• by Tobi Elkin , Staff Writer @tobielkin, August 31, 2016

Pandora’s Sponsored Listening ad program, which launched last year, is an interesting advertising business model. That program allows marketers to sponsor one hour of ad-free music to which listeners opt in by watching up to 15 seconds of a video ad.

While Pandora’s long been associated with audio ads, which remain a staple of its ad inventory, Pandora is going full-force into visual ads. Gatorade and Taco Bell are among the brands that have experimented with Sponsored Listening.

Pandora says that 59% of listeners who continue on past the first 15 seconds of a video will watch a full 30-second video. For a 60-second video, 37% of listeners watch all the way through, according to Pandora’s survey of 208 Sponsored Listening campaigns.

In addition, Pandora is experimenting with muted autoplay video that plays on the side of the app while consumers are listening. It’s testing targeting based on listening preferences. The muted video is interesting for Pandora because pre-roll has a 90% skip rate since it blocks consumers from getting the content they want.

But it’s not just Sponsored Listening that’s getting traction. Pandora also offers programmatic display advertising across the Web and in-app. The company is also working on programmatic audio, according to Heidi Browning, the company's SVP, strategic solutions.

Browning, who’s focused on measurement and attribution, among other things, told RTBlog that programmatic ties into Pandora’s data strategy. Pandora’s working with Millward Brown, Nielsen, and comScore on measurement and on a solution for measuring in-app audience engagement.

“We’re starting to see some of that work come to fruition,” Browning said, for example in measuring brand impact—awareness, favorability, and purchase intent. Also, in the area of location analytics and “whether we’re driving traffic into stores, this is especially important for retail and restaurant advertisers,” Brown said. It also works for measuring the offline impact for advertisers -- that is, actual sales.

Browning notes that Pandora has a large logged-in user base, which makes it a powerful platform for first-party data. “We can harness this first-party data to do matching and measurement,” she  said. Pandora maps the dataset to a third-party data source to look at people who are exposed vs. not exposed to ads. It can look for lifts in sales and other things.

One fun fact: Edison Research found that millennials on Pandora’s platform spend 2.3 times more time listening versus than what they do on Spotify’s. “We have highly engaged users who log an average of 24 hours a month worth of listening in the second quarter,” she said. That’s on all screens, all devices.

Like others in the industry, Browning said “attention” is an important metric. Pandora’s working toward “guaranteed attention through things like sponsored listening and visual ad experiences,” she said. It’s also working harder on personalizing content to benefit listeners and audio storytelling, which is getting a nice assist from the explosion in podcasting.

Pandora said it has 78 million active monthly listeners in the U.S., and about 3.9 million Pandora One subs that pay $4.99 a month for ad-free music.

Browning said Pandora’s focused on its ad-supported model at this point in time, “but we want to offer the opportunity to not listen to ads as well.” The future is likely to bring about more of an on-demand model. When Spotify is mentioned, Browning emphasizes that the Pandora’s audience in the U.S. is much larger than Spotify’s and that Pandora focuses on the addressable audience model:  “we focus on our audience reach.”

Pandora’s largest verticals are auto, retail, consumer package goods, edcuation, healthcare (hospitals and doctors), entertainment, political campaigns, and quick service restaurants. Pharmaceuticals is a target category for growth, Browning said. Certainly over-the-counter drugs and supplements are an easier sell than the heavily regulated prescription drug sector.

Location analytics play an interesting role in Pandora’s business. For example, a campaign for Taco Bell used audio, video ads, and sponsored listening with a guaranteed return on intention. What that means is that listeners could watch a video and then get an hour of uninterrupted listening sponsored by an advertiser. Browning calls this formula, “choice, attention, and reward.” For the Taco Bell effort, sponsored listening on the Web and mobile drove an incremental 15% lift in traffic to the stores, and one in seven customers came back to a store within 10 days. An effort around breakfast, in 2015, helped drive new and repeat business.

In another example, a campaign for the Las Vegas Convention and Visitors Bureau targeting 25- to 54-year-olds and “feeder” markets layered in electronic dance music in casinos. Pandora offered branded radio stations, which address mid-funnel efforts, and audio ads, to see a 6% increase in visitors to Las Vegas. That translated into $110 million in incremental revenue for Las Vegas in the fall of 2015.

Nielsen Catalina measures sales for consumer package goods. A campaign for Kellogg’s PopTarts ran three months and targeted audio and display ads to 13- to 17-year-olds, and it had a branded radio station see a 7% lift in incremental sales. There was a 3 x return on ad spend, meaning that for every dollar spent the advertiser got $3 back.

The bottom line: first-party data must be correlated to offline experiences.

Other innovative plays from Pandora include custom playlists, personalized content, and personalized concerts. For example, Skechers sponsored a custom playlist for runners that offered running tips, and personalized, branded content.