Pandora offers 'killer ad unit' and 'earballs' for advertisers

By Rosie Baker | 25 November 2013
 
Jane Huxley

Music streaming site Pandora is building advertising into its platform in Australia for the first time.  It's the “killer ad unit” to monetise mobile and close the gap between money invested by brands and consumer's use of smartphones, reckons the firm.

The ads, which are a combination of audio and visual spots, began rolling out this month. For those that want to avoid ads altogether there's also a paid-for subscription service.

Pandora will use the insight is has on what kind of advertising creative and execution works on the platform in the US to build a picture for Australian advertisers. The company wouldn't say who is advertising, but big brands across automotive, FMCG and retail have been using the platform in the US for the last seven years. Pandora hopes they will follow suit locally.

Jane Huxley, Pandora Australia's managing director, told AdNews that Pandora's combination of audio and visual ad opportunities is the “missing piece” of mobile advertising and will close the gap between monetisation and usage.

“I've been talking tongue in cheek to agencies about 'earballs'," she said. "It's the killer ad unit for mobile. We've been getting incredible feedback from agencies and the reason is that the disparity of money invested in mobile and smartphone usage has long been talked about. What we offer will close that gap. That is where Pandora is resonating [with Australian advertisers].”

“There's less wastage and more cut through [with Pandora]. People are immune to a lot of display advertising,” she claimed.

Huxley reckoned Pandora has the third best mobile monetisation platform globally, behind only Facebook and Google. In the US, advertisers see greater engagement and interaction with Pandora ads than other types of mobile advertising, she claimed, and a higher return than the industry average.

The site is due to hit 1 million Australia users “imminently” according to Huxley, ahead of the initial target set for the end of the year. Around 70% of usage in Australia is on mobile.

The music streaming site's founder Tim Westergren sent an email to its members outlining the plans and giving the reason.

In it, the brand said: “Simply put, ads pay the bills.” That money allows it to pay musicians and artists royalties and still provide a free service for listeners.

The company recognises that ads are a “disruption” and is pushing its subscription deal Pandora One as a way of “minimising” it and “preserving” the ad-free experience.

The model is similar to that of rival Spotify which offers a free streaming service with ads as well as a premium service that gives members unlimited streaming, offline access on mobile devices with no brand advertising.

In August Pandora began building a sales team ahead of the roll out of advertising opportunities, including Jon Stubley, former group direct sales manager at Macquarie Radio Network and Shaun Alexander formerly of Spiral Media. At the time Huxley told AdNews the target was 1 minute of advertising for every hour of audio streaming.

Earlier this week the US business reported a 36% year on year rise in advertising revenue to US$144.3m. Mobile advertising revenue more than doubled in the quarter and topped US$100m in one quarter for the first time. The streaming service still reported a net loss, however.

The music streaming market is increasingly cluttered, and according to Spotify earlier this year, is already saturated. Services including Songl, Spotify, Deezer, Rdio, Pandora are battling it out alongside Apple and streaming platforms introduced by mobile network providers including Telstra and handset manufactures.

Nokia has this week relaunched its free streaming service as MixRadio.

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