The acceleration of technology and mobile has brought the sexy back in audio, and Pandora is in the process of proliferating their platform—and betting its future on an on-demand paid subscription model.
Pandora launched their premium personalized radio service earlier this month, and the $9.99 option stands out with customized playlists for its universe of music. Launched March 15, it’s still gradually being rolled out to the public.
The popular online-radio provider’s shift to a paid model positions the company to compete with the likes of Spotify and Apple Music, two rivals who’ve already solidified their seat in the mobile music space and long dominated the paid market. Pandora is trying to separate itself from the triumvirate by banking on its already-existing 81 million user base and 10 years of brand equity by serving customized playlists to each individual user. In contrast, Spotify and Apple Music serve songs on a “learn as you go” basis.
Pandora is poking for profits on the avenues of audio—arguably the most native of all digital ads in the vastly growing earbud era.
In February, they partnered with ad personalization firm A Million Ads to become the first publisher to bring capabilities popular in display and video ads to the audio marketplace. In January, they rolled out muted video and responsive display ads—native mobile ad formats aimed at delivering lift in time spent, brand awareness and quality clicks. The updates are bound to be beneficial to data-driven marketers who are moving toward nimbler practices with their budgets.
According to their Q4 report released last month, Pandora made progress in 2016 with $1.385 billion in total revenue, a 19 percent year-over-year increase, by driving leverage to their core business while accelerating subscriptions for their paid product. But with Spotify and Apple Music still in pole position with subscription models, Pandora’s paid platform journey has only started for its quest of 32 million subscribers by 2018.
Susan Panico, Pandora’s vice president of sales marketing, oversees brand strategy, positioning, messaging and marketing plans on the B2B side. Panico, who previously worked 18 years for PlayStation in a variety of roles, joined [a]listdaily to talk about how their music discovery platform is a place where artists find their fans and listeners find the music they love—and how brands organically get in on the action, too.
What is your brand strategy in marketing music discovery? How has it changed?
Looking over the last few years, we started primarily from word-of-mouth. In our early days, we did very little marketing. We amassed a huge audience and all of that was because of the personalized music experience that we delivered. Then we got to a certain point where we realized that we wanted to make a stronger connection off the platform with our audience, and we drove a lot of our marketing around the music discovery element of Pandora. We’re right on the cusp of launching arguably the biggest product in our history with the premium subscription service in Pandora Premium, and you’ll continue to see the messaging around personalization.
Your daily focus is mostly on marketing solutions for Pandora’s book of clients. How are they looking to connect with consumers?
Our clients range from globally recognized brands like FedEx and McDonald’s all the way down to the local mom and pop shops that we service in different markets around the country. A lot of brands are looking for ways to connect with consumers in a one-to-one and personalized way. Music is the most universal language of which you can do that. Music transcends culture and age. More brands are recognizing the emotive power of music, and the experiences that are particularly driven by music create such memories with their audience. The brands that engage with us on-site and partner for activations, the consumer recall is amazing because it’s organically woven into music experiences that people walk away with, and even amplify on social their own social channels. . . . Millennials are so tethered to their mobile devices, yet, untethered to about everything else. Experiences are such a great way to earn their hearts, minds, respect and trust. For your marketing strategy, one-too-many doesn’t work well anymore. You need to figure out how to make it one-to-one. Delivering personal experiences, whether it be digital or in real life, is important.
How are brand partners looking to work with Pandora?
I think it varies. Some brands have music and experiential as key pillars within their corporate strategy, and even within their organization structure, and they leverage a massive music strategy as part of their brand marketing efforts. And then you have other brands, say, a financial service one, that is trying to figure out how to leverage music to reach customers while also helping to make their brands a little bit sexier.
Whether it be sponsored listening or an ad-free subscription model, Pandora has been constantly tinkering its product. What is your strategy in having ownership from rival on-demand services like Spotify and Apple Music?
Part of our vision is to unify an entire music marketplace under one roof. If you have an ad-supported, free-tier complemented with a premium on-demand service, it’s really providing choice for the way people want to listen to music. We feel that we have a huge strategic advantage in the science that our music service is built on with the Music Genome Project. Our data informs on consumer marketing, and informs on how we help marketers reach their desired audience. All of that fuels the unique experience Pandora delivers to its listeners.
How does Pandora leverage its wealth of data?
We sit on this giant treasure trove of data. When you think about the people who are using Pandora, they’re firing off over a billion signals per day that allow us to capture different information, like the kind of devices they’re using, or the time of day they’re listening music. We create insights that are really valuable to marketers. What that means from an experiential standpoint, and what makes us a unique partner—if you’re a brand who wants to figure out how to leverage a music strategy, we can use our data and talk to you about where your audience is, which artists are trending in certain markets, and help you get aligned to it at a magical intersection.
Why is your continued sponsorship of SXSW such a significant part of your yearly experiential marketing strategy?
At the heart of Pandora, we’re about personalized music, and music discovery. SXSW is a great event to connect people with new artists and new music. With our corporate mission, there is no better and natural place for us to go as a brand. We love being in Austin, the epicenter for live music. It’s something that’s made a lot of sense for us strategically. This year we showed up at The Gatsby as one Pandora over the course of Interactive, Music and Film and opened up our space for all badge holders and fans to align with the overall convergence of SXSW.
What are the results that SXSW has yielded?
With the thousands of people that come through our space, they really look at Pandora being that connective tissue that helps bring them new and emerging artists and expose them to music that they didn’t know—and it turns out being music that they love. That’s what our personalized music discovery service is all about. There’s a balance there of not only having the live music throughout, but it’s also partnering with advertising partners to bring in experiences and activations with sponsors including Advance Auto Parts, Ashley HomeStore, Ltd, McDonald’s, MGM National Harbor, Simple Mobile and The Clorox Company into our space to ensure there are engaging experiences that people want to share on social. What’s most interesting is that we have a soundboard panel of about 50,000 listeners. What we saw particularly around millennials is that ‘experiences trump material possessions.’ You have an entire generation that would rather create memories than buy actual goods. The way we show up is exactly that—we give people wonderful music memories.
How do you see Pandora’s platform changing the way music is consumed moving forward? How will you remain nimble and carry brand momentum during this transformative time?
Right now we’re focused on this next huge step in our path toward innovation. I actually love to think about our founder and CEO Tim Westergren’s vision, who was a musician himself. He’s always talked about how amazing it would be to create this ‘musician’s middle class.’ So that when people are growing up, they can say ‘I want to be a musician’ and people can reply back, ‘that’s a great career for you’ and it’s because we’ve built this platform where artists can thrive, and we connect them with listeners who find and love their music. It brings the trifecta between the artists, fans and brands all under one simple, easy-to-use destination. And I think that’s the path that we’re on. . . . How that relates back to a marketer is twofold. One, music isn’t media. Music is the most emotive, personal environment in which you could insert your brand and make a one-to-one connection with someone through that passion point. Every marketer should really be looking at music as a platform in which to get their brand message across. The other part is because of the proliferation of mobile devices and acceleration of technology, music as is a must-have strategy. The audio ad is a must-have medium. Digital music streaming has brought the sexy back to audio.
Follow Manouk Akopyan on Twitter @Manouk_Akopyan
