I bet you listen to Pandora or Spotify if you’re under 50. My mom listens to Pandora and she’s 64. So do my kids. Pandora knows me by the stations I have. It’s kind of embarrassing. They have me so pegged. I can tell by the extremely accurate ads I get served. Clearly from my Disney Radio and Kids Bop stations I have young children and from the 90’s Pop and Britney channel I frequent they know I’m a Millennial, albeit an “old” one.
My usage of Pandora personally and our wild success with their medium for our clients leads me to continue our series on advertising mediums with a blog about Digital Radio.
For the record, I listen to Spotify too.
So, here’s the quick scoop on why Digital Radio is valuable and how to consider the two biggest players in the digital radio advertising space: Pandora and Spotify.
First off, what are the pros of Digital Radio?
Creative is easy to swap in and out. You may not know that the creative for most Traditional Radio stations, and for Digital Radio companies, is free. It’s offered as an added value in-house at the media company and the production quality is really good. This gives marketing managers like you near and far a desire to jump up and do little happy dances! It makes your job much easier and saves you money on expensive productions costs. You can swap out creative in just a couple days! So if you’ve got a sale or event that needs some extra horsepower, have no fear, the audio production teams available are top-notch and great at turning ads around in a hurry without sacrificing quality.
- Users are required to have an account to listen. This allows Digital Radio companies to capture their users’ valuable demographic info. They require users to give them their birth year, zip code and gender to create an account. Genius, because by doing that they help you effectively target your demographic by age, geographic area and gender! Hence the reason that I’m personally so effectively targeted by advertisers seeking “professional working moms of young kids”.
- Unlike Traditional Radio, Digital Radio is sold by CPM (cost per thousand impressions) so your purchase is guaranteed. You only pay for impressions that are delivered. You don’t pay for rating points that may or may not be accurate depending on your opinion of Traditional Radio and their ratings methodology. By purchasing ads on a CPM, you’re given more accountability from the media company and better able to track your ROI.
By providing a medium that allows advertisers to effective narrow their target demographic and guarantee the impressions to that demo, Pandora and Spotify clearly provide a huge advantage in the audio and video advertising market. They deliver advertising solutions that are compelling and influential like traditional media, but they do it in a guaranteed, trackable way that gives marketing managers more concrete insight into their return on advertising investment. Pair that with the fact that Pandora limits advertising to 4 minutes per hour and that in the Seattle DMA they has over 414,000 unduplicated listeners, Adults 25-54, listening each week with an average time spent listening (TSL) per week of 7 hours 29 minutes and we’re all ears to their pitch! Aren’t you?
We buy Pandora advertising for our clients all the time. We talk more in detail about why here. Why do we buy Pandora all the time? Because in addition to the above pros the bottom line is that it works. Since we’re all about advertising that actually works and yields return, we’re all about Digital Radio.
You’re probably wondering, if you’re like most Marketing Directors, about the differences in advertising on Pandora versus Spotify.
As the Digital Radio ad space has grown, we’ve definitely seen an uptick in interest in Spotify. “Digital audio is booming: Ad revenue grew 42 percent in the first half of 2017 after generating $1.1 billion in 2016, according to the Interactive Advertising Bureau.”
At the end of 2017, Spotify reported “that it had 157 million global monthly active users, of which 71 million were subscribers who listen ad-free… Pandora operates only in the U.S. after discontinuing its service in Australia and New Zealand last July.
Pandora reported 74.7 million active listeners at the end of last year, including 5.5 million subscribers to its ad-free products.”
Using their numbers this tells us that 45% of Spotify’s users are paying for ad-free listening versus Pandora which has only 7% of subscribers paying for ad-free listening. Flip those stats around and this means that 93% of Pandora listeners are hearing your ads versus 55% of users hearing Spotify ads; and those 93% of Pandora listeners are in the U.S. versus Spotify’s number which is accounting for a global reach.
Does that mean we don’t buy Spotify? Not necessarily. We do if it makes sense. But these numbers are good food for thought when considering your audio advertising goals.
According to Edison Research, this year”some 160 million people stream audio weekly, up from 44 million in 2010″. This is a growing opportunity for advertisers. We’re seeing knock-it-outta-the-park returns on Digital Audio ads for our clients, many in the Seattle, San Francisco and Portland markets. We’d love to share some success stories with you. Give us a call or shoot us an email, you can reach us here.