Pandora


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Overview


In 2000 Pandora was created as an internet radio that can be accessed for free or through a yearly subscription. The difference in the paid and free services includes unlimited listening, better quality, and advertisements. Paid or unpaid, Pandora not only plays a users requested song or artist but made automated recommendations for the songs following the original request. Using a comprehensive music analyst system the Genome Music Project that analyzes close to 400 different characteristics of every song and artist the users request is played and a playlist is formed based on similar aspects. Users can then decide whether they like or dislike a song recommended, which is also analyzed to better analyze a users preferences. Pandora also allows users to create and save up to 100 playlists so that their preferences are saved and accessible at a later time.

All of these features make Pandora a successful company and effective option for advertisers. Pandora has tens of millions of users who listen for hours a month and are exposed to advertisements while doing so. There advertisements include brief interruptions in the playlist every couple of songs, either audio or visual. Also the side of the Pandora player is sponsored sometimes in an interactive way, most of the time in correspondence with the audio or vid. These advertisements are also linked with what the advertiser chooses, usually their site or a sponsored site on Pandora itself. Since Pandora requires login and uses such a unique analyst system it makes advertising even more specific. When signing up Pandora requests age and gender this immediately places users in demographics. They also save users preferences in music so companies can choose exact placement for their product. If they feel their product would best sell to a demographic or listens to a specific style of music they can place it in that exact style. There one year sales growth from 2008-2009 was 151.5%, earning them $50.3 million, there first profitable quarter since there launch (Pandora Media, Inc). With these kinds of astonishing numbers and well implemented advertisements are well placed and effective, for nearly any company.
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Pandora screen while playing music. Notice advertisement on the right for upcoming show. Also the multiple other ways to access Pandora directly below the radio.







Audience


Pandora currently boasts 48 million users who listen and use Pandora at an average of 11.6 hours a month (Miller, 2010). These numbers are both expected to rise in the near future due to new options for access. Pandora has created applications for mobile phones, allowing users to access Pandora at virtually any time they have their phone on them. Pandora also now allows you to access from certain television sets that are internet accessible, and from car stereos. With these new ways to access it makes Pandora much more than just the internet radio that it started as, which greatly increase its accessibility and convenience for users.
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Costs


On the Pandora site they offer advertising information with options ranging a budget of under $5K to above $25K. This shows that they can arrange a campaign for companies with less funding, but still get their advertisements on Pandora. While also offering services for those with the budget to spend more and receive more. Based on the large corporations and companies who are most often seen advertising currently through Pandora it seems more likely that most choose the above $25K option.


Advertisers


There are many advertisers who are currently taking advantage of the unique and very specific opportunity to use Pandora to reach their audience. Some of these advertisers include Nike, Kia, North Face, Citi Bank, Don Julio, Absolute Vodka, Target and dozens more. These larger corporations often have more extensive campaigns in a more broad way, instead of more specific techniques. Music artists are also taking advantage of the very specific form of advertising by advertising themselves when users prefer their genre of music. Recently Pandora also extended mobile advertising to smaller and regional businesses (Press Release, 2010). The regional businesses are especially important because through the phone users locations are available which can then be used to advertise businesses nearest to them.

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Reach and Frequency


With such high numbers in users and hours the reach and frequency is remarkably high. Being able to access from so many different options also increase both reach and frequency. For example, Pandora’s iPhone app was a remarkable success, allowing users to access directly from their iPhone, it was the first free music app(Graham, 2010). Following the launch of the app in July of 2008 Pandora sold 1 million units in a weekend, registered 180,000 new users and 200,000 new custom stations created by users, and Pandora executives claimed the company attracted a new iPhone user every 2 seconds.(Shields, 2008) These numbers are from just after the release and have no doubt increased in the past year and half. Also these numbers represent only one of Pandora’s smart phone applications; they also have applications for the popular BlackBerry and Droid systems. These phone applications also offer more than just the audio advertisements. The Pandora app has banner ads on each app so they advertisement is constantly within view of the user. The banners are then linked with websites to access from the phone or offer to receive emails from the company advertising. With technology advancing Pandora is also becoming accessible from your television and soon seamlessly in car. With the numerous was to access Pandora and the fact that advertisements are integrated into their music the reach is nearly endless and the frequency is at the users discretion, with both rising.

