Brief:

• Pandora is highlighting ad-supported services that connect brands with audiences as part of an app update. Users can access the platform's Premium tier, which includes full albums, premium playlists and new music, after watching a 15-second video instead of paying a monthly subscription fee. Heineken is among the brands that are running video spots in Pandora's new app, according to an announcement shared with Mobile Marketer.
• Pandora also launched a nationwide brand campaign that shows how "life is better with sound on." The campaign will feature a livestreamed concert by singer Halsey on Dec. 10 that transforms New York's Times Square into a "silent disco" where people can dance while listening to headphones.
• The campaign includes TV spots, digital ads and out-of-home (OOH) elements such as interactive street murals in several cities. Those murals will link to individual playlists curated by the mural artists for each city. Immersive experiences, including a concert hosted by Pandora and parent company SiriusXM, are scheduled for Super Bowl weekend. Pandora's in-house agency is overseeing the campaign, with media buying support from Digitas.

Insight:

Pandora's new ad formats like non-skippable 15-second videos should help to broaden its customer base among major brands, fueling more ad growth. Pandora's 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 its gross profit by 19% to $169 million, per quarterly results from 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 company has 6.3 million paid subscribers to its ad-free tier.

Pandora's multichannel campaign aims to highlight its new features as the company faces stronger competition from Apple Music, Spotify, Amazon Prime Music and YouTube Music. The initiative includes significant OOH activations, such as interactive murals, to generate publicity and cut through ad clutter. OOH not only urges consumers to visit physical locations, but also can trigger measurable responses through mobile devices. In addition, the "silent disco" with Halsey could help the app reach millennial consumers that have embraced the trend and are familiar with the musical artist.

The app campaign touts new music discovery features, which were first introduced in October and are now available to all users. It added a "For You" music feed of personalized recommendations that updates in real time, and "Pandora Modes," which previously were only available on its desktop version, to tweak the listening experience of favorite stations.

"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 it also offers radio-like music feeds and podcasts. Pandora historically had provided a "lean back" listening experience that let users listen to curated music feeds among a variety of genres and moods. It introduced some on-demand services in 2017, but many Pandora listeners are still unaware that they can search for and play individual songs on-demand, Chris Phillips, the head of technology at Pandora's parent company, SiriusXM, told Variety.

Pandora for years has been the most popular streaming audio platform in the U.S., the only country where it operates after shutting down service in Australia and New Zealand two years ago. 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 forecast in March. The researcher 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. Pandora's latest brand campaign and redesigned app may help the company to reverse or slow those trends.