ad sales

Pandora renews focus on ad revenue, names McAndrews new CEO

Thursday, September 12, 2013 - 12:55pm

There is an emphasis on advertising solutions this week.

Two days ago Songza closed a capital round of $4.7M for developing its “life moments” sponsorship platform. Yesterday Pandora announced its new CEO/Chairman appointment of Brian McAndrews to replace outgoing Joe Kennedy. Kennedy announced his intent to resign the company last March.

The selection sends a clear signal of Pandora’s intent to double down on monetization of its leadership position in Internet radio, so it’s no wonder that Pandora stock jumped nearly 10% this morning. McAndrews comes with a deep pedigree in digital advertising. As President and CEO of aQuantive, a digital marketing leader that was acquired by Microsoft in May, 2007, McAndrews became Redmond’s APS (Advertising and Publisher Solutions) lead. He comes to Pandora from a managing directorship at Madrona Venture Group, whose portfolio spans a wide range of Internet brands, from Amazon to Cheezburger.

One of McAndrews’ several board positions is at AppNexus, a major ad-buying platform whose CEO, Brian O’Kelley, is regarded as the inventor of ad exchanges. AppNexus executed $700M in advertising purchases in 2012, making it a competitor to Google. The company is rumored to be the next multi-billion dollar IPO.

McAndrews inherits Pandora as it owns leading share across markets (7.42% of total U.S. radio share), 72-million active users from a registered base of about 200-million, a relatively small music inventory of about a million tracks, proprietary recommendation and programming technology, some form of presence in over 100 car models, and a controversial attempt to reduce its statutory royalty payments to recording artists.

Profit may not be Apple's goal for iTunes Radio, but it wasn't for the iTunes Store either

Monday, August 26, 2013 - 11:05am

Given the high cost of operation and mounting losses of industry leader Pandora, analysts have suggested that Apple's intention with iTunes Radio isn't about profit -- (it may not even be about Internet radio at all).

"It’s about keeping its users from other Internet radio products," wrote Minyanville.com's Diane Bullock. "If Apple can provide this in-demand service to its iOS faithful, they won’t be tempted to stray and find themselves in the open and exciting arms of threateningly hip startups. Being all things digital means the cult of Mac won’t have to worry about defectors bolting for the door."

Consider: most potential listeners already have an iTunes account. The new service will be preinstalled on iPhones and iPads with iOS 7, iTunes for OS X and Windows, and Apple TV. And if a listener is signed in and ready-to-go, why launch another app to listen to Net radio? 

You may remember that the iTunes store itself had "break even" as a goal in 2003, and was launched to help sell iPods. After just five years, the store became the the leading U.S. music vendor. It now accounts for 64% of the world's online music sales, generating 15% profit on sales of $13.5 billion.

For the Internet radio product, Apple may have already laid the groundwork for some nice revenue. With blue-chip advertisers lined up before the service even launches, some paying tens of millions for year-long ad campaigns (see RAIN here), Apple may indeed end up exceeding expectations. They've done it before.

Read the Minyanville piece here.

Pandora sales VP explains local ad strategy to Twin Cities business journal

Wednesday, August 14, 2013 - 1:20pm

In local sales efforts, leading webcaster Pandora is positioning itself as the number-two radio station in the Minneapolis market (like it does in several others). Pandora regional VP Gabe Tartaglia discussed some of the webcaster's competitive strategies with Minneapolis/St. Paul Business Journal's John Vomhof.

But it's more than the sheer number of listeners that gives the webcaster a foothold locally, Tartaglia contends. It's its ability to target advertising not by station format, but to the listener herself.  

"We've got over 700,000 listeners in the Minneapolis DMA every month, and every week, if you take a demographic like adults between 25 and 54, we have about 400,000 listeners," Tartaglia, who's based in Chicago, said.

He characterized their ad rates as "pretty competitive," with the big value coming in targetability. Pandora registration requires the listener's age, gender, and ZIP code. This means Pandora can track users across channels.

"So, if a local advertiser wants a very custom geography or wants to reach an exact age or gender, we can provide that exact demographic with 100 percent guaranteed delivery and zero waste," Tartaglia explained.

"Think about it in terms of the individual listener, not the genre of music they're listening to or a particular artist. Most advertisers want the person. They want the consumer who can hopefully become a potential customer," he continued. "So, if a person is listening to a rock station and then changes to a country station, to us, that's one listener and we can still serve the same targeted adds to that person."

Pandora's biggest local categories and clients include automotive (about 10 different local dealers), health care, and education (University of Minnesota, Globe University).

Read the interview in the Minneapolis/St. Paul Business Journal here.

AdAge says better targeting of iAds on Apple net radio service will make them more lucrative

Friday, June 7, 2013 - 10:50am

Apple and Sony Music have reportedly reached an agreement to license Sony-owned sound recordings for Apple's upcoming Internet radio service. Sony Music was the final major label holdout; Warner Music and Universal (including EMI) are already in.

