Streaming Audio Pioneer Pandora Targets Small Business Advertisers With New Tools for Reaching Listeners

As Americans are spending more time at home and engaging with new forms of media, particularly podcasts and other streaming audio, businesses both large and small are looking for new ways to connect with them.

Pandora, a pioneer in internet-delivered music, sees small to medium business advertisers as an important part of its growth strategy. It is rolling out new programs designed to help businesses adapt their ad messages quickly and easily in a rapidly changing world.

The competition for streaming audio listeners and ad revenues, particularly in the podcast business, is more intense than ever, with Spotify, Amazon, Apple and SiriusXM, which acquired Pandora in early 2019, all investing heavily in online music, podcasts and new technologies.

“With the SiriusXM merger, content that was only available to large national advertisers is now becoming available to local advertisers [via Pandora],” Leon Van Gelder, Pandora’s vice president of small and medium business, local and inside sales advertising, told CO—.

Pandora’s head start in local advertising and the new content and clout gained from joining with SiriusXM could give it an edge against the competition. SiriusXM and Pandora have a combined reach of more than 100 million monthly users, according to SiriusXM.

Pandora also has an ad partnership with SoundCloud, a platform that lets users share original music they’ve created, which gives Pandora advertisers access to SoundCloud’s younger audience.

Helping small businesses navigate advertising challenges amid COVID-19

Van Gelder has been working with local and small business advertisers for the past decade, but now, the challenges those businesses face are tougher than ever, he said.

“In light of everything going on with COVID-19, it’s become even more important for the small and medium advertiser to be much more careful about the advertising they do,” he said.

“They were very cost-sensitive before and now they’re even more so, because every dollar they spend they need to make sure they’re getting some ROI [return on investment] on it,” said Van Gelder.

Reaching the right person at the right time

The pandemic caused many small businesses to cancel or suspend their ads. To support them as they reopened and to encourage them to resume advertising, Pandora offered pricing incentives, and partnered with American Express to provide research, marketing and creative services.

Because of the pandemic, it has become more important for local stores and restaurants to advertise about their safety precautions, reopening plans or new operating hours, and they have turned to Pandora to get those messages out, Van Gelder said.

Streaming audio ads have the advantage of being easy to change on short notice, an important asset at a time when reopening plans can shift overnight, he said.

For the past year, Pandora has been offering a low-cost option for small businesses called AudioGo that allows them to purchase geographically targeted ads for as little as $250 a month.

Pandora also has been launching new programs that leverage its marketing data and customer analytics to help advertisers create tonally appropriate ad campaigns during uncertain times.

In addition, it is exploring other partnerships that would expand the reach of its advertisers to additional, non-Pandora audio platforms.

Pandora, Van Gelder said, offers local advertisers the ability to “reach the right person, in the right place, at the right time, at scale,” whether they’re listening to music, sports, or a podcast.

While advertisers can request specific content, most small to medium businesses buy what Pandora calls its “audio everywhere” product, Van Gelder said.

“What’s important to a small or medium advertiser is not to try to understand what the consumer likes from a listening standpoint,” he said. “You should be agnostic as to what their personal listening habits are. It doesn’t matter if that person’s listening to Frank Sinatra, a podcast, comedy, hip hop – if they’re the age, gender, geography of your potential customer, you want to reach them.”

An advantage of streaming audio platforms like Pandora, Van Gelder said, is that businesses can target a particular type of customer, for example, males ages 25 to 54, and a geographic area, for their ads. Pandora knows to send the ad to those listeners no matter what they were listening to on the platform, because listeners share their age, gender and zip code when they register for Pandora.

“I always use myself as an example,” Van Gelder said, “because I’m a white male 25 to 54 who lives in Westchester County, N.Y. If you were buying traditional radio to try to reach me, you’d buy sports or you’d buy rock or some genre like that. But I listen to more hip-hop than I do any of those other formats. So you’d be missing me.”

Risks of being ‘audio agnostic’

The COVID-19 pandemic has highlighted the need for small businesses to find new ways to reach customers, Tricia Farwell, associate professor of advertising and public relations at the School of Journalism and Strategic Media at Middle Tennessee State University, told CO—.

“Local businesses need to think about where their audience is regarding their media consumption, and reach them on those platforms,” she said. “Traditional media may not be where their consumers are, especially if the business is trying to reach a younger audience.”

But “agnostic” audio streaming campaigns can pose risks for small business if ads land on podcasts or music programs that aren’t an ideal fit for the business, she said.

Local businesses could be better off choosing to advertise on specific podcasts or shows that are aligned with their customers’ interests, rather than using demographic or geographic criteria alone.

“Businesses need to think about who their consumer is and look more into what makes those consumers “tick” and what would drive them to a purchase,” she said.

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