revenue

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.

iTunes Radio will broaden iAd offerings to audio and video, so Apple's staffing up

Thursday, September 5, 2013 - 9:00am

Apple is reportedly beefing up its sales force as it expands its iAd mobile advertising network and readies its iTunes Radio webcasting service.

AdAge reports (hat-tip to Tom Taylor, who covers the story today in Tom Taylor now here) Apple posted want ads on its job board for five iAd-related jobs, plus another 35 to LinkedIn in August alone. Apple's job openings include account coordinators, ad design managers, project managers, and engineers to create new rich media ads for iAd. The company is also hiring ad execs with creative experience to work with advertisers and agencies to create better ads.

AdAge's coverage links to an eMarketer report from June projecting iAd U.S. revenue growth from $213 million this year to $376 million in 2014 and $623 million in 2015.

Apple will hold a special media event on Tuesday, reportedly to unveil two new iPhone models. Observers believe the new mobile operating system, iOS 7, will go live a week or so later, and with it, Apple's heralded iTunes Radio Internet radio service.

Read more in AdAge here.

Despite revenue and usage spikes, stock suffers after Pandora narrows Q3 earnings guidance

Friday, August 23, 2013 - 2:25pm

Webcaster Pandora reported record earnings yesterday for its second quarter, $162 million (up 58% from a year ago). Executives say the growth was driven by mobile -- its total mobile revenue went up 92% year-over-year to $116.0 million. Pandora -- says eMarketer -- is now behind only Google and Facebook as the third largest generator of mobile ad revenue. Total ad revenue was $128.5 million, a 44% increase. And local sales quadrupled in 2Q over last year.

Over the last quarter, listeners tuned in for 3.88 billion hours, giving Pandora a 7.08% share of all radio listening in the U.S. The service now has 71.2 million regular users.

"Pandora has quickly become the largest radio station in nearly every major market in America," CFO Mike Herring told analysts on the earnings call.

Positive earnings and usage growth were apparently overshadowed by Pandora's widened second-quarter loss, and the webcaster's narrowed guidance for third-quarter earnings. Pandora stock fell in after-hours trading.

Read Pandora's press release here, and excellent coverage from Tom Taylor Now here.

Spotify experiments with methods to deliver ad messages beyond audio spots

Thursday, August 22, 2013 - 10:40am

Music subscription service Spotify is reportedly offering advertisers the chance to beta test a new Facebook/Twitter-like "follow" feature, which would enable brands to push content like branded playlists to listeners, AdAge reports.

Earlier this year Spotify added a 'follow' feature for artists, labels, and users. For advertisers, the feature could be a way to reach Spotify customers who pay not to hear audio ads. One advertiser who's taken a stab at it is shampoo brand Herbal Essences, which has created a playlist of songs to sing in the shower.

"Spotify is also looking at how it can enhance ad targeting beyond age, gender and geo-location to potentially include interest-level information, giving advertisers the ability to reach people who listen to certain genres or even specific artists," reports AdAge.

Meanwhile, a global music licensing company called Music Dealers has partnered with Spotify and will present what they call "Sonic Identity Workshops" to advertisers. These are to educate marketers on how to incorporate music into a brand's identity.

"Each workshop, facilitated by a panel of industry names, promises to dissect and analyse the individual attributes that make up a brand's sound," according to a press release. "Customer filters and curated playlists will then be created that match the brand’s sonic identity." Read more in AdAge here and MusicWeek here.

Radio's digital revenue grew 16% in the second quarter

Monday, August 19, 2013 - 2:55pm

Digital revenue still doesn't yet account for 5% of U.S. radio broadcasters' revenue. But it was up 16% in the second quarter of 2013, and up 13% in the first half of the year. It was radio's only revenue sector that gained in Q2.

The RAB says spot and "off-air" (events, etc.) radio revenue were flat for the quarter, with network revenue off 4%.

You can see the RAB's report here.

Pandora's ratio of revenue to its share of radio listening means earnings potential, says Billboard

Friday, August 9, 2013 - 1:00pm

Labels and performers critical of Pandora's efforts to lower the royalties it pays often say the webcaster should simply sell more ads and generate more revenue. Billboard says its analysis of Pandora's business model indicates it is, in fact, "well-positioned to turn its massive listening audience into profits."

It's simply a matter of monetizing its audience at the same rate as broadcast radio, according to the analysis.

"Pandora had roughly a 7% share of U.S. radio listening in June," writes Billboard's Glenn Peoples. "A 7% share of the $16 billion radio advertising market is worth $980 million to broadcast radio. Pandora’s revenue during the last four quarters was just $417 million. That implies Pandora’s current market share could generate an additional $563 million."

Morgan Stanley analyst Scott Devitt predicted a 15% share of radio listening for Pandora by 2015, which at its current montetization would amount to half a billion in ad revenue. Billboard reasons that if Pandora squeezed the same revenue out of its inventory as radio, it would be four times that ($2 billion).

So, would Pandora need to load up on ads like so many local broadcasters, with several 6- or 8-minute spot breaks per hour? Wouldn't that substantially affect audience? Or would superior ad-targeting mean Pandora could charge advertisers a substantially higher rate than broadcast radio, requiring fewer spots to generate the same revenue?

That specific question isn't addessed in the analysis, but Peoples does write, "no other platform can deliver both audio and display ads to more than 71 million monthly active users while allowing advertisers to target by demographic characteristic and location."

Read the Billboard analysis here.

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