Pandora Simplifies Open Music Submission as It Launches Ad-Powered Growth

pandora-landscapeUndeterred by its falling stock following its lower-than-expected financial outlook, streaming radio platform Pandora is giving a boost to its discovery experience with a streamlined open music submission process. This service follows the company’s earnings report and the announcement of its ad-powered market growth strategy – more specifically, mobile-ad-heavy strategy.   

Market Growth
Pandora’s personalized stations are designed as much to introduce users to new music as they are to let them have what they are already familiar with. In a post, the music-streaming platform says that 44 percent of its collections are made up of independent artists and labels. Thus, the simplified submission process at is designed to give another big push to the discovery experience.

User Engagement
Another smart aspect of this open submission is the subsequent increase in listener engagement via rating crowdsourcing, as Pandora lets users provide feedback on the titles it runs. In January, it clocked in 73.4 million active users.

Strong Earnings, Weak Forecasts
Turning to the outlook for the music platform’s financial health, it is announcing first-quarter and full-year earnings guidance below Wall Street forecasts for 2014. This has been sending the stock down, but the earnings news for the fourth quarter and full year 2013 is rather upbeat from a marketer’s perspective.

Ad-Driven Growth: Mobile Is the Word
Indeed, advertising accounted for $162 million of Pandora’s fourth-quarter revenue, compared to $116.1 million the same period a year ago. Digital, and more specifically mobile, advertising are the biggest chunks. This translates into an overall fourth-quarter revenue increase of 52 percent.

“A key to our growth in mobile monetization has been partly due to the fact that our advertisers think in ‘platform-agnostic’ terms with their digital ad dollars instead of allocating budgets in silos. In short, with approximately 80 percent of our usage now coming from mobile, advertising dollars should follow where consumers are spending their time — and that is on mobile. We see the power of audio as a native solution to both Pandora and mobility,” a representative tells ClickZ.

pandora-mobile Pandora’s mobile interface, with Facebook social integration both for content discovery and ad optimization; ad serving plus rating for discovery.

Marketing Spend Boost: More Mobile
More exciting is Pandora’s user acquisition strategy going forward, which heavily relies on marketing investments and hires.

“We’re not in a mode where you’re looking to cut costs, but to invest aggressively in this opportunity,” Mike Herring, chief financial officer, says. “It’s not a time to try and optimize profitability. We think we have a huge market opportunity in front of us.”

And mobile is a key part of the strategy going forward: “Our strategy in monetizing mobile is to help our advertisers understand that mobile is the new digital. We believe in a mobility mindset, which is taking on a consumer-centric perspective rather than a device-centric one. The lines between desktop and mobile/tablet continue to blur and we now live in a world of connected homes, cars, and lives where content is accessed across multiple devices 24 hours a day,” Pandora’s representative says.

Cars and Connected Cars Ads
During the earnings call, president Brian McAndrews also highlighted the opportunity of car advertising as an avenue the brand has not been fully leveraging so far. Connected cars, however, have been part of its strategy for a while already (since 2012, more precisely) and today the music-streaming platform intends to boost its in-car audience. It’s partnering not only with major car makers but also with car audio systems manufacturers.

Native, Mobile Ads
Heidi Browning, Pandora’s senior vice president of sales marketing, tells ClickZ: “Looking at the year ahead, we’re extremely bullish on the opportunity for mobile. We have a deep understanding of the connected consumer given most of our listening, done by our more than 70 million active users each month, is on a mobile device. Our advertisers have a great opportunity to leverage mobile audio for storytelling and engagement.”

So why the dip in share price? Maybe the weaker-than-expected guidance is worrying investors because of the current moving landscape of the music-streaming industry? After all, the recent launch of Beats, with a strong predictive affinity algorithm, can’t be ignored.

There’s one area in which Pandora is way ahead of the game, though: it is already available as a service with connected devices in the home, including various audio and video players, TV and home entertainment systems, and more surprisingly, appliances (via an alliance with Samsung).

Which service will come out on top, and how? What’s your bet? 

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