Mobile ad revenue was up significantly for Pandora during Q2 2014, jumping 59% from last quarter to $167.5 million, a 51% year-over-year increase.
Total revenue for the Internet radio streaming company came in at $218.9 million, 76% of which was made up by mobile ad revenue. While it represented a 38% year-over-year growth for the company, the total came in just shy of estimates. Local ad revenue was $35.3 million, up 144% since last year.
On the revenue per mille front, ad revenue per thousand ad-supported listener hours was on the rise, reaching $34.15 million this year, up 7% from last year.
A big issue for Pandora last quarter was its less-than-robust growth of active listener hours. Investors on the Q2 2014 earnings call pounded Pandora President and CEO Brian McAndrews on the point.
Between Q4 2013 and Q1 2014, the 12% increase in listener hours wasn’t all that much considering the Q1 increase was only 16%. It’s not a static number, but it’s also not impressive, considering the 250 million radio listeners currently in the US. In Q2 2014, radio listening among Pandora users went up just 7.04%.
“We expected to see some seasonality in June; it’s typical for us that we pick up more in September and that we see a relative slowdown in the summer when people go on vacation and leave school,” McAndrews said. “Over time, when people go on vacation, many of them drive, and as we become more prominent in cars that may temper that or lose some seasonality. But even with all that, we did grow seven and a half percent.”
McAndrews would not get specific about Pandora’s future advertising investment, especially in potential efforts to re-engage Pandora’s 100 million latent accounts.
“We’re not talking about a massive budget, but historically we’ve done word-of-mouth and been successful with that. We are investing more in marketing in terms of international and brand marketing in the second half,” he said. “Once you hit a critical mass, the hours you have arguably have more upside over time.”
Pandora has also been investing in product development and its sales force, which increased by 15 to 343 people.
In response to a query about Pandora’s plans for using data to better target listeners – the company has already moved beyond ZIP code targeting to using more precise location data – McAndrews, who noted that Pandora has more than 100 segments to target listeners, said there’s room to improve. He also made reference to a cross-device “core identifier,” a kind of anti-cookie, seemingly similar to Verizon’s PrecisionID, that Pandora uses to track users and build segments.
“We’ve done a fair amount, but we still see a tremendous opportunity with our own data and working with third parties,” he said.
McAndrews also talked about the beta launch of “Promoted Stations,” an ad unit that integrates a brand’s custom content, think song mixes and curated lists, into Pandora’s station recommendations for listeners. In other words, native. Participating brands include Skechers, StubHub, Taco Bell and Toyota.
