In this article, you are going to learn all about Pandora ads:
- What are Pandora ads?
- What is the current number of Pandora users?
- How does Pandora Work
- Why use Pandora ads
But before we continue, let’s first look into the transitioning of the traditional radio into online radio. By taking a journey through history, we can better understand the history of Pandora ads. This journey will help form a roadmap as to why radio advertising is still popular to this day.
This post was updated in August 2021.
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The Transitioning from Traditional Radio to Internet Radio
Since the advent of the internet, businesses have had to adapt to the new digital landscape of advertising. Companies like Spotify and Pandora are already benefitting in the move from analog to digital. The two companies now possess ad platforms. They are called Spotify ads and Pandora ads respectively.
Before the rise of the internet, radio was the dominant advertising platform. From the nation’s largest corporations to the local business, they had to allocate much of their advertising budget towards radio advertisements each year. Despite the availability of other advertising avenues such as print media and the television, radio always emerged on top of the pack.
For some of you, the main reasons for radio preference to other forms of marketing may seem obvious. But let me reiterate them for some of you who aren’t sure.
Why was radio advertising so renowned in the 20th century?
Here were the main advantages of radio advertisement:
- The availability of radios: Radio listening was quite ubiquitous, especially in the latter half of the century. It was common to find a radio gadget in many homes across the nation.
- Portability: Unlike TV, the radio was a portable device. It was therefore found both in the houses and with people in the street.
- Radio requires less concentration on the side of the consumers: Unlike radio listening, print media and televisions require a great deal of attention. The viewer has to be alert and be actively involved with the message in the media. They have to either see what’s on the screen or to concentrate on what’s written. But with radio, listeners can continue with their tasks as they tune in.
Despite these benefits, there were a few flaws. They include:
- People used to switch between stations to avoid ads.
- It was almost impossible to determine the return of investment (ROI). (It is considered wise for businesses to reduce costs by tracking their ROI in any transactions)
And so, as the availability of new advertising products increased online, the popularity of radio started to decline. Radio advertising was no longer appealing to many businesses. Some even got rid of using the traditional platform in the rise of the digital age.
However, there is a significant twist to the story.
The rise of internet radio such as Pandora radio is breathing new life to the advertising industry. Internet radios are redefining the usefulness of radio as an advertising medium. We can trace the origins of audio ads to this particular shift.
What Advantage do Internet Radio Ads have over Traditional Radio Advertising?
- It is easier to track the ROI
- The ads are more affordable compared to radio ads
- It is possible to use personalized ads
- The addition of online ads to the advertising portfolio continues to gain traction in the digital era
One of the biggest and most common internet radio platforms is the Pandora radio platform.
What are Pandora Ads?
In simple terms, Pandora ads are advertisements on the Pandora platform. Thus, the question remains,” what is Pandora?”
Pandora is a music streaming service currently available only in three countries: The United States, New Zealand, and Australia. It allows people to have access to their favorite songs whenever they are online.
Jon Kraft, Tim Westergren, and Will Glaser were the three founders who conceived the idea for Pandora. The trio wanted to launch a new form of individualized radio by taking advantage of the spreading internet all over the world. The platform would provide a custom radio station to each of its users.
Thus, armed with two million dollars in initial funding and 50 employees, the founders started working on creating Pandora in 2001. However, the company ran into serious trouble when the initial investment evaporated within a year. But fortunate for them, the employees decided to work for two whole years without pay. Everybody, from management to the lowest ranks, believed they were working on something special.
Finally, in 2004, Pandora officially launched, initially as a paid service. But as the company continue to find its fit in the market, they had to change their approach. They quickly decided to shed the paid model in favor of the more viable advertising-based model. This change resulted in what we know as Pandora today. The move also led to the birth of Pandora ads.
When Pandora became a publicly-traded company in 2011, it cemented its place as an authoritative leader in internet radio. Today, Pandora is a compelling place for many advertisers, both small and large.
What is the Current Number of Users on Pandora Radio?
In terms of popularity, the Pandora audio streaming platform ranks in the third position. The first two are Apple Music and Spotify in the audio streaming market share.
According to Statista, there were about 64.9 million active Pandora monthly users. This number represents the second quarter of 2019. It is, however, essential to note that the number of active users has steadily been declining since 2015. In the fourth quarter of 2015, the statistic was at 81.1 million monthly users.
