. That would be a good foot in the door, and shit your getting much of that money back. Honda and GM need to wake up.
Without competitive constraints, you can be sure that there will be ads on music channels. Perhaps not many at first, but ramping up to several minutes per hour. Karmazin's background is in ad sales, and if you think he's going to turn down a paying commercial client with money in their hands -- guess what? He'll take the money, and you will be listening to commercials.
If Sirius puts commercials on the music channels they will lose a customer in me.
FYI, someone is being a joker, and the offensive comments weren't made by snick422. The comments have been deleted, but again, this makes the case why I need a registration system in place. Stay tuned...
thanks,Ryan
I was a SIRIUS Ad Sales employee for a couple of years. Advertisers don't want it! No numbers = No dollars period. Howard became triple x rated..... who are you going to sell that too? Porn sites? Gambling dollars all went away...... What advertiser wants to buy "Who can Hold It The Longest Enema Contests", "Amputee Beauty Pagents" or "Moms Who Give the Best Head", "Guess if its a janitor, security guard, or executive" by having an african american person in the studio and listeners have to guess which one he is.... get real! They are practically giving away spots! It was a nightmare to work for and still is. Get numbers and research and maybe somone will buy. I can go on and on.... They lost about 10 good sales people in 2 years because of the nightmarish environment.... its a revolving door. No one wants to stay and be humiliated and riduculed that we suck as a team. Martha Stewart was a joke with NO listeners, yet they wanted us to sell the crap out of it.....They should count their blessings that they did $35 million this year, especially when they are bleeding money left and right... Howard is fading fast and so is satellite radio. wake up and smell the coffee you a**holes.
I hate the way Mel looks ad satellite radio as a venue for more advertising, but in the same venue, when he's selling ads for twat cream and hemmorelieve,what does he expect anyway?
I was in Ad Sales for SIRIUS for a couple of years and I can say it was rough trying to get advertisers onboard. Howard was fading fast and no mainstream advertiser wanted to be associated with his xxx rated program!! Who wanted to buy "Who Could Hold it the Longest Enema Contests", "Moms Who Give The Best Head", "Guess If Its a Janitor, Security Guard or Executive" by inviting a black guy up to the studio and listeners have to guess what profession they are in, "Amputee Beauty Pagents"..... Who wants this crap?? Not Procter and Gamble, and not any normal sane advertiser...... Porn sites want it. Gambling sites went away..... This is the stuff they wanted us to sell!!! Get real! It was a nightmare to work for and still is I hear. They should count their lucky stars that they made $35 million this year. Over 10 good sales people have left in just over 2 years because of the work environment. Screaming, intimidatiion, fear, lack of resources, mis management by someone who thought he can do it better than everyone else (who has since been demoted). It was utter chaos in ad sales with no one knowing what to do.... No research, no numbers yet they wanted top dollars from advertisers. Wasn't happening then and not happening now. They had so much inventory that they were giving away thousands of spots to advertisers who may have only really purchased half that amount..... and it still didn't work for many clients.... Because they don't have the listners...... Focus on building subscribers. Can't say it was fun. Two losing companies make ONE big losing company. Good Riddance.
I listen to both XM and Sirius. XM in the office where I cannot get a Sirius signal for CNBC and Fox News. XM in the car for music - I like Mix because they don't talk over the songs. Anyway, it's the same old commercials over and over again - crap to make your kids be less disrespectful or stuff to rub on your privates to make them longer, or PlumChoice to have them clean up slow computer. This stuff is garbage. I change the channel whenever a commercial comes on because they are so insulting. If Sirius can get $35M for this crap then God Bless them. I wouldn't pay a $1.00 to advertise there.
Either the merger will be announced or it won't. Racist pigs aside, Wednesday and Thursday have great importance. More than earnings, bashers, or pumpers can offer. The only question is what Market do SIRI and XM play in. Distribution channels are irrelevant unless they offer signicant competitive advantage. In other words T-3 Doomsday or Heyday.
big black cock, right in your face
Jeff said "Again, Sirius is PAID for the Sub so there is no reason not to count them as subs, Its just not a listener and listeners are what Advertizers want to get to."
Probably the thing that makes me most angry about the parking lot subscribers is this fraud that 'Sirius is getting paid so they should count" Let's remember that Sirius PAID OUT to the automaker to install the radio.....there's a bounty paid for every one of them.
So if I give you $ 400.00 and then you pay me $ 6.00 per month, it's true that I'm getting paid...but it's also true that you are paying me back my own money....VERY SLOWLY. That's no way to do business. The subscribers should only be counted when they are self paying, or at least the EXACT NUMBER of trial subscribers should be reported. Getting the real numbers out of Sirius always takes the Q & A period with an analyst backing them up against the wall. I really have a problem with a management like that. What else are they not telling ?
Please--ad revenues follow documented audience. Sirius, with their theoretical 8 + million subscribers, have a smaller AQH, on any channel, than a leading major market radio station. Most major market stations aren't sharing a "PUR" of 8 million with 100+ channels of choice in local radio competition. Maybe Mel should be thankful that his sales team has convinced advertisers to spend $35 million on his platform. Where does his 10% of revenue expectation come from--deep study of market analytics or just more Wall street spin.
