University of California
Type of paper: Thesis/Dissertation Chapter
Pandora Marketing Strategy
Pandora has often been heralded for it’s great success in word of mouth and viral marketing. By 2012 Pandora had accumulated 100 million+ active and registered users, most of which had been acquired organically. According to an interview with Matt Nichols, Pandora’s Director of Marketing, Pandora success comes from providing a personalized service that it’s ‘competitors’ simply don’t match up to. “You can create personalized radio stations that play only music you’ll love… help you discover music you’ll enjoy and only play you songs that you want to hear (http://geekcast.fm/archives/semcast-5-search-engine-marketing-at-pandora-with-matt-nichols/). It is this model of personalized radio to for todays listeners who like their music how, when, and where they want it and all of that for free, that has allowed Pandora to remain the largest player in online radio.
In 2005 Pandora began a highly successful paid search campaign that ran for a little over three years. Through search optimization and paid advertising through popular search engines such as Google and Yahoo! Pandora was able to draw in a larger listening base. Unfortunately the campaign was shut down after a few years because the cost of advertising had begun to lower the margin for revenue, whose unit of monetization is based on cents per listening hours.
Success in Pandora’s email strategy has been found by limiting emails sent to users on the basis of information relevant to their personal account, such as adding artists to a particular station. According the Nichols “It’s really about delivering information that is relevant, rather then killing the user with over emailing.” (http://amatv.marketingpower.com/pandoras-word-of-mouth-marketing)
Pandora reaches listeners who use desktop computers, laptops and mobile devices (e.g. smartphones, tablets) through its website and mobile apps respectively. Additionally, the company has partnered with several car manufacturers such as Ford, Lincoln, Mercedes-Benz, MINI, BMW, Hyundai, Toyota, Lexus, Honda, among others to integrate its online radio service with automotive sound systems. Such strategic alliances do not generate any sort of revenue for Pandora but increase its exposure and utilization. oPandora’s advertising sales force in 2012 was 75% larger than a year earlier with five teams that focus on different platforms. The purpose of such increase has been to grow ads revenue faster than listener hours in order to offset the high royalty costs that those hours imply.