Pandora Shares Strategy for Introducing Video Ads

As Facebook continues to wrestle with its plans to launch a video advertising product, it’s likely studying what other companies have done to appease marketers and users. Of course, Facebook’s unparalleled audience makes its eventual (and reportedly delayed) leap into video ads all the more complicated. Venturing into video ads for the first time requires deliberation and logical steps that can present the new ad format to users in as natural a way as possible. Any massive alienation of users would likely do more harm than good.

One company that could provide some perspective and actual results for Facebook to follow is Pandora. Two years after introducing video ads to its primarily audio-centric platform, Pandora believes it has found the right balance between user experience and brand objectives. And no video ad product would be complete today without an eye toward mobile and cross-platform distribution.

“We saw that consumer shift happening very early on and noticed that consumers are making a choice to consume content through their mobile devices,” Heidi Browning, SVP of strategic solutions at Pandora, tells ClickZ.

“When we think about our audience at scale and our ability to target, we thought about interesting ways to put advertising in an unobtrusive way in front of our listeners,” she says. “So our whole strategy behind it was let’s deliver it in an unexpected place, but let’s deliver it at a natural break in the user experience. So our video ads are auto-play video ads that are only served upon engagement when someone either skips a song or changes a station, and then we frequency cap that as well.”

Although it is offered as a cross-platform media buy, the delivery of Pandora’s Video Everywhere ad product tends to “favor mobile because of the consumption behavior and habits” on the platform, adds Browning.

“We can say definitively that our auto-play video on Pandora is an effective driver throughout the entire consideration funnel from ad awareness through to brand consideration and purchase intent,” she says. “Our completion rates are very high and are well above the industry standard.”

Pandora’s video ads are non-skippable and typically run for 15 seconds, although it will accept 30-second spots that users can skip through after 15 seconds. “The majority of people run the 15 seconds and I think there’s that trend out there in the marketplace that shorter is just as effective if not more effective than longer video ad formats,” Browning says.

“We basically step back and take a look at what the advertiser objectives are and talk about where we think the greatest opportunity for impact is,” she adds. “Our business model is really based around CPM (cost per thousand impression) advertising, as if you were to buy traditional video on TV so we really focus on the quality of the audience and communicate the effectiveness of the experience from the delivery standpoint as well as a brand-impact study.”

When Pandora brought its cross-platform video ad product to the iPad earlier this summer, USA Network, Target, BMW, and Taco Bell all came on board with new campaigns. Cheryl Gresham, director of media and brand partnerships at Taco Bell, says the fast-food chain jumped at the opportunity because of the “affinity” its customers already have with Pandora and the success it’s had with previous audio campaigns on the platform.

Taco Bell extended an existing campaign to Pandora with a video entitled “Believe Your Eyes” that features a 180-view of the shiny, cheesy, crispy Cantina Double Steak Quesadilla. “Believe your eyes. It’s that good,” reads the ad.

“When the video runs it takes over the entire screen instead of just running in a small box. So we appreciated that fact as well that it only ran when the users were actually engaged,” says Gresham. “We really were looking at it as a test and learn within Pandora,” she adds, noting that most people still primarily think of Pandora as an audio platform.

Video is a natural extension of Pandora’s native audio ad format because there is sound with video, says Browning. “Audio is our primary delivery mechanism, so we think that will continue to be the foundational native advertising experience for our audience. I think there’s a huge opportunity to grow the video market, but there’s some challenges in the industry that need to be addressed,” she continues. Advertisers and agencies tell Pandora they want simplicity, compliance, measurement, and tracking services that are not yet broadly available on mobile.

“Our advice is let’s not let that technology hinder your ability to reach the audience where they’re spending the most time,” says Browning.