Pandora internet radio is taking a split on its business plan, pushing its users toward ad-free subscriptions while finally adding programmatic ad support for its ad-monetized free service. In an earnings call on Tuesday, Pandora CEO Roger Lynch announced that, at long last, certain advertisers can now purchase audio ad inventory programmatically through a private marketplace.
The change has been a long time coming for Pandora, as audio competitors have been adopting their own programmatic offerings. Spotify launched its programmatic platform back in 2016, and iHeartRadio had one in 2014.
“Last quarter, we spoke about our need to invest in ad tech, including increased focus on programmatic, which will leverage many of the strong capabilities we already have—scale, targeting and innovative ad formats,” Pandora CEO Roger Lynch said.
Once Pandora’s programmatic options become widely available, ad buyers will be able to purchase inventory on both Pandora and Spotify’s streaming services using the same tools, allowing brands to better coordinate omnichannel campaigns.
However, Lynch did not announce when the new platform will become available for all advertisers, claiming that the company needed to ensure stability first.
“Before we open the floodgates for all demand, we need to make sure that we’re understanding how all of the different systems interact,” Eric Picard, Pandora’s vice president of product management, said. “Things haven’t scaled from a volume perspective the way the market has wanted in the audio space.”
In the same earnings call, Lynch announced that the number of subscribers to the company’s nascent premium service grew by 63 percent this quarter, and is increasing its efforts to convert users to the ad-free service.
In December of last year, Pandora rolled out a rewarded-ad service, allowing users the ability to “unlock a Pandora Premium listening session” in exchange for watching a video ad.
Despite the company’s push toward a subscription business model, advertisers needn’t be worried: Pandora itself claims that its priority is its ad-funded service.
“If you look at some other services in the market, the ad-funded tier is an entry-level tier designed to transition someone to a subscription tier as quickly as possible,” Picard said. “We’re building a very healthy, sustainable, long-term, ad-funded business.”