Our Favorite Digital Audio Advertising Solutions: Spotify vs. Pandora
Abby Long is the Senior Managing Editor at PMG.
With music streaming being responsible for more than 50% of all US music industry revenue last year, paid and ad-supported streaming services brought in a total of $3.9 billion, which has caused brands to fall head over heels in love with the potential opportunities associated with digital audio advertising. So who are the big players on the digital audio advertising market? We’ve given you our favorites and explored the marketing capabilities of the world’s largest audio streaming platforms.
According to a study conducted by Spotify and GroupM, it was discovered that Generation Z is 54% more likely to stream on their headphones than the general population. Alongside the growth of headphones and connected devices (smart home speakers, cars, etc.), digital audio advertising gives marketers more ear-time with their target audience and thus allowing the brand to build more intimate, 1:1 connections with their consumer which can increase engagement, brand loyalty and much, much more.
Along with their endless targeting capabilities and ad format options, both Spotify and Pandora make it easy for brands and agencies to utilize their advanced programmatic solutions and bid on display inventory via Private Marketplaces (PMPs) at scale in a brand-safe environment. We may be a bit biased, but we’ve found these programmatic processes for digital audio advertising to be much more cost efficient than negotiating and purchasing with a traditional radio station like previous audio buying experiences were, and we’ve seen a greater ROI for the majority of our brands.
All this to say, we are big fans of Spotify and Pandora but don’t just take our word for it, let’s take a deeper dive into these two platforms.
Valued at an estimated $8.4 billion and with more than 140 million active users, Spotify is a digital music service that gives users access to millions of songs, and brands thousands of opportunities to target and connect with those users through digital audio ad buying. As reported in the New Yorker, “… Spotify is the Netflix of music sites” with Mark Zuckerberg saying, “Daniel (Spotify’s CEO) just saw the opportunities of streaming music before anyone else.”
As noted by comScore, Spotify is the 21st most popular app with close to 33 million unique visitors each month – all searching for their next favorite song or playlist to enjoy. Equally impressive is the fact that an average user streams 148 minutes of music a day through Spotify with the majority coming from mobile devices – making Spotify great for driving brand awareness.
Speaking of awareness, and as a result of its groundbreaking popularity, Spotify lets advertisers leverage their data to help brands reach the right persona through the use of behavioral segments categorized by user interests and shopping behaviors while also taking into account contextually relevant information like listening habits, mindsets and music tastes. In other words, these audience insights let brands deliver their message at the right time to the right people on the right platform.
Along with letting advertisers dynamically serve campaigns to users based on platform (Spotify app platform, device manufacturer, mobile carrier, etc.), Spotify also has the ability to retarget and broadcast sequential messages to users. To do so, Spotify uses its first-party data to help brands re-message users based on their previous engagement or exposure as well as developing sequential brand stories to drive awareness or action.
What’s neat about Spotify is that they have programmatic audio capabilities and prime advertising real estate available for marketers to take advantage of by letting brands not just broadcast audio messages, but create an immersive experience for listeners with creative banner ads, video segments and sponsored playlists to enjoy.
Spotify Branded Advertisement. Source: Spotify for Brands
Access to these audience insights and more is available here.
TL;DR: Spotify targets users with advertisements by using geographical data, age/gender of a user and playlists correlated to a target market.
Because Spotify’s mission is to better understand how our listening habits reflect who we are as people, Spotify,
Uses demographic targeting to confidently reach a brand’s audience across mobile and desktop
Spotify has crafted a whole suite of behavioral segments by analyzing a user’s streaming habits on Spotify alongside their broader interests, lifestyle, and shopping behaviors which is fueled by leading third-party data providers in select markets.
Uses content targeting to reach users with particular habits, mindsets, and tastes that align with a brand’s target persona
By leveraging first-party data to identify user-curated and Spotify-curated playlists aligned with popular activities and moods.
Spotify creates audience segments by identifying users that frequently listen to playlists in each category.
Spotify also refreshes segments daily based on new playlists, new users, and overall streaming activity.
Delivers a brand’s message at the right time and on the right platform
Since people listen to music all day, brands can reach their audiences at the right time through digital audio ads by picking the right time to suit the brand’s message or complement broadcast buys.
Tells stories and re-engages with listeners
Spotify allows brands to re-message users based on previous engagement or exposure across all Spotify platforms.
By doing this, brands can develop longer, sequential brand stories to drive awareness or action.
Pretty neat, right?
Source: Spotify for Brands
Spotify Branded Playlist. Source: Spotify for Brands
Spotify’s ad formats are also very diverse – allowing brands to advertise to users the way they want by spanning across,
Branded Moments (new!)
