Since two-thirds of Pandora’s listening occurs at home, Pandora suffers from “empty room syndrome.” The ads are on, but no one is there to hear them.
Pandora has no idea if anyone is actually listening. They can send a message: “Are you still listening?”
In Pandora’s Q1 2017 Financial Results call, Pandora CEO and Founder Tim Westergren stated, “As we indicated on the last conference call, we would be managing our least profitable ad hours down 5 to 10% for 2017.” Westergren is referring to the Q4 2016 Financial Results release where Pandora reported, “We are consciously controlling ad-supported hours to manage towards profitability.”
Nomura | Instinet Wall Street media analyst Anthony DiClemente wrote:
“The company plans to continue actively controlling listener hours (-5.6% YoY in 1Q to 5.21bn), as it optimizes timeouts for the least profitable audience cohorts.”
Super awesome. Pandora has a knob that controls listener hours! How much fake listening do we want?
“Optimize timeouts” means Pandora’s sends that, “Are you still listening?” message more often to demos they cannot sell to shut off listening. They cannot make a lot of money from demos no one wants (Boomers), so they dial down that fake listening.
Millennials? Whoa! Don’t dial down that fake listening! Pandora needs those impressions! Who cares if the ads play to an empty room?
Radio is more accountable since Nielsen Diaries and Portable People Meters report actual radio listening. AM/FM radio audiences are based on actual people that actually hear radio. Don’t you want to be heard?
Pierre Bouvard is Chief Insights Officer at Cumulus | Westwood One.
Original post has been updated to include quotes from Pandora Financial Results calls.
Contact the Insights team at CorpMarketing@westwoodone.com.