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Responsiveness


Because of type of ads Pandora utilizes they easily receive action from the users. On the website the advertisements are directly next to the player and are easily accessed and responded to because of their placement. The banner ads on the mobile apps are utilized in a similar way, any advertisement that intrigues a user can easily be accessed directly and immediately from the mobile phone. The regional advertisements especially can evoke immediate response. If a user notices a business nearby them they can easily take action on their intrigue. With being able to access Pandora in so many ways and locations it makes responsiveness especially high.
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Scheduling



Advertisers also take advantage of timing of their ad placement. They can use specific times to best take advantage. For example, currently TBS has an ad for the new Conan O’Brien talk show to help promote the beginning of the new show. There are also advertisements for the new Johnny Depp and Angelina Jolie movie, The Tourist, releasing soon. Both of these will no longer exist after the show has established itself and the movie releases. This allows companies to take full advantage with limited time. It is also an option to pick exactly what time of days an ad will run. Based on research a company can determine when their targeted demographic listens to the Pandora and heavily advertise during these times.


Limitations



Pandora is doing their best to eliminate many of the limitations for their advertisements. Their main one would be, as an internet radio, only being able to access from a computer. With the addition of mobile apps, and adding Pandora in cars and TV’s it is much easier accessible eliminating some limitations. Still the biggest limitation would be access, if you do not have a compatible mobile phone or Pandora on your television or car then you can still only access from your computer. Another limitation would be the fact that unpaid users can only use Pandora for 40 hours a month; although this is a high number after the number is reached ads are virtually eliminated to this audience. Pandora also offers the paid subscription feature which is a limitation as well. For $36 a year you can enjoy Pandora without advertisements. With such a low cost some may opt to pay the $3 a month and enjoy unlimited music without advertisements.

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Interesting Qualities



The wide array of options that Pandora offers to advertisers is very impressive. The way that Pandora can decipher their users and relay this information to advertisers makes advertising very precise, and when advertising this can be a major factor. Being able to target an audience on music preference, gender, age, location, schedule and many others allows advertisements to be nearly unequally specific. Few media mediums can offer such accurate break down of users like Pandora is able to. Another interesting quality is being able to link Pandora to a users Facebook and or Twitter page. This feature allows users to share what music they are currently listening to with their friends and followers. It also acts as a form of advertisement for Pandora and ultimately any of their advertisements. If people see someone they follow or are friends with are using Pandora it becomes more likely that they will then use Pandora.


General Impact



Pandora has been at the fore front of internet radio since they launched in 2000. They have established themselves as a leader in the rapidly expanding internet radio industry and look to keep it that way. This is partially due to their sale of advertisement. They make much of their profit from selling these advertisements and give advertisers many reasons to use their services to advertise. They offer many effective advertisement methods that are almost guaranteed to reach a desired audience.







References




Shelley, A. (2009). Pandora. Notes, 66(1), 138-142. Retrieved from Academic Search Complete database.

Jefferson, G. (n.d). Pandora online radio service scores a hit. USA Today, Retrieved from Academic Search Complete database.

Pandora Media Inc, Hoover’s Company Records – In-depth records, Retrieved from LexisNexis Academic.

Shields, M. (July 18, 2008). Pandora scores on iPhone. Adweek. www.adweek.com.

Miller, C. (March 7, 2010). How Pandora Slipped Past The Junkyard. The New York Times. www.nytimes.com

(October 18, 2010). Press Release: Pandora Extends Mobile Advertising Platform to Small and Regional Businesses. www.adready.com

www.pandora.com