One of the more interesting and potentially compelling stories to come out of the Pandora Files this year has to do with a difficult topic for those folks – sales.
Obviously, there’s incredible consumer interest in Pandora – especially on mobile devices where listening has surpassed usage on computers. While the radio industry debates whether Pandora is “radio,” the fact is that many consumers from diverse backgrounds enjoy it immensely.
Last week, Edison Research released their version of July audience ratings, based on Pandora's data. According to Edison's calculations, Pandora has an impressive .5 or .6 AQH rating in NYC, LA, Chicago, San Francisco, Dallas/Ft. Worth, Houston, Atlanta, Philly, and D.C.
There are ratings and then there's audience research, and this chart from our recent Techsurvey 7 is proof positive that core radio listeners are turning to Pandora. Our surveys are comprised primawrily of station database members, often P1s to radio. And while perhaps much of this listening may be additive to broadcast radio, time spent is…well, time spent.
Among those who stream, nearly three in ten listen to Pandora weekly. Note how both men and women are turning to this pure-play option, while usage is especially strong among 18-34 year-olds and smartphone owners.
Buzz, usage, momentum, mobile. These are all qualities that are synonymous with Pandora.
So what's the problem?
The missing word is sales. In a story that broke last week, it turns out that even with all these positive arrows, Pandora is having a heap of trouble selling its mobile inventory from which 60% of its overall listening occurs.
Pandora’s CEO, Joe Kennedy, recently admitted that "The sheer level of aggregate advertiser demand for mobile is limited.” So while Pandora is ahead of the game in many fronts – ubiquity, access, and mobile usage – the speed bumps associated with streaming sales (especially mobile) along with rising streaming fees (as the audience grows) creates unique challenges for the new IPO.
If you’re in radio and you’re selling your stream, you can clearly relate to Pandora’s problems. And in tomorrow’s post, we’ll talk how radio might respond strategically to what Pandora is up to. As readers of this blog know very well, we have warned about the Pandora challenge for well more than a year, based on the results and reactions we've measure in our Techsurveys, as well as "Goin' Mobile."
Get ready for a radical idea.
I have suggested for sometime that the way to make advertising work in the new media environment is to go beyond geo, demo and content targeting to self selected advertising. Give users a choice on what ads they hear just like they choice they have for music. For example, if I am interested in a hybrid vehicle, financial planning for my kid's college, Caribbean vacations and new movies plus I like funny commercials or ads with great music, then I would select those categories and hear only those ads. Imagine how powerful such ads would be. They would instantly change advertising from being a program intrusion to valid product/service information for things I want. They could virtually eliminate the tune-out factor and with a direct click-through to more info or to buy would be the Holy Grail advertisers have been looking for and fulfill the promise of new interactive media.
Posted by: Richard Fusco | Tuesday, August 02, 2011 at 01:24 PM
Richard, I like it - listener-controlled ads. Hey, if we're going to be competitive in this space we can't just stream our terrestrial signals and call it a day. Thanks for contributing to the conversation.
Posted by: Fred | Tuesday, August 02, 2011 at 02:18 PM
I’m a fan of Pandora as well as I Heart Radio, despite I Heart's ragged execution.
What jumped out at me about the Pandora numbers is that they are not comparable to single station radio station ratings. Those are aggregate numbers for all of Pandora. To compare you should be looking at cluster ratings for those respective markets. Unless media buyers have changed in the few years since I left radio, they irrationally insist on each station standing alone in a media buy. If they are consistent, they will resist buying the Pandora cluster. Of course, Pandora being smartly managed they will refuse to sell it any other way.
We should remember that Pandora is not dependent on selling advertising to raise revenue. There’s a very affordable subscription fee that makes the ads all go away.
Posted by: Jerrystevens | Tuesday, August 02, 2011 at 09:53 PM
Jerry, thanks for the note and the reminder about Pandora's subscription fee.
Posted by: Fred | Wednesday, August 03, 2011 at 06:21 AM
Why can't pandora buy a radio sation and call it pandora radio and link them both up for the webbers online. I know , easier said than done, radio will eventually fall unless they reinvent the whole radio concept. I'm pretty sure the new cars will have internet capabilties where it gives them a chance to hear pandora in their car.
Posted by: Peter Garcia | Monday, November 07, 2011 at 11:38 AM