The Union of SiriusXM and Pandora

March 3, 2020

Denise Karkos, CMO at SiriusXM + Pandora, has always believed that analytics should be at the heart of every marketing organization. Her experience has revealed that creating a world-class data and analytics operation is a team sport both within your company and with your marketing service partners. Karkos shared what it takes to build a solid analytics foundation within an organization that elevates accountability in marketing performance and drives a competitive advantage.

Denise Karkos is the CMO for two distinct brands living under one roof: SiriusXM and Pandora. SiriusXM recently acquired Pandora, transforming itself into an audio entertainment powerhouse that reaches nearly half the U.S. population with its services. SiriusXM today offers live and on-demand entertainment in the car, while Pandora is largely known for ad-supported free listening and is mainly used via a mobile app.

As CMO, Karkos believes that data and analytics must be at the center of an organization. By being armed with so much information, data, and technology, SiriusXM + Pandora have been able to strengthen its capabilities and continue to grow.

The CMO’s job is at the intersection of brand, strategy, and culture. During Karkos’ first 90 days on the job, she focused on three key objectives:

  1. Understand the business.
  2. Absorb the culture(s).
  3. Set the brand vision.

Karkos adopted a mantra: “Be firm on the vision, flexible on the journey.” Because the merger between the two brands was still fresh at the time, there was no one guiding decision-making. Data and research enabled Karkos’ thinking.

1. Understand the Business.

The SiriusXM + Pandora business is extremely complicated, and its CMO must wear many hats. There are days that Karkos discusses satellite technology, while on others she focuses on ad sales for Pandora. SiriusXM is largely found in cars; in fact, 80 percent of cars today are embedded with SiriusXM. Because it is a satellite business, its data is one-way (from the satellite into the car), which in turn hinders personalization. Although the brand has benefited from an incredible business model, there is a growing trend of plugging in phones. In light of this rising consumer behavior and to avoid being displaced when phones are plugged in, SiriusXM has created a standalone app with the same content available as in cars. It aims to continue building a SiriusXM relationship with consumers on mobile phones, with the Pandora app sitting happily next to it.

Previously, SiriusXM and Pandora had three technology stacks and three sets of analytical tools, all of which needed to be choreographed. The brand as a whole had to think strategically about its capabilities when coming together. Karkos set out to solve for the brand challenges, identifying KPIs for its three channels:

  • SiriusXM (car): Subscriber revenue
  • Sirius XM (app): Subscriber revenue
  • Pandora: Listener revenue (although it does have a subscription business, it makes revenues from democratizing music and being an ad-supported product)

By identifying KPIs as subscriber growth and listening hours, SiriusXM + Pandora could better develop its decision-making criteria. Karkos’ lessons in understanding the business included:

  • Ensure marketing department understands how money is made as a business — for instance, what projects will hit KPIs.
  • Remain consistently aligned with the CEO and CFO on top KPIs and communicate them with the team.
  • Be bulletproof in measurement and contribution (the biggest opportunity for growth).
  • Fill in any analytical gaps in skills, tools, or process.
  • Prioritize resources to fully staffed analytics and performance teams.
  • Aim for 80 percent or more ROI on marketing spend.

2. Absorb the Culture(s).

If you mash two brands together that are culturally different, discord with customers will follow suit. Recognizing a brand’s culture is key; all brands today are built from the inside out, and marketers must study the culture and espouse what it means to consumers.

SiriusXM, for instance, grew up with direct marketers and true ROI goals. Pandora has always been much more about awareness and building relationships with listeners. It is known for its music genome project, which created sophisticated algorithms to “know the next best experience” for listeners. Pandora’s No. 1 growth driver has been its improvements to the algorithm and making the decisions that resonate with listeners. Although novel 10 years ago, today the algorithm is an enabler for increasing consumer listener hours.

The two brands embody a West Coast/East Coast dynamic. Although the cultures are distinct, Karkos’ job has been to make sure the Pandora team understands the expectations of the SiriusXM management, which is used to having accountability, ROI, incrementality, and a direct marketing machine. Pandora today must craft marketing campaigns that have more accountability and ROI than in the past. The more data and analytics are brought forward, the more confidence there will be.

3. Set the Brand Vision.

A panel of 2,000 consumers was convened for SiriusXM + Pandora to discuss the marketplace and where the two brands are similar and distinct. It discovered strong distinctions and key differences in each business’s KPIs. It also noted that culture was very different as well as how the brand is portrayed from a consumer perspective. Nevertheless, there were common traits that appeared.

