Music streaming is barely old enough to remember when Napster launched more than two decades ago.
That year, 1999, Pandora gave birth to the Music Genome Project, famously harnessing Big Data to bring free, personalized listening experiences at a scale never seen before. Spotify wouldn’t come to be for seven more years.
It’s late in 2019 and the reigning Internet radio king is heeding to a new generation of music services, namely Spotify, which have made on-demand personalization the standard.
As the year closes, Pandora took steps to realign itself with an ad campaign aimed at changing consumer perception. It also wants to steer attention to its redesigned mobile app that elevates Pandora’s enhanced on-demand personalization, a user experience Spotify has already fastidiously cornered.
Three years ago, Pandora announced its foray into on-demand music streaming through a similarly stout ad campaign.
Now three years on, calling it its most ambitious ever, Pandora’s latest ad campaign wants to make the impression, once again, that it can serve up the perfect song at the perfect moment.
Pandora’s VP of brand marketing Brad Minor says the effort will address a perceptual problem. What people think Pandora does and what it actually can do isn’t lining up.
“People want to be able to listen to what they want when they want, with that on-demand control,” says Minor. “We’ve had that. The challenge is our listeners don’t necessarily know we have that now, and that’s our fault. We need to make sure it’s telling you how Pandora has updated since you first came to know and love us some 15 years ago.”
Pandora’s new 15-second video ads help the service broaden its customer base, fueling more ad growth. Ad revenue rose 8% to a record $315 million in Q3 from a year earlier, while subscription revenue climbed 5% to $132 million, helping to boost Pandora’s gross profit by 19% to $169 million, per quarterly results from parent company SiriusXM.
Despite those gains, Pandora’s user base fell 8.3% to 63.1 million, while listening hours declined 7.5% to 3.32 billion for the comparable periods.
The newest ad campaign touts new music discovery features, first introduced in October and now available to all users. It added a “For You” music feed of personalized recommendations that updates in real time, and “Pandora Modes,” which were previously only available on its desktop version.
“Already, we’ve seen twice as much engagement with the new ‘For You’ discovery feed than the traditional Browse feature it replaced, with listeners enjoying access to more of Pandora’s vast catalog of on-demand content than ever before,” Denise Karkos, CMO of SiriusXM and Pandora, said in a statement.
The redesign makes Pandora function more like Spotify, whose key distinction is on-demand song tracks and customizable playlists, although Pandora continues to offer radio-like music feeds and podcasts.
While Pandora introduced some on-demand services in 2017, many listeners are still unaware they can search for and play individual songs on-demand, said Chris Phillips, the head of technology at Pandora’s parent company, SiriusXM.
Pandora for years has been the most popular streaming audio platform in the U.S., the only country where it operates. Its biggest competitor in the U.S. is Spotify, which is expected to become the most popular audio platform in the next few years, eMarketer forecasted in March.
eMarketer expected Spotify’s U.S. audience to grow to 73.7 million by 2021 from 65.3 million this year, while Pandora will decline to 72.2 million from 72.4 million for the comparable periods.