IAB Standard Display Ads
As can be seen, by its range of format options, a key advantage for using Spotify is its moments-based targeting marketing approach. Because Spotify actively curates playlists for users based on mood, activity, or time of day, a brand can easily target relevant users listening to those playlists. So, for instance, if you’re an activewear brand wanting to start a campaign with Spotify, you could sponsor a Workout Playlist for users to enjoy. In fact, according to Spotify, “mobile music moments like “working out” and “working” have unlocked up to $220 million worth of new ad revenue in the seven markets surveyed.”
Want to see some Spotify success stories? Check them out here.
Pandora’s New Logo Unveiling
Pandora is another excellent digital audio advertising option that boasts an impressive 78 million active listeners each month and has the unique ability to connect with users across an impressive 1,800 devices – from tablets, wearables, and smart TVs – and over 190 car models to date. Pandora has proudly been personalizing the listening experience for over a decade now by developing methods to ensure Pandora partners are engaging with the most relevant audiences for their messages.
What’s so impressive about Pandora is that they pioneered the first music personalization software for streaming services with the Music Genome Project – a group of musicologists who analyze every song for up to 450 distinct musical characteristics. Rather than Spotify’s algorithm performing the analysis, Pandora uses real people to do the work of differentiating audience segments. How cool is that?
Another capability inherent to Pandora is letting advertisers tap into Pandora’s cross-screen insights. Remember how when you register to listen to music with Pandora, your age, gender, zip and email address are needed to open an account? Well since 100% of Pandora users are logged-in while they are listening, Pandora can find and match users with 3rd party data sources along with client 1st party data in a 1:1 deterministic way.
TL;DR: Pandora targets users by geographical information, age/gender, affinity, and device, whether it’s a car radio or through the mobile app.
At Pandora, the mission is to transform the future of music and be the source for personalized music. Learn about how when Pandora plays, brand messaging works in the bullets below.
Reach an audience at scale
With over 78 million people tuning in each month, listeners enjoy Pandora wherever and whenever they like – on over 1,800 connected devices and 190+ car models – for effortless connectivity.
Target people who matter to the brand
The power of Pandora’s 78 million logged-in users powers over 1 billion data points every day.
Beyond engagement, it’s true love
Through the passion point of music, listeners are engaged with Pandora multiple times per hour, creating more than 10 billion stations and more than 70 billion thumb interactions since Pandora’s launch.
A Quality Environment
Pandora serves only one ad at a time, and upon user interaction – meaning that brands get 100% share of attention in a highly viewable, premium environment.
With the Music Genome Project, Pandora has worked hard at pioneering music personalization, a result from 13 years worth of people-powered craftsmanship.
Source: Pandora for Brands
Pandora Brand Ad. Source: Pandora for Brands
Pandora gives advertisers the ability to format their ads in a variety of ways ranging from,
Display Ads for Mobile + Web
Web Skins + Billboards
Coupled with Pandora users streaming an average of 24 hours per month and having over 1,300 affinity segments to take advantage of, brands can easily target the ideal user with their messages on Pandora. Last year, during Pandora’s unveiling of a new logo, Ad Age reported that, according to comScore, “Pandora was eighth in terms of unique visitors for mobile apps, making it one of only two in the Top 10 that aren’t owned by Google or Facebook.”
Since Pandora is programmed into over 190 car models to date (including all of GM’s vehicles), their platform is naturally integrated into the lives of millions of Americans – putting them within easy reach of your brand. Plus, with the opportunity to incorporate display banners that click-to-site, marketers can easily use the Pandora platform to drive brand awareness in a fun, creative way that’s different from the standard display ad real estate people are accustomed to experiencing.
Want to see some Pandora success stories? Check them out here.
From my personal experience with Spotify and Pandora: Since the Spotify and Pandora apps are so user-friendly and make such good use of the space in their designs, the advertisements look native to the app – giving a refreshing experience to the user. So much so that you don’t feel like you’re experiencing an ad.
With Pandora, there’s a low minimum spend threshold which allows marketers to test with a smaller budget – not to mention the unique ability for a brand to purchase a Genre Sponsorship that can position the brand with new artists and music. Another option provided for advertisers by both Pandora and Spotify is the ability to ‘sponsor’ listening time, so users can have 30 minutes of ad-free listening after watching a short video or listening to a short audio message from the sponsor. This neat opportunity is great for a brand’s first dip into the digital audio buying world.
Spotify Sponsored Session Brand Advertisement. Source: Spotify for Brands
The real draw for digital audio advertising is its cost-effective, non-skippable inventory, which is reaching more millennials than traditional radio advertisements. In the end, this gives advertisers the ability to micro-target based on lifestyle and interests, rather than running messages across radio stations in hopes of an ROI. Whether you’re looking to capture listeners during their commute with Pandora or their workout with Spotify, both of these streaming platforms provide incredible targeting opportunities worth taking advantage of. In our opinion, this deeper level of targeting gives advertisers and brands more control, stronger engagement, and better brand alignment; resulting in better campaign performance. And who doesn’t want that?
Stay in touch
Subscribe to our newsletter