Spotify and Pandora are often pitted against one another as competitors fighting for control of the digital-music industry, particularly when it comes to targeting millennials who are highly influenced by pop culture and listen to hours of music every week.
So, the opportunity to watch the two brands' CMOs square off during an Advertising Week panel brought a big crowd to the Times Center in New York Monday evening. Interestingly, the two had decidedly different strategies for attracting millennials to their respective platforms.
Millennials have remained the topic du jour for advertisers over the past couple of years, with brands eager to find ways to reach younger consumers who are notoriously tricky to target. With that in mind, there was at least one thing both execs were in full agreement on: millennials respond to music.
"Especially for a millennial, music is one of those things, like fashion, that gives you a voice and a point of view; it also allows you to fit it," said Spotify CMO Seth Farbman. "It's this human condition of wanting to stand apart but fit in."
Here are four of the biggest differences between how Spotify and Pandora are trying to win the attention of millennials:
1. Marketing toward the unmarketable
For millennials, products trump advertising, said Farbman. Unlike previous generations, today's young adults know when they're being marketed to and are more likely to push away brands that don't live up to the hype.
"What's changed so much is that there is absolute transparency—marketers cannot just put a message out there and hope for the best," Farbman said. "Your product and service is the most important thing. If it does not deliver, you shouldn't even bother marketing it."
Meanwhile, Pandora's CMO, Simon Fleming-Wood, backed up his point that tech-savvy millennials are hard to reach with one big stat: They spend four hours a day listening to music, the same amount of time they spend watching television.
"When you're talking about reaching millennials, you're talking about how you gain their attention," Fleming-Wood said. "For the first time, most music consumption from millennials is over a connected device. If you think about the role that radio has played in this country for so long, that's a pretty staggering statistic."
2. Dicing up data
Farbman and Fleming-Wood agreed that their companies have troves of data about how users listen to music and what they like.
Pandora's radio-like service is based on data—including email addresses, ages and gender— collected from 250 million registered users. Fleming-Wood said 85 percent of listening is done on mobile, which is used as a major selling point in convincing brands to buy more smartphone and tablet-size promos.
Unlike Pandora's model, Spotify is an on-demand service that lets music fans listen to playlists or a series of songs. According to Farbman, 50 percent of Spotify's streams come from users physically pressing play.
Once a marketer zeroes in on a person who likes to listen to one particular type of music—a workout-themed playlist, for instance—"You start getting a real picture of the complete lifestyle," Farbman said. "We're at a point now where we are gathering so much data so rapidly that we're constantly reimagining what can be done with it."
3. Sell an experience, not the technology
Licensing issues aside, the actual act of listening to music on Pandora, Spotify, Apple Music or any other competitor is essentially the same, meaning companies need to provide additional content and perks for millennials to stay on one platform.
Spotify releases a new playlist every Monday called Discover Weekly that recommends music based on users' individual listening habits. Because they expect fresh content every week, the playlist "becomes almost a physical thing that you hold onto," said Farbman.
On the flip side, Pandora uses digital listening trends to plan live concerts. Last month, it hosted an L.A. concert called Summer Crush with hip-hop artist Jason Derulo and girl-pop group Fifth Harmony. Fans who listen to both artists on Pandora were invited to the event.
"Even when we think about our live-events strategy, the way that we interact with our fans is very much in personalized conversations," Fleming-Wood said.
4. Go offline
Pandora's recent summer concert is part of a bigger event-marketing trend that both CMOs agreed is hugely important to attract millennials.
"We've leaned into [live events] a lot more over the last year and are going to lean into it significantly more in the future," Fleming-Wood said. "There's a different level of emotional engagement with seeing live music."
Experiential advertising is on Spotify's radar. The brand has set up activations at events like South by Southwest Interactive, but Farbman said he's also interested in expanding.
"That's something that we need to do more of, whether that is just within music or sports, film," he said. "Actually bringing music to the people is incredibly important."