(Digital) The Pandora Myth

VP/GM Peter Burton of member station KSWD has written the definitive “battle plan” all of us must have if we are to defend Radio and really challenge the many “Pandora myths”. As published in Radio Ink, please read this compelling pushback to Pandora.

Radio Ink
(Digital) The Pandora Myth

Imagine telling a story about anything, right or wrong, and never being questioned. Imagine telling a media buyer that your TSL is three hours when it’s really one, without the buyer contesting your claim. Imagine telling an advertiser that you can geotarget ads to listeners, but you really can’t. Imagine assuring media buyers that you can target ads by age and gender when your listener data is unverifiable. Imagine going unchallenged as you “convert” your radio station AQH ratings into cume ratings. Pretty far-fetched, right?

Not really: Pandora has been doing all that, and getting away with it, for years now. It has even gone as far as converting AAS (Average Active Sessions) to AQH, and media buyers are buying it — even though Nielsen has challenged Pandora’s metrics and motives — because no one in radio is asking tough questions. Pandora has been successful in stealing radio ad dollars because radio has failed to contest its claims.

Once Pandora realized that it couldn’t make a subscription-based model work (because no one would pay for the service), its leadership decided to sell ads. They hired strong radio salespeople, with radio buying relationships, and sculpted their presentations to take radio dollars. Every day Pandora takes money from radio, and we, as an industry, ignore it because we don’t want to make the effort to learn how to contest their claims.

At its current pace, Pandora will soon annually bill $1 billion. Guess where the majority of that revenue will come from? You got it: out of your pocket. Got your attention yet?

While Pandora may be a good consumer product, it is not a good ad vehicle. Why? Pandora has a flawed registration process. Its data is unverifiable, resulting in inaccurate targeting by demographic, gender, and location. Consumers today are very concerned about privacy. Because of the risk of identity theft, they tend to hide or withhold information. A recent study by a leading national online ad-delivery platform concluded that 92 percent of people withhold information when asked about personal data, including names, birthdays, phone numbers, ZIP codes, and e-mail addresses. Half of them actually provide a false identity. Any claim by Pandora that its listener registration data is accurate is inherently suspect.

Additionally, Pandora tells media buyers that it can target mobile ads by ZIP code. This is important, because 80 percent of Pandora’s listening comes from mobile devices. If it could deliver geotargeted ads to mobile listeners, based on where those listeners were at the time of delivery, that would be valuable indeed. It can’t, but media buyers are increasingly buying Pandora’s story. The truth is that Pandora doesn’t target by IP address, GPS data, or information received from a cell tower. Instead, Pandora relies on the information input by the listener during the registration process, making momentary location targeting impossible. It makes a good story, though.

Beyond inaccurate information on demo, gender, and location, Pandora has no idea how long its listeners are listening. Pandora prompts (“Are you still listening?”) only once an hour on the desktop (desktop accounts for only 20 percent of their listening), and never on mobile devices (again, 80 percent of listening). After more than 160 hours on Android devices and iPhones*, our tests never received a prompt. Neither the hours of listening that Pandora submits to Wall Street nor the gross impressions it is selling to media buyers are verified.

When talking to your buyers and clients, question Pandora’s registration process, ability to geotarget, and listening hours (the prompting issue). These three areas peel the onion back and expose Pandora as an ad vehicle. In fact, question everything Pandora claims.

One final thing: A Pandora executive stated at the RAIN Summit 2014 in Las Vegas, “Clients are realizing that Pandora often plays the same commercial back-to-back, and in the same break, and one right after the other through one or two or more hours of play.” He admitted that Pandora has a persistent problem with commercial rotation caps. Imagine if a radio station did that.

Sales Managers and AEs: Learn everything you can about your new competitor, then stand up and fight!

*Source: On tests for prompting, KSWD (The Sound)/Los Angeles’ IT department performed tests quarterly on both iPhone and Android devices averaging eight hours (per device) per test. These tests were performed each quarter dating back to October 2011 (10 quarters).

Peter Burton is VP/GM of Bonneville’s KSWD in Los Angeles and can be reached at 323.692.5401 or pburton@thesoundla.com

Southern California Broadcasters Association White Paper Report

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