Pandora has been vocal about its need to increase its ad tech capabilities since CEO Roger Lynch took the helm in November. With Wednesday’s acquisition of programmatic audio platform AdsWizz for $145 million, Pandora has gone from a programmatic newcomer to one that could control the market.
“We’ve invested in proprietary ad tech for a while, but this significantly changes the game in terms of building on a robust ad technology platform that is a full stack,” said Scott Walker, VP of ad strategy at Pandora.
AdsWizz powers the programmatic audio ecosystem with an ad server, demand-side platform, supply-side platform, data management platform and exchange. It also launched a podcast exchange with NPR last year. As of last January, the platform processed 2 billion digital audio impressions each month across 39 markets. AdsWizz declined to comment how much spend or how many impressions currently run through its platform.
The ad tech company works with major audio publishers including Cox Media, iHeartMedia, Spotify, Soundcloud, Deezer and TuneIn Radio – all competitors to Pandora in the streaming audio space. But Pandora will operate AdsWizz as an independent subsidiary and AdsWizz will continue working with its current client roster.
That’s because in addition to powering its own programmatic capabilities, which the company launched last month, Pandora acquired AdsWizz to power a programmatic exchange for the digital audio ecosystem, Walker said.
“We think we can bring publishers additional monetization opportunities that may not be available because they don't have the sales infrastructure or investment around engineering an ad stack,” he said. “We can bring diversity of demand, data and targeting that is best in class around our logged-in user base, so it’s kind of a win-win for all constituents.”
That’s quite a shift from a year ago, when AdsWizz CEO Alexis van der Wyer singled out Pandora inventory as a missing chunk in the supply side.
“They let other people try first, and then they’ll get involved,” he told AdExchanger at the time.
Now, despite being late to programmatic, Pandora has a big opportunity to exert tremendous control on the marketplace. As the largest streaming platform in the market in terms of both users and ad revenue, Pandora could set standards around ad buying protocols, ad formats and measurement.
“From a market standpoint, the world will be inherently programmatic,” Walker said. “Audio is no different. The best-in-class digital ad stack around audio with the leading publisher in the space is a really formidable combination.”
The question is whether audio publishers will be willing to work with an ad tech platform owned by one of their biggest competitors. To convince them, Pandora will have to prove its neutrality, or at least that the benefits of buying through its ecosystem outweigh the risks.
Walker compared Pandora’s role to that of Google Display Network (which might not comfort a lot of current AdsWizz clients).
“There is an opportunity for us to not only monetize Pandora better and increase the diversity of advertisers and yield on our owned-and-operated inventory, but help publishers do the same,” Walker said. “There’s going to be a lot of protocols we need to follow to make sure that they feel comfortable that we’re not taking advantage of the situation.”
Pandora inherits AdsWizz’s 150 employees, who are focused on ad tech engineering. Pandora already integrated AdsWizz’s stack with its own supply when it launched programmatic audio last month.
Now the teams will work on building additional digital audio technology and measurement capabilities for the industry, as well as an API suite that can connect rich media and data providers to its ecosystem. Pandora and AdsWizz are working with the MRC to develop audibility standards for the industry, Walker said.
“In order for everyone to benefit, there’s far more gain in delivering the right percentage of media for digital audio relative to time spent than to try to compete directly against other streaming players,” Walker said.