For more on the steady decline of active monthly users, take a look at the following graph. It is illustrating the slow deterioration of active monthly users over four years.
Source: Statista 2019
Despite this small decline of users, Pandora ads can be an effective advertising medium for your business. According to research by Edison titled,” share of the Ear Study,” Pandora is number one in terms of the amount of time spent by users, listening to ad-supported digital audio.
The ads are quite useful in reaching a specific target audience in your area. Thus, whatever you are a local business or a national brand, Pandora ads are geared for your needs.
As per 2015 statistics, Pandora has a whopping 250 million registered users. The platform provides its users with two choices. Either the users own a free account, or they adhere to a paid subscription service. With the paid subscription service, the user is free from ads. But as for free users, ads can appear on their screens in-between content.
Thus, with about 70% of the registered users possessing free accounts, there is a significant opportunity for marketers. Advertisers can incorporate personalized pandora ads into their marketing strategy. This results in a digitalized way of reaching new customers and markets.
If you would like to learn more about Pandora facts and statistics, click here and add to your Pandora IQ.
Before utilizing this profitable target market, advertisers need to learn how the Pandora platform works.
How Do Pandora and its Ads work?
Pandora is like a regular radio station on the air. But it has a personalized twist. The listeners are responsible for creating their customized stations. They base the station on a particular genre, song, or artist. Pandora will then play songs similar to the classification of the listener’s choice.
Pandora broadcasts only over the internet. Therefore, it is only available on devices such as desktops, mobile phones, and smart TVs. Also, there is a Pandora app designed for smartphone users. If you listen to Pandora, you are sure to notice that their interface has patented buttons. These are the thumbs up and the thumbs down button.
Users can show their love for a song by clicking the thumbs up button. With such simple clicks, users indicate the kind of songs they prefer listening to. Such a simple act helps the platform to curate the streamed content to the listener’s tastes and preferences. On the other hand, a user can click on the thumbs down icon if they dislike a track. The platform will then skip the song and learn to avoid playing similar songs. Thus, the platform can give its users personalized stations for each one of them.
As I mentioned earlier in the statistics section, more Pandora users prefer using its free version. In exchange for the service, users get to see ads about three times for every hour of streaming. For specific markets, the frequency may be more prevalent. For those users that detest ads, they can subscribe to the paid version for $4.99 a month. This version is entirely ad-free.
Pandora is using the two subscription modes to monetize its services because of a study they conducted. The research indicates that too many ads can cause users to opt for the ad-free version. Hence, the subscription revenue will increase, but at a cost. The move might make listeners reduce their listening time on Pandora. Worse still, some users might decide to ditch the service entirely.
Moreover, the study found that even with the increase in the number of subscriptions, it won’t be enough to cover the ad revenue lost when listeners reduce their streaming time or leave the platform altogether.
Thus, the company achieves a delicate balance between showing its audiences Pandora ads and earning a profit. They accomplish this by limiting the number of ads per segment to a few minutes per hour. This limitation reduces the chances of offending a listener to the point of opting out from the service.
Why Use Pandora Ads?
The most compelling benefit of Pandora ads in comparison to terrestrial radio is their targeting capability. What makes this precise targeting possible is the information provided by users when they sign up for the service. Such information includes gender, zip code, and age.
Additionally, the company partnered with Krux, a data management company, to have access to more actionable demographic data. The additional data includes income, shopping habits, profession, interests, educational level, lifestyle, and many more.
Remember that all of this data is for each listener, unlike the information provided by terrestrial radio about its listeners.
Another advantage of Pandora over traditional radio is its broad range of ad products. Since there is a visual element to Pandora, advertisers can utilize other ad formats. These include audio, print, and video formats. Each form offers a unique way of using ad products.
Hence with Pandora ads, you can be able to advertise your products or services to the right kind of potential customers.
Final Thought
Pandora ads can be an excellent investment for advertisers targeting potential customers in the United States, New Zealand and Australia. They can help the marketers entice people on a personal level especially when the ad correlates with their favorite song.
So, choosing the right Pandora ad can be the pixie dust your business needs to expand its market share.
If you would like help in taking your first baby steps in creating a Pandora ad, get in contact with one of our Bunny Studio staff by clicking here.
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