Questions for Pandora’s Cheryl Lucanegro, SVP Ad Sales

cherylpandora.jpgDisplay ad buyers have a conflicted relationship with online radio. On the surface streaming music seems an ideal way to reach large audiences while they’re listening to their favorite music. But you have to wonder, are the people really watching?

They are in the case of at least one player. Pandora, the popular personalized music platform, invites its users to rate songs, and delivers new music based on those ratings. The result, according to sales chief Cheryl Lucanegro, is an engaged listener who visits Pandora’s graphical interface — and therefore sees the ads — an average of six to seven times an hour.

Pandora has played host to a revolving door of major advertisers, including top automakers VW and BMW, CPG giant P&G, and tech brands like HP. It’s even been tapped by political campaigns. In November, the Obama team delivered geo- and age-targeted ads to Pandora users.

Pandora is not strictly a Web product. It can be integrated with home streaming devices, and has distribution relationships with Sprint and AT&T. Its latest platform evolution is an iPhone application, which is among the most popular available through the iTunes App store. It marked its two millionth install last week, only five months after its launch.

Lucanegro, whose background includes roles at The Industry Standard and Salon.com, took some time recently to talk with ClickZ about Pandora’s audience and ad offerings.

Q. How long have you been with Pandora?

A. I’ve been here a little over three years. I came here to launch an advertising model. The product existed in a subscriber form then. It also existed in kiosks at Best Buy and Tower Records.

I came on board, started building the ad model and at the same time a sales team that could work with the top customers. We wanted brands that wanted to do something innovative and unusual.

We now have five offices around the country. We have close to 15 people actively selling in markets like New York, Detroit, Chicago, L.A. and Oakland, where we’re based.

Q. How has Pandora’s product and its audience changed over time?

A. It’s gotten bigger. Pandora has grown from a couple hundred thousand people that registered to 20 million today. About 1.5 million come on a daily basis. On iPhone they’re spending an average 90 minutes listening. On the Web they’re spending anywhere from two to three hours listening at their desk or at home.

A. Advertisers are skeptical of display ads in streaming radio environments, since people may not see the ads. How do you deal with that?

A. Particularly if you’re on the Web, people might walk away for a few minutes or longer. We only refresh when someone interacts, so it’s a guaranteed impression. People who are on Pandora are actively engaged. On average they’re interacting…six to seven times during the hour.

Q. What kind of advertisers are you courting?

A. Pandora users are the kind of people that share music with others. We [target] advertisers that are looking to reach that type of market.

We’ve done very well with the auto companies. We’ve done really well with a lot of consumer electronics products. HP is one of our biggest advertisers, as is Microsoft. Quick serve restaurants and consumer packaged goods are also big categories.

PandoraNikeiPhone.jpgQ. How did the iPhone app come about?

A. Part of our strategy is to be anywhere and everywhere you’re listening to music. We’re on a lot of devices in the home… products where you can stream music in the house. We’ve been on phones with Sprint and AT&T.

When Apple opened the app store, it seemed a perfect place to allow users to have this music experience.

Q. Where do ads fit into the app experience?

A. We launched in the iPhone store on July 12, but didn’t start serving ads until September 22. If you’ve seen Pandora, you have a song tile. We have an overlay ad that appears at the bottom of the song tile. If you click on it your music keeps playing. You can experience the brand, shop, [and] the ads are clickable to any URL. The best part is you’re not leaving the app.

We also have a click-to-call option, so you connect directly to the advertiser. It’s something that I think would be very relevant for advertisers who want a specific direct response.

Q. Have you had iPhone-only advertisers?

A. Kraft has run a number of campaigns with us, but they have specific ad programs [for the iPhone]. Kraft has an iPhone app. They wanted to tell iPhone users about it. Target used Pandora to promote a Christina Aguilera iTunes download and a new CD she had just come out with.

Q. How is the audience for the app different?

A. We did a survey two months ago when we first launched the product. Initially it was a little bit older, more affluent, and predominantly male.

What we’re finding now is it’s evening out. The age is coming down just a tad. It’s still predominantly male, but more females are starting to use it.

[And] because of our targeting capability you can reach an 18-year-old male with a [Toyota] Scion ad in San Francisco listening to Hip Hop. Alternatively, you can [target] a 55-year-old in Chicago listening to old-time rock and roll.

Q. At the risk of fawning, many Pandora ads are more visually striking than the average display unit. How do you stand out in the age of banner blindness?

A. We use really stunning creative. There’s a typical IAB standard ad unit built in there. The thing is we take the assets they’re using in their ad and we’re building a skin around it. They own about 50 percent of the screen space on the Web.

There are so many places you can advertise now, and so many ways you can get your message out. We decided to allow them to do some really creative things, and it works.

We have a really good repeat rate with advertisers. It’s close to 80 percent. Most publishers have a pretty cluttered site. Not only do they have diverse content, but you have 50 things you can click on. We work very hard to deliver a [great] experience for both the advertiser and the user.

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