Pandora: Product, Ads, & Monetization

I recently wrote about Pandora Radio and how their teams are leveraging personalization data to map consumer trends and master all-time high engagement rates using the power of the thumb. This was at a February AMA (Atlanta) event featuring the lovely Heidi Browning, SVP of Strategic Solutions on the B2B Marketing Team at Pandora since 2011.

Well this morning I had the opportunity to wake up to Pandora COO, Sara Clemens, and her lovely New Zealander kiwi accent, speaking at the Oppenheimer 19th Annual Technology, Internet, and Communications Conference webcast via Pandora’s Investor Relations website.

Having never previously heard Sara speak I was immediately impressed by her collectedness, delivery and insights. She began with a quick overview of of the product post-IPO (June 15, 2011), by addressing two core priorities: Extending the artist/listener engagement and exploring incremental revenue streams.


Product

Sara was keen to begin with a quick update on Pandora’s core product, with some noteworthy data and progress updates. Sara stated that Pandora’s core listeners are now using the platform for an average of 24 hours each month, and that users listening to Comedy stations are engaged for an average of 6 hours longer. The listeners are not backing away, and now is the time to capitalize by placing an increased focus on the product.

Delivering a consistent and differentiated product has been at the core of Pandora even before the 2011 IPO, always striving to connect fans and artists on levels previously unforeseen. In doing so, Sara hopes to achieve what Facebook did back in the mid-2000’s with their newsfeed.

Here’s a look at the Facebook Social Graph concept, for those of you unfamiliar (via dotnetspider):

Think about it this way — what was the news like in 2001 (pre-Facebook)? Where did you get your news? And how about now — where do you find your news today? Facebook’s Social Graph, with a personalized newsfeed around your relevant interests and followings, has completely changed the game. The music industry is stuck in a similar position where discovery, listening, and connecting to artists are not properly aligned. Pandora is aiming to become your personal Music Graph:

  • Music Discovery
  • Live Events
  • Automatic Notifications
  • Ticket Purchasing

Did you know that approximately 80% (yes, 80%!) of the music available on Pandora is never played on terrestrial radio? Massive potential for music discovery. Which brings us to helping the artists actually get discovered…

Pandora AMP

In extending the artist/listener engagement and extending resources to artists, Pandora recently launched the Pandora AMP service, or Pandora Artist Marketing Platform, continue in their commitment of enriching lives through music all over the world. The tool offers Audience Insights, as well as another tool (in Beta) called AMPcast, giving artists the opportunity to publish spontaneous custom audio messages that will hit listeners and fans organically while they’re listening to your station(s).

Other tactics Pandora is utilizing in creating more meaningful relationships between artists and fans include early access to album releases, concert tickets (see Pandora Presents program, which has since ended), inclusion on artist emails, and the acquisition of Ticketfly.

Ticketfly

October 2015 – Pandora announces plans to acquire TicketFly for roughly $450M + stocks to create the World’s most powerful music discovery platform.

In recent news, Ticketfly has signed 17 new venue and promoter clients in the Southern USA, further proving its worth and sustainability as a leader in the space. Ticketfly is now the top provider to independent venues and promoters in this Southern/Southeast region, continuing the dominant momentum set forth by the Pandora x Ticketfly partnership.

Ticketfly Announces 17 new clients

Monetization

Through the acquisition of Ticketfly, Pandora is realizing a new, and healthy, revenue stream created through the sales of event tickets, sponsorship packages, and advertising at the new 3rd party venues. Sara announced a 65% increase to sponsorship ads since launching, clearly satisfied by the diversity in revenue.

However, to Sara every hour of listener engagement means more ad revenue. This becomes a two headed monster in balancing ad-load vs. listener satisfaction. When are you advertising too much? How do you know?

Based on the Pandora “Chronos” proprietary tech software, Pandora boasts the ability to increase a listener’s ad-load without decreasing satisfaction or engagement (note: unsure the spelling of Chronos).

Also in terms of ad sales, Pandora offers 1,000+ data segments for advertisers, everywhere from behavioral analytics, ethnicity, political affinity and household income, through to device type and “day part” (meaning the greatest amount of listeners at a certain time of day).

Sponsored Listening: After a successful Beta release in 2015, Sponsored Listening has been opened to the public, and Pandora is taking a bullish approach in expanding the visual/display streams. With Facebook again leading the way, Pandora has been able to successfully integrate new display tactics like muted videos, etc., that may not otherwise have been considered. These tactics allow users to engage with an ad for X-amount of sponsored, ad-free listening, versus simply slapping on a static image for users to glare at. The experience becomes more immersive, and users are in turn delighted by the options and outcome (no ads).

In the last two years, Pandora execs have been focused on solely bringing the experience closer to the artists. This has involved a level of direct negotiations with artists and labels alike, creating opportunities for incremental revenue streams on both sides of the engagement. I’m happy to hear Sara express with urgency that Pandora will stick with their core economics, as to not let one rogue negotiation spoil the future of this innovative company.

Pandora execs are looking for deals that allow for new technologies for users, but keep the Pandora core economics the same.

On the topic of original content (as seen in recent Apple Music, Tidal, Spotify tactics), does Pandora have plans to offer exclusive content? In short, Sara’s answer was No. Artists are always looking for a bigger reach, so if you’re to limit their reach, you must compensate them based off the opportunity cost loss. It’s not sustainable to offer exclusive reviews solely to acquire a listener, when they’ll snag the music and leave the platform, whereas Pandora sets course on a challenging mission to attract and keep listeners.

There’s no doubt in my mind that Pandora is ahead of the game with their data harnessing ability and personalization tactics. I continue to be impressed by the way their team innovates and capitalizes on user engagement, really keeping the customer at the core.


In conclusion, Sara was excited to announce Pandora’s unique opportunity to capitalize on increased daily engagement through leveraging the vast amounts of personalization data inherent to the platform.

For more news on Pandora Media, Inc., check out their Investor Relations website, as well as the Pandora Pulse advertising hub (also on Twitter and LinkedIn).

[Cover image credit to Passive Promotions. All other images credited to Pandora Media, Inc.]

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