One of the first lessons you learn in radio is that there is a finite number of advertising avails to pay the bills. Over the years, the spot load grew and grew, especially in the ’90s when the smell of consolidation was in the air. In recent years, many broadcasters have ratcheted their commercials down in order to be more competitive with Internet and digital competitors.
And in the process, the search for advertising and sponsorship opportunities has been amped up. Whether it’s events, podcasts, mobile apps, or streams, many broadcasters have mined new revenue outlets, sometimes with great success.
Now Pandora finds itself in the same predicament. Except for them, commercial inventories have to remain low because that’s a key factor in their value proposition. And because necessity is the mother of invention, Pandora has now started offering sponsorship packages for song skips and replays on their most popular channels this time of year – yes, Christmas music.
In a recent AdWeek story, Lauren Johnson reports this new venture has already won Pandora the eBay account. It all begins later this week, and the bet is that extended listening to holiday music will justify the advertising expense with impressive metrics that result in increased eBay visits, online bidding, and holiday purchases.
Corporate spokespeople and marketers from both Pandora and eBay are effusive about this program. The online auction site’s campaign is called “The Gift They’re Waiting for is Waiting on eBay,” and it highlights a dozen types of friends, family members, and co-workers that consumers find themselves shopping for.
CMO Suzy Deering notes “the people who tune into Pandora’s Christmas Traditional station represents the very audience our campaign targets, which is why this partnership makes so much sense.”
If Pandora listeners sit through a :15 eBay commercial like the one above, the platform allows them to skip and replay songs. But at what point do these “sponsored skips” lead to a disappointing user experience.
Our Techsurveys continue to show that Pandora fans have become especially sensitive to commercials over the past few years as the pure-play continues to be under pressure to generate revenue:
While limited song skips rises to the top of the negative list among Pandora users who say they’ve been listening less during the previous year, commercials continues to be a common consumer complaint.
While every media brand is under pressure to expand the revenue pie by creatively finding ways to sponsor everything, at what point does commerce triumph over the user experience, leading to dissatisfaction and less usage? This is especially the case around Christmas time as radio stations that commit to the holiday music format need to find novel ways to monetize it during the handful of weeks where the consumer mindset shifts to mistletoe, egg nog, and decking the halls.
Is Pandora’s eBay campaign a clever and effective way to integrate a major advertiser into the fabric of the pure-play’s holiday music extravaganza?
Or is it a blatant attempt to cash in on Christmas usage by finding a new way to sponsor pretty much everything that accompanies listening to Pandora?
You can bet we’ll be tracking Pandora’s “Ho, ho, ho” quotient versus the “Bah, humbug” factor in our upcoming Techsurvey13.
To learn more about Techsurvey13, click here.
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I still think that Pandora (and Spotify and all of the streaming services) is that the royalty costs are so high that they can’t possibly make money. They either have to charge more for ads than advertisers and current media metrics will allow or run more of them than listeners will sit through.
I can’t blame them for looking for creative ways to add revenue without just adding units, but I share your skepticism regarding its success chances.
At some point, someone will have to address the lack of a business model for streamed music. I the meantime, we’ll have to weigh a 15 second ebay spot against all of “Grandma Got Run Over By A Reindeer”.
Clearly, Bob, the economic reality of the streaming model is hitting hard. And you can sense that with programs like the one Pandora has rolled out for eBay. (You can just imagine a program director arguing with a sales manager about why we just can’t sponsor “skips.” It’s obvious who won that battle.) Thanks for the comment.