A very smart, Maine small business owner told me the other day, "The truth is, no one listens to Portland radio anymore in their cars. Most people listen to satellite radio." Clearly, the customer is not always right.
The fact is, AM/FM radio is, by far, the most used commercial medium in Maine and in America. Satellite radio is barely a blip on consumer's radar. Here is a bit of history
In 2001, XM radio launched its first satellite into space. The company's goal was to provide, in exchange for a monthly subscription fee, hundreds of entertainment channels with CD quality sound to motorists wherever they travel.
The following year, Sirius Radio, launched its satellites to offer a competing service. By 2007, both companies were, according to Goldman Sachs analyst Mark Wienkes, "on life support". So, XM and Sirius merged.
Flash forward to 2018, 11 years after the "life-saving" merger. Has satellite radio put a dent in the audience for AM/FM radio. In a word: No. Here are the facts.
In 2001, the year of the first satellite radio broadcast, 93% of American consumers listened to AM/FM radio each week. In 2007, when the 2 satellite radio companies merged, tradition AM/FM radio still had reached 93% of American consumers each week.
Flash forward to today. Seventeen years after the launch of XM, traditional AM/FM radio still has a 93% share of American consumers. American still prefer free, commercial radio to paying up-to $20.99 per month for the wonders of satellite.
The strength of Portland radio stations vs. satellite radio reflect the national numbers. Last week, in southern Maine, AM/FM reached more than 7-times the number of consumers reached by satellite radio.
Advertising On Satellite Radio
Even if satellite radio ever did have a significant audience in the Portland area, would it make sense for a Maine small business owner to advertise on Sirius/XM? The reality is, satellite is not an ad-friendly medium.
A few weeks ago, Lauren Vetrano, Director of Content Marketing at Westwood One, did a deep dive into this question. Here is what she discovered (re-printed here with permission).
When comparing AM/FM radio and SiriusXM, an important factor to consider are the ads themselves. AM/FM radio is a commercial-driven medium. In fact, on average, 84% of the AM/FM radio audience hears the ads when they listen to AM/FM radio at home, at work, or traveling in the car.
In contrast, only 26% of SiriusXM time spent listening is to ad-supported spoken word channels. 74% of SiriusXM time spent is to the music-based ad-free channels.
Ad-supported SiriusXM: low reach, tiny audience share
So, let’s narrow in on an apples to apples comparison and look at just the ad-supported SiriusXM channels compared to AM/FM radio.
Edison reports that AM/FM radio’s daily reach is 72%. Ad-supported SiriusXM is only 4%. Ads on SiriusXM hit only 4% of America, leaving a huge 96% of the country not reached by the medium.
Looking at share, we see a similar story. In the car, ad-supported SiriusXM channels only have a 4% share of audio time spent. AM/FM radio? Sixteen times greater at a 67% share. 67% of American audio time spent in the car is with AM/FM radio.
The reality: Despite perceptions, the audience to SiriusXM’s ad-supported service is actually quite small. Most listening to SiriusXM is to their music-based commercial-free channels. AM/FM radio, on the other hand, dominates the audio landscape with huge daily reach and massive in-car share of audio time spent.
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