“P” is for Pandora

When you think of the name “Pandora,” what’s the first thing that comes to mind? Perhaps it’s the ancient Greek myth of Pandora’s box, the popular Pandora charm bracelet or the whimsical planet from the hit movie Avatar. But first and foremost, I think of Pandora Internet Radio. I often listen to it for hours at a time. Since its birth at the turn of the century, it’s hard to ignore how fast it has grown and how it’s beginning to reshape the way advertisers reach the consumer on music platforms.

Although the company started in 2000, Pandora has only been serving music to its listeners since 2005. In its first 6 years live, Pandora grew from 0 to 100 million users (2005 – 2011). In the past 2 years, it has more than doubled to over 200 million registered users. That growth is staggering! If you add this to the fact that consumers now have access to Pandora on every device where the Internet or radio is possible, it’s hard to not think of Pandora Internet Radio first when someone mentions the name Pandora.

Photo of a cat with headphones by Flickr's Out.of.Focus

Through the eyes and ears of the consumer, Pandora is a free Internet radio service that creates custom stations built on preferences submitted by the account holder. To get started, listeners must provide their date of birth, zip code and gender. After the initial sign up, the listener then picks an artist, specific song or genre they would like to listen to. Pandora then creates a custom station based on what they think the user will enjoy. To further customize your station, while a song is playing, the listener has an option to give it a “thumbs up” or a “thumbs down” to indicate preference. Based on your likes and dislikes, Pandora then continuously evolves your station so you can continuously listen to and discover only the songs and artists that you’re interested in.

Dubbed the “Music Genome Project,” Pandora is unique because it employs actual human beings that evaluate your likes and dislikes. Pandora doesn’t use a single computer to evaluate a user’s music preference. These analysts take into consideration up to 450 musical attributes like harmony and chord patterns to help create a truly unique experience for its listeners. The goal is to not only capture the musical identity of the song, but to have a complete understanding of the musical preferences of the listener.

Through the eyes of media buyers and planners, things get a little more technical. Unlike terrestrial radio, which typically runs 60-second units, Pandora only allows for unit lengths of 15 or 30 seconds. What makes Pandora unique is the fact that a radio ad can be targeted exactly like a digital ad. With the information that is provided upon sign-up by the user, Pandora can target consumers based on account data and serve ads based exactly on whoever your target audience is.

Along with a radio ad, the advertiser also has the option to serve the consumer a display ad to increase interactivity and help to drive their message home. While the consumer might not be interacting with every ad they hear, they are definitely interacting with the Pandora service. This is evident by the fact that Pandora listeners have personalized their stations with over 25 billion “thumbs” since 2005.

Unlike radio, which is purchased on rating points, Pandora is purchased with guaranteed impressions. If an advertiser buys 10,000 impressions, its ad is served 10,000 times to consumers that do not have the ability to switch the station. This aspect greatly increases the likelihood that targeted consumer will actually hear and listen to the advertisement. Additionally, Pandora’s shorter ad formats increase the likelihood that a consumer will pay attention to the ad because they know the music will start again shortly—rather than five or six minutes later.

There is a reason Pandora is blowing up with both new users and new advertisers: it is carving out a niche that is hard to compete with. Pandora can reach a target as narrow as women 25 to 35 years old in Ann Arbor, Michigan who are listening to holiday music from 12:00 p.m. to 6:00 p.m. In short, Pandora has blended the long-standing interest in “broadcast radio” with the benefits of digital, such as hyper-targeting and performance reporting. And that’s a box of awesome.

What will they think of next?

Have you experimented with Pandora advertising? I’d love to hear about it in the Comments section!

Photo Credit: Flickr’s Out.of.Focus

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