Findings included that SiriusXM is a premium brand with a subscription service that’s expensive. It delivers a high-quality product that cannot be found elsewhere. Pandora, on the other hand, is all about personalization thanks to its genome project. It helps consumers discover new songs, boasts ease of use, and is a fun and approachable brand. Pandora’s creative is artist-forward, creating campaigns that credit the features and capabilities that it’s invested in. They are typically difficult to measure — for instance, a mural on a wall in L.A. is hard to measure. SiriusXM goes to market in a very scientific way. Karkos claimed that the next go-to-market strategy for SiriusXM + Pandora will be all about addressable TV and programmatic digital media, as well as leveraging traditional media.

Next Steps

To discover the intersection of brand, strategy, and culture, Karkos suggests creating a framework. SiriusXM + Pandora’s framework resembles that of a subway map, with advertising the last stop on the train. There must be foundational capabilities and a team culture so when brands talk to consumers, it mirrors what’s going on inside. Karkos concluded in her first 90 days that the two brands were better off not coming together, and today live under the Sirius XM master brand.

Q&A with Denise Karkos, Chief Marketing Officer at SiriusXM + Pandora

Q. You said you had 80 percent accountability of your marketing spend in terms of ROI, which is huge. When I think about your marketing investment budget, I didn’t think about the technology investment in relation to the paid media investment and other channels that you use in your marketing budget. How does that stack up in a media company versus your old world?

A. We were getting more sophisticated at TD Ameritrade in terms of next best dollar spent. One thing that was great about our marketing team was that we had a great relationship with the C-suite. We were able to say the ROI of a marketing dollar is five dollars and 15 cents. But what’s the technology ROI? The sale ROI? The branch ROI? Here at SiriusXM + Pandora the understanding of the ROI mix is nowhere near 80 percent. It’s what I hope to do — build the marketing budget up by proving our way into incremental channels, showing that they add incremental value. We will test our way into that. At the same time, I must get my hands around the marketing tech stack. I am so unemotional about the marketing budget. I would spend a hundred dollars on solving a tech problem rather than solving another ad in the marketplace.

Q. How does Pandora compete with YouTube, where users can play any song they want for free?

A. One of the pieces of research that I walked into was what happened when Spotify came out with “play any song on demand” and we had that feature behind a paywall. Today, we can offer you any song on demand, but you have to listen to an ad first. YouTube has a very similar model. We do have the capability, but people don’t really know about it. YouTube is probably the number one competitor and they’re a force to be reckoned with. I’m not bashful about our competition, it’s fierce — Amazon, Spotify, YouTube, it’s everywhere. The good news is that the average consumer uses about four listening services. They go in and out.

Q. Are there still executives at the company who were part of the merger of SiriusXM? Did they think the merge would be easy?

A. There is a lot of legacy. Most of the people at SiriusXM have been around for 20-plus years. They love the company and they stay. There is so much historical knowledge there, and the business keeps evolving. They look at Pandora like a shiny new object that they need to figure out how to monetize as they did with SiriusXM. There are a lot of Pandora executives still here and coming on board. There is so much data on the Pandora side. That’s the irony — that that’s the one that needs to be better monetized. It’s about applying a SiriusXM mentality and rigor to a Pandora treasure trove of data. I’m so eager that these companies are coming together and lifting all tides.

Q. What is your strategy to battle subscription entertainment services?

A. We are building a “where will growth come from” strategy. One of the biggest trends is connected devices, such as smart speakers. We don’t own any of that hardware, but our competitors do. If you say, “play Hits 1” (a SiriusXM radio station) on a Google device or an Amazon Alexa, it may not choose to play our music. We are working with every one of these brands and they have been great partners. As the world of audio evolves, there are unforeseen pitfalls. Voice tech is one place where we are doing well but we could be doing so much better if we could have the right conversations with our partners.

Q. Since you started, are you seeing any resistance to change?

A. The culture is very fast-paced but one thing that I have realized is the temptation for me to say “I’ve only been there for four months and I can’t solve the world’s problems.” The environment I’m in is very tenured fact-based people and it’s unnerving to come in with half a fact base. I am trying to study very fast but there is no empathy for how long it’s taking. In terms of resistance, that is 100 percent my first job: to build relationships and come with hypotheses. That has helped me get on board very quickly.


"The Union of SiriusXM and Pandora." Denise Karkos, CMO at SiriusXM + Pandora. 2020 ANA Masters of Data and Technology, 3/3/20.

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