Back in the day, media buyers occasionally encountered radio stations too popular to overlook. You couldn’t “buy around” these local favorites, because you’d miss out on listeners. More recently, there are fewer of these dominant stations due in part to large companies like Clear Channel leveling the playing field among stations. With well-researched and planned programming, most stations enjoy similar followings. So there aren’t many must-buy radio stations anymore.

Except for one: Internet radio giant Pandora.

Mobile drives listening habits.

In the age of smartphones and web-connected cars, Internet radio has gained a major following. In 2013, 45% of people 12 years old and up listened to Internet radio each month. It’s part of a long evolution of a medium that has always favored mobility. Transistor radios replaced floor-standing units. Car radios transformed the industry, too. Today, the mobility is again fueling change. Internet radio was once the realm of desktop computers. Today, it travels everywhere with us.

And that means millions more hours spent listening.

The Internet radio audience continues to grow

In this fast-growing category, Pandora is king. It now accounts for 77% of all Internet radio listening and almost 9% of all radio listening—broadcast included. In fact, it’s the No. 1 radio station in 14 out of the top 15 U.S. markets. Hard to buy around, indeed.

Share of Internet radio listening

Pandora is number 1 in 14 of the top 15 local markets

Smart Choice. Smart Radio.

If you haven’t used Pandora yourself, you might be wondering what’s driving its across-the-board popularity. The station offers extreme personalization. Listeners can give instant feedback on programming by tapping a thumbs up or thumbs down—a thumbs down will advance the listener to a new song. So Pandora gets smarter as it gets to know you over time.

It’s also pretty talented at predicting what you’ll like. Pandora categorizes songs on up to 400 individual attributes and uses an algorithm to make educated guesses about music that suits your groove.

Listeners love it. So do media buyers. Here’s why.

  • Pandora is a direct 1:1 feed, so it knows you’re actually listening. Broadcast radio listenership is based on Arbitron ratings—a projection of total listening based on a smaller sample size. The accuracy of ratings is debatable in markets where people report their listening habits via diary.
  • The service lets advertisers target based on hundreds of criteria. From gender, precise age, and zip code to much more specific traits. Parent. Pet owners. Small businesses. Pandora listeners are registered users, and the station also collects third-party data that helps distinguish each individual. Broadcast radio requires advertisers to buy exposure to a station’s full listenership, which is less targeted.
  • Listeners are less likely to “tune out” during commercials. The station runs less than two minutes of commercial time per hour, compared to up to 10 minutes for most broadcast stations.
  • Pandora is easy to include as part of a broadcast radio schedule. It uses the same measures as broadcast radio—ratings, gross rating points (GRP), and cost-per-point (CPP).  And Pandora ratings are reported for every radio market in the country.
  • Advertisers receive value-added banner ads on both desktop and mobile. Pandora recognizes that their audience is doing more listening than looking with their service, they don’t charge for banner advertising. (Which answers the question, “Does Pandora belong on my radio plan or my online media plan?”)
  • They’ll match or beat the CPPs you pay for broadcast. Enough said.
But wait a minute. Is broadcast radio dead?

Clearly, we dig Pandora. It offers a sweet combination of listening trends, targeting capabilities, commercial environment, and affordable cost. So you might be wondering if broadcast radio should even be part of the buy.

Yes. Absolutely.

  1. Broadcast is local. People want to know what’s going on where they live. They frequently turn to local stations for news, weather, and traffic. Pandora offers none of these things. The only thing local that runs on Pandora are the ads.
  2. Broadcast has personalities. And those folks have followings. Listeners may love Pandora’s features, but sometimes people want to listen to something besides music. Radio personalities offer entertainment and information that Pandora doesn’t.
  3. Broadcast offers brand integration and promotions. Most broadcast radio content is created live and locally.  That means advertisers can do way more than advertise adjacent to local content—they can be a part of it. Broadcast offers guest interviews, sponsored in-program segments and on-air contests/giveaways enrich the messages advertisers can use to promote themselves.
The bottom line

In an increasingly popular medium of Internet radio, Pandora can’t be beat. It’s a major player even when you look at the full spectrum of radio listenership that includes broadcast. Pandora isn’t going to replace traditional radio anytime soon. But with its enormous reach, there’s no buying around it.

Author
Kelly Kilpatrick
Kelly Kilpatrick

Associate Media Director

kkilpatrick@butlertill.com
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