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Exploring the Present State of Online Radio: Pandora

Exploring the Present State of Online Radio: Pandora

When it comes to listening to your favorite music online, the landscape is always changing. As more people go online as a means to get their fill of their favorite tunes, the influence of streaming services continue to rise.

As we saw with the arrival of ads to voice-activated devices, audio platforms are ripe with opportunity for potential advertisers. In part two of our three-part series on online streaming services, all which are available through the Awlogy Total Audio Network, we take a look at the reach and audience using streaming service Pandora.

Pandora crafts musical experience around user tastes

Pandora is the longest running online streaming service in existence. Founded in 1999, the company allows users to create custom radio stations that serve songs based on listeners’ music tastes.

As a result, Pandora has managed to grow a sizable user base over the past two decades. Today, the online streaming service has roughly 80 million active listeners. According to reporting conducted by comScore late last year, Pandora is the ninth most popular smartphone app among American adults. Approximately 41 percent of smartphone owners in the United States use the Pandora app. 

Recently, Pandora has faced questions about its future. Pandora quieted some speculation earlier this month when it confirmed to Venture Beat that it was receiving a $480 million investment from Sirius XM. This comes on the heels of Pandora launching a premium service to rival Spotify and Apple Music’s on-demand platforms in April. 

Like most online radio services, Pandora’s core users are Millennials. However, compared to one of its biggest competitors, it skews towards the older end of the Millennial spectrum. In a 2016 survey conducted by Cowen and Company, they reported that more than 51 percent of respondents age 25-34 reported using Pandora. In comparison, Spotify garnered just 27 percent of listeners in the same age group.

It can be argued that the simplicity of Pandora’s platform is what draws users to come back for more. Rather than just picking songs they already know and love, Pandora’s freemium service helps users discover new music. Through the Music Genome Project, trained musicologists rate music on hundreds of characteristics and features, which in turn serves users with the songs they’d most likely enjoy hearing.

From Pandora:

From Top 40 to Flamenco, our musicologists analyze every song for up to 450 distinct musical characteristics, because humans can do some things algorithms can’t. This personal touch empowers our listeners to create completely unique stations. With each thumb up or down, the Music Genome Project gets smarter and continues to tailor song selections to individual tastes.

We take great pride in hearing our listeners say, “Pandora just gets me.” Creating bonds between artists, brands and fans is our purpose, and the Music Genome Project is our heart and soul.

Advertising plays a major role in Pandora’s revenue generating strategy. In 2015, the online streaming service ramped up its programmatic advertising offerings, allowing brands to target users on specific demographics. At the end of 2016, Pandora also announced its plans to launch in-stream programmatic ads sometime this year.

Though it’s an audio-centric platform, Pandora also offers visual products for brands looking to advertise. Sponsored Listening gives businesses an opportunity to sponsor one hour of ad-free listening. Listeners can opt-in by watching a 15-second video ad and advertisers are charged a flat rate.

AdExchanger reported that 59 percent of listeners who watch the first 15 seconds of a video continue to watch the whole 30-second ad. For 60-second ads, it found 37 percent of users watch the video all the way through.

In an interview earlier this year, Chief Revenue Officer John Trimble offered some poignant thoughts on what makes advertising on streaming services like Pandora a good investment.

“The power of modern technology, when combined with the innate storytelling power of audio, offers advertisers an extremely effective means to engage and connect with consumers," Trimble said to MediaPost. "Unlike the human eye, which can take in a tremendous amount of visual stimuli at one time, the human ear is incapable of this stimulus juggling act. So, for an audio advertiser, the attention of their audience is practically guaranteed.”

Stay tuned as we dive into our third installment of the State of Online Radio and outline how iHeart fits into the mix.  Or, for or more information on how to leverage Pandora or the Awlogy Total Audio Network to find your audience, reach out to us.
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