As Pandora prepares to be sold to Sirius, the streaming service is giving advertisers more tools and data to better reach its listeners.
Pandora’s new Advertising Insights Lab aims to tap the extensive data science team that powers the company’s personalization algorithms in order to gain insights, like the creative that best matches particular types of campaigns, how listeners tend to interact with ads and other patterns that can help brands understand the nuances of digital audio advertising.
The rollout comes after SiriusXM announced last week that it would acquire Pandora for $3.5 billion. Spurred by the growing popularity of on-demand streaming and voice platforms, the audio advertising space is growing fast. But it’s still plagued by a lack of consistent measurement and targeting capabilities.
“Now more than ever, we’re at a moment where it feels like the entire ecosystem is looking to audio,” said Lizzie Widhelm, Pandora’s svp of ad innovation. “For the 13 years I’ve been in the audio industry, it has struggled with trying to understand and make sense of what is the right way to measure their investment in this space, and we’re absolutely leaning into this with this Insights Lab to try to produce and deliver actionable best practices.”
Some examples of insights that might be gleaned from the lab include the revelation that a client’s advertising campaign was still proving memorable up to four months after it had stopped running and a more detailed measurement model that showed last-click attribution was undervaluing another brand’s total ad exposure, according to Widhelm.
Pandora currently reaches a monthly free user base of around 71 million with 6 million paid subscribers, making it the largest streaming service in the United States. Still, the company has struggled to turn that advantage into a profit as on-demand competitors like Spotify and Apple Music have eaten into its market share.
Under SiriusXM’s ownership, however, Pandora will be able to continue its focus on building out a more discoverable library of podcasts and expanding capabilities on voice platforms, while serving as a “funnel” of new users into the satellite radio service, according to a conference call with executives at both companies. Widhelm said the Advertising Insights Lab could eventually scale to serve SiriusXM users as well.
“It’ll be exciting to see how the best practices that we have and the billion dollars of business that we have monetizing great content and connecting with listeners—if we can continue to do that on a larger scale,” Widhelm said.
But Pandora’s increased focus on podcasting comes with its own set of challenges. Despite the medium’s popularity, audience measurement has proven a particular challenge, and a glut of content has stretched thin a limited advertising pool. Panoply, the podcast network born out of Slate, cut its entire editorial staff last month, and BuzzFeed shut down its podcasting arm not long after.
“Podcasting is a really challenging space … everybody’s talking podcasting at this point, but relatively few are delivering,” said Fred Jacobs, an audio media consultant at Jacobs Media Strategies. “That said, everybody understands that the on-demand audio opportunities are potentially huge if everybody can overcome the measurement problems, the monetization problems.”
An Interactive Advertising Business report last year identified audio as the top growth category for digital advertising with a 42 percent increase in spending—$603 million—during the second half of 2017. Yet Michael Dougherty, co-founder and CEO of programmatic radio advertising firm Jelli, said brands are mostly still in the early days of figuring out what a successful audio advertising strategy might look like.
“Big picture is that audio as a category is hot. It’s creating entirely new experiences for consumers—look at Alexa, Google Home, etc.—and creating new opportunities for advertisers to reach those consumers,” Dougherty said. “As advertisers develop their audio strategies, they are looking at large players like Pandora and iHeart.”