At Pandora, the watchword is “engagement.”
“At a certain point, it’s not how many people you bring to your product, it’s about how much engagement you see, and for us, engagement means time spent,” said Heidi Browning, SVP of strategic solutions at Pandora.
The same sentiment was expressed by Pandora CEO Brian McAndrews during the company’s Q3 2014 earnings call at the end of October. Although Pandora’s monthly active user growth has been somewhat of a concern for investors over the last few quarters – it increased just 5% between Q2 and Q3 – McAndrews countered by pointing out that a user base is only as valuable as its level of loyalty and engagement with the platform over time.
And in terms of activity, the numbers are fairly solid, with Pandora users spending roughly 20 hours a month with the online radio service.
“We’re getting away from impression-based advertising and focusing on a true value exchange,” Browning said. “We’re about earning the attention of our listeners.”
AdExchanger caught up with Browning at the 2014 Open Mobile Summit in San Francisco.
AdExchanger: How does Pandora approach engagement?
HEIDI BROWNING: It’s about personalization. Each moment matters and each moment represents a trigger for engagement with our product. Every time you thumb up or thumb down a song to create a station, you become a more loyal listener.
We’ve been working on personalization for a decade, starting with our Genome Project [which enables tailored content discovery]. To do it well is terrifically difficult. It’s a combination of technology, human creation and participation to bring it to life. That’s the thing that continues to set us apart from other entrants into the space. We’ve had a head start.
How could a brand take advantage of user engagement on Pandora?
Let’s say two people start by liking the same band. From there, every time they engage separately and thumb up different music, all of that engagement will ultimately create a completely different set of taste-based preferences. The longer you listen, the more personalized the experience becomes and the more we know.
The concept of connecting consumers around key passion points isn’t new, but it’s a very effective marketing and advertising tool. Pandora is a personalized service and most users engage with it on their most personal of devices. The relationship between Pandora and consumers is very positive, and brands that participate in that conversation benefit from the halo effect.
What ad products do you have?
We’re focused on several products, both of which are in beta right now, that are designed to encourage consumers to spend time with a brand, and listeners get something in exchange.
One is Sponsored Listening, which is essentially about capturing a consumer’s attention. If listeners engage with an ad unit in some way, by watching a video, for example, they can unlock an hour of ad-free listening brought to them by the brand. Sony PlayStation is a beta partner on this.
The other is Promoted Stations, our native product that lives within a listener’s playlist or station list. You can think about it like a promoted tweet. The branded station is surfaced to the top of the station list to encourage listeners to engage with the music and the brand. Toyota and Bacardi are both big beta partners on that right now. They’ve created relevant video content centered on music, artists and their journeys and they’re using Promoted Stations to help build an audience around it.
What if someone isn’t looking at the screen while a sponsored video is playing?
That’s part of what makes Pandora different. Our ads are only shown when we know someone is looking at the screen. If the Pandora app is running in the background, we wouldn’t run the ad then.
What about audio ads?
Audio is one of the topmost effective products we have because you don’t have to be looking at the screen for it to be effective, and it’s very native. We differentiate ourselves from the traditional audio world by guaranteeing delivery, as opposed to the radio world, which is focused on estimated delivery.
When will Sponsored Listening and Promoted Stations be generally available?
Everything in mobile is infinitely more difficult, but I can say 2015, for sure.
Would Pandora ever consider creating its own engagement metric?
It’s tough to create your own metric because you can’t get mass adoption from everyone in the ecosystem. But I would certainly advocate for a different metric that could be globally adopted with a focus on the value of time spent with a brand. That could be measured within the ad experience itself or correlated with traditional brand lift, in-store traffic or offline sales. That’s the next frontier. As a media owner, we can provide you with a highly engaged audience. We have the experience and engagement to drive value, but our marketing partners tell us what they need.
The industry is getting away from impressions and we all need to move to a place where we’re targeting humans, not opportunities. Measurement should be about seeing if people are engaging, listening, interacting with advertising. That’s the next shift we’ll see, and the journey to get there is all about viewability and audience verification.
What kind of metrics do you provide today?
Some products have more detailed reporting behind them than others, but take a branded station, for example. You can see the number of people who added it, the reach, the amount of time spent listening, geographical and demographic details, where in the country they are, what other types of music they listen to, the frequency of their return visits, the average time spent listening to the station and the overall time spent listening to Pandora.
There is a lot of rich information that can help marketers build their audience and give them insights on what kind of content to deliver.
You have a lot of first-party data. Do you layer on any third-party data?
We work with a third-party ad server and we develop the majority of ours ads internally, but the data we use for targeting is all our own internal data. We leverage what we have and we use it for smart targeting.