Dive Brief:

• Music-streaming service Pandora today announced in a press release that it will offer ad-supported users access to its on-demand, subscription-based listening platform if they engage video advertisements. When listeners search for their favorite music, they'll be given the option to view a 15-second video ad that lets them unlock a free Pandora Premium session.
• Pandora Premium, which launched earlier this year, combines personalized radio with the ability to search for any song, album or playlist tailored to a user's preferences. Ad-supported listeners can access personalized autoplay and uninterrupted mobile music streaming.
• The feature enhances Pandora's Video Plus, a cost-per-completed view advertising product that launched in September with brand partners like T-Mobile. Early tests of the expansion found that two out of three listeners accepted the Pandora Premium reward, and about 90% who opted into the video watched for at least 15 seconds, according to Pandora. All brands that have or will purchase Video Plus units have access to the feature, a spokesperson told Marketing Dive. 

Dive Insight:

Pandora's new video product could bolster brand engagement while also delivering an appealing proposition to users who want a taste of the platform's ad-free listening experience. This type of "value exchange," where time and attention unlocks access to premium content, is preferred by 54% of U.S. internet users over purely ad-supported models, according to Nielsen Media Labs data cited by Pandora in a blog post. For Pandora, it could potentially drive more interest and sign-ups toward its paid service. 

This kind of hybrid approach might help Pandora stand out in what's become a tightly competitive online music streaming space, with other players like Spotify and Apple Music. By combining video rewards-based advertising and on-demand content, Pandora is providing marketers with the opportunity to deliver their brand messages to consumers when they choose to receive them. Accompanying its announcement of ad-supported premium content, Pandora provided data showing that users ages 20 to 49 were 67% more likely to prefer mobile reward video ads over other ad types such as mandatory video ads.

Interactive video ads have been shown to increase a consumer's time spent with a marketing message by 47%, according to an October study by Magna, IPG Media's media strategy group. The firm found brands can triple their consumer engagement with 15-second ads when consumers have the option to interact with them. The sheer option makes ads 32% more memorable, even if viewers don't click on them.

Rewards-based ads also entice users to make a purchase. When users were asked to interact with an ad, video or survey in exchange for a reward within an app, they were 4.5x more likely to make an in-app purchase, a study by Tapjoy, which connects mobile advertisers with developers, found.