It's more Wall Street spin. Karmazin cares only about two things: the bottom line and the stockholders (not subscribers). Look what companies like Clear Channel and Infinity/CBS did to terrestrial radio! This is more of the same. The merger will be the beginning of the end.
>>> I really have a problem with a management like that. What else are they not telling ?
This is really the issue with the lying about the subscriber #s. They're free to count subscribers any way they want to because there are no standards that must be adhered to. But this company is consistently overstating its #s by nearly 1,000,000 subscribers -- 1 in 8. That is clearly a material and misleading overstatement.
It has been the same with the misdirection on the cash flow. There are still many, many people who believe that Sirius has an OEM deal with Toyota, when no such deal exists (they have been able to compensate some distributors sufficiently to get them to get them to do port installs).
One really has to wonder what all misleading remarks will be uncovered after the merger is approved. Anything that has been promised before the merger in an effort to win approval is subject to retraction the instant it is approved -- UNLESS it is mandated. Those looking for dual-mode receivers, get it in writing. Those looking for Sirius programming on XM & vice-versa, get it in writing. Because there are no guarantees with this crew.
We deceived advertisers by telling them that car lot subscribers counted as a listener. It was pure lies. They refused to let us go out with numbers (they had them from a subscriber study - and so do I) becasue no one was listening to certain channels or the audience numbers were too small to count. They didn't care. MaQrching orders to were sell sell sell with no basis or justification of a buy. Karmazin should kiss the feet of the salesperson for bringing in $35 million with no AQH or research to back up a buy. Thats what advertisers need to make intelligent decisions. Typical Con Man. Snake Oil Salesman.
We deceived advertisers by telling them that car lot subscribers counted as a listener. It was pure lies. They refused to let sales go out with numbers to the street (they had them from a subscriber study) because no one was listening to certain channels or the audience numbers were too small to count. They didn't care. Marching orders were to sell sell sell with no basis or justification for a buy. Karmazin should kiss the feet of his salespeople for bringing in $35 million with no AQH or research to back up a buy. That's what advertisers need to make intelligent decisions. Typical Con Man. Snake Oil Salesman and Ungrateful Old Coot with money who cares only about the stockholders
"Ryan, I love your site but can you do anything about the racist pigs like snick422 and the others. I and I know a lot of other people are sick of these racist comments."
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@Anon: I'm working on a major overhaul of the comment system in general. I agree, the racist/hateful comments need to brought to an end.
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ummm, "yum yum, black penis " is racist? what you are not even allowed to talk about black penis now without someone crying racist?
worse then nappy headed hoe's when there were THREE WHITE GIRLS in the picture imus was commenting on.....LOL
WOW, these black people really need to stop this crutch and move on.....
I would love to see Mel K. and Nate Davis and Gary Parsons who pay tens of millions of dollars to their car "partners" personally go to the car maufacturers and get them to sell ads to Chrysler, Ford, GM, Toyota, Honda. Let's see if they can close the deal and get these companies to pay for time on Maxim or Playboy or Howard Stern or O&A or any of these niche channels. Hell, even CNBC and FOX and CNN are scraping the bottom of the barrel by penis enhancement and identity theft and credit counseling commercials - I mean come, on if you need credit counseling, can you really afford satellite radio?
Isn't this the inter-webs? Why would anyone care about a stupid blog comment. Grow up you Anonymous Coward douche.
I, for one, love the racist comments.
@PNess: The yum yum whatever comment is not the point. I really hate it when people impersonate others just because I have anonymous comments open.
Honestly, I don't care about "offensive" comments as much as I hate the fact that people need to dig through a ton NOISE to get to the SIGNAL.
We have some extremely intelligent people around here, but they're being drowned out by a small percentage of idiots (I see the IP addresses of each comment, and some morons actually sit here and argue with themselves using fake personas).
Come one Ryan you have to tell us who that is! (I see the IP addresses of each comment, and some morons actually sit here and argue with themselves using fake personas).
That would rule, and you maybe finally be cool in my eyes. You dumb wetback.
Two words: Tom Chiusano
The caption I see is "I said YOUR penis is this big, now pass the spuds"...
Mel: MEL: I turned off commercial radio because of THE COMMERCIALS. OK the programming sucks anymore too (and I live where there is literally no room on the dial for another station). I PAY for sat radio so I don't have to waste my time waiting through someone trying to sell me something I don't want or need.
Ads are killing cable tv - if a la carte ever passes (not likely!) I'm there on day 1. Put ads on Sat and I'm gone again. Mel, you are an ad salesman to the core, great for you and your very large bank accounts. Leave me alone! I don't want ads. I want peace. I want music. I want bright music experts talking to me about the music (can you tell I prefer XM and am about to cancel Sirius?).
Mel, when you came to Sirius I predicted this. America does not need more advertising. Mindless consumption is destroying our souls. LEAVE US ALONE. Let me listen to some music. I don't need any new drugs, cars, diet miracles, magazines, investment opportunities, fast food, or any of the other crap that wastes so much of the public's spectrum.
www.xmradio.com/solutions ... as you can see XM Radio has taken a different approach to selling advertising on XM. They are focused on selling premium sponsorship associations. That's why XM has brands like Iams, Bank of America, AT&T, JCPenny, GE, American Express, Canon, Chevy, Exxon, Hallmark etc. on the air instead of all DR crap (granted XM has plenty of that too but at least there is more diversity and quality advertisers on XM)
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