"As of earlier this week, the company had yet to sign up Sony/ATV, Sony’s music publishing arm," All Things Digital Peter Kafka wrote today (here), meaning it's not yet full-steam ahead for what the press has called "iRadio."

"But the gaps between Sony/ATV and Apple were supposedly smaller than the ones Sony Music and Apple were looking at a few days ago."

It's expected that Apple will announce the service at its Worldwide Developers Conference on Monday, and make the service public later this year. As an Internet radio service, it's most obvious competitor out of the gate would be webcasting giant Pandora.

Paul Resnikoff at Digital Music News points out (here): "So, kill Pandora, kill? Not exactly: just recently, Pandora CEO Joe Kennedy noted that Pandora's extremely-huge audience makes it nearly-impossible for Apple to boot the app off its iOS deck. Then again, that's what they said about YouTube."

The new Apple service will compete with Pandora not only for listeners, but for advertisers as well. Earlier this week we reported (here) that Apple was retooling its underperforming iAds program to support the webcasting service. AdAge says (here) using the iAd service for the Net radio product will allow Apple "to retain a higher percentage of that ad revenue compared with other iAd inventory. Currently, 70% of iAd revenue is given to publishers who monetize their apps using the service, according to Apple's iOS developer program." According to sources, Apple's deal with music rights holders calls for the company to turn over 10% of ad revenues.

AdAge also reported Apple's service will allow advertisers more accurate consumer targeting than would-be rival Pandora. Pandora steers appropriate ads to listeners based on age, gender, and area code (as supplied by listener). "If a Pandora user changes his or her permanent residence and fails to update their zip code in his or her Pandora account, the ability to target ads based upon location is nullified," AdAge wrote. "Using iRadio on an iPhone will give iAd the ability to more precisely target ads to users based on location." And better targeting can command higher advertising rates.

Inside Radio looks at "tangled" state of online radio ad sales

Monday, June 3, 2013 - 11:40am

Inside Radio today has an extensive piece on the "tangle" of Internet radio advertising sales.

"Different vendors often touch the same stream and multiple third parties pitch the same ad inventory to buyers," Inside Radio writes. "Increasingly, broadcasters are installing filters and scheduling rules to help untangle the digital ad web for traffic departments and buyers." What's more, companies like TuneIn and AdsWizz themselves will run ads in the streams they aggregate (and those ads could be coming from rep firms like Dial Global or Katz360, which may also be repping the original streams in the first place!). Broadcasters move inventory from vendor to vendor. Webcasters often get less revenue (as more "middle men" are part of the process), and it's harder to make sure listeners aren't getting overloaded by repeated airing of the same ads or campaigns.

"We’ve created a big mess for buyers," Eric Ronning, EVP and chief digital revenue officer at rep firm AdLarge, told the news source. "We’ve unintentionally created a trick welcome mat."

Subscribers can read more at InsideRadio.com.

Pandora increasing spot loads and hiring more AEs

Thursday, May 30, 2013 - 12:45pm

Borrell Associates says its research shows local media companies with ad execs dedicated to digital sales average twice the online revenue of those without specialized AEs, and that hiring digital sales representatives is rising.

Borrell has released its 2013 update on local media digital sales executives, "Assessing Local Digital Sales Forces." You can download a free executive summary of the study here.

Greg Harmon, the study's author, also sees some bold competition from "online pureplay" companies (for example, Pandora or Yelp) who are paying an average starting salary 50% higher than what TV, newspaper, and radio managers offer.

The ad reps, whether working for a pureplay or a traditional media outlet, will likely have plenty to do. Today Strata says its data from a first quarter survey shows 76% of advertisers are "more interested in digital than they were a year ago (up 51% over 2011)," including the "streaming/online radio" segment, for which 54% say they are "more interested in this than last year."

In its summary of the survey, Strata mentioned "streaming or online radio/TV" as an example of a new advertising area into which 47% of respondents say they'll soon expand. Read more from Strata here.

Strata, you'll remember (from RAIN coverage here), is one of the two media buying platforms that has integrated Pandora inventory into their platforms. Pandora CFO Mike Herring called that "a watershed moment" for Internet radio.

He spoke at the Cowen Technology, Media and Telecom Conference, also addressing the webcaster's growing sales force, saying, "every one of [the recent hires] was a top one, two, three seller at their local [terrestrial] station." (He's also quoted as saying these new hires "take somewhat of an initial pay cut coming to Pandora, with the opportunity to be part of something that’s growing," which doesn't necessarily contradict the Borrell finding, as these AEs weren't necessarily dedicated digital sellers at their previous employers.)

And growing it is: Herring says Pandora is increasing the amount of ads it sells and airs, to a maximum of about "3-1/2 units an hour, and they only use :15s and :30s," reports Tom Taylor Now. Read more on Herring's quotes from the Cowen conference from Tom here.

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