Before it was announced that SiriusXM was buying Pandora, the long standing music streaming service made their own rather eye-raising purchase. The company bought
top digital audio advertiser AdsWizz. I could say that the purchase went under the radar but truthfully everything Pandora does in 2018 is overshadowed by Apple Music and Spotify locking heads with each other. Even though Spotify and YouTube are globally far bigger than Pandora within the United States, the earlier leader in passive music streaming is a key player in the world of digital audio advertising. Digiday even reported that
Pandora claims to be the largest publisher of digital audio ads in the U.S., and it owns two-thirds of all digital audio inventory, the company reported
in its quarterly earnings last year.
What interesting about AdsWizz in relation to Pandora is a few of the partners that it currently works with, to quote an article by Adexchanger
The ad tech company works with major audio publishers including Cox Media, iHeartMedia, Spotify, Soundcloud, Deezer and TuneIn Radio – all competitors to Pandora in the streaming audio space. But Pandora will operate AdsWizz as an independent subsidiary and AdsWizz will continue working with its current client roster.
Essentially Pandora bought the advertising company that works directly with all of it’s immediate competitors in the music streaming space, because while Apple Music and Tidal might be competing in the same space, they are not competing for the same advertising dollars. That exact reason is why Spotify in July announced a separation from AdsWizz after the company was bought by Pandora; it wouldn’t make sense to have of their chief focuses, advertising, entangled with a company that is their direct competitor.
Excluding YouTube, Pandora is still the largest American music streaming service by just sheer number of users. Spotify is over 50 million, Apple Music is somewhere over 20 million, and Pandora is still hovering above 70 million
, which would sound great if not for the fact that number is right now on the decline. Still looking at those numbers there are tens of millions of people that are using free music streaming platforms that are powered by audio advertising and what does SiriusXM now control in this market. The largest company that fills this particular growing niche.
The future of advertising is digital — personalized, targeted, more transparent in terms of what you’re getting, reach, and quality compared to traditional TV and radio channels. Then there are fast-growing new channels, smart speakers and cars. We expect digital audio can be massive.
What is so striking about online audio is just how new it really still is within the advertising space. Unlike the broader web that is so dominated by Facebook and Google digital audio ads is still relatively fertile terrain. That Pandora’s already worked in that particular space longer than any other music service and bought a company like AdsWizz shows an understanding that while they be known for music; they’re best poitioned to be selling advertisements. Pandora may boat about their rising subscriptions numbers, but their future is in the advertising business, perhaps even more so now as a part of SiriusXM.
That’s why I didn’t find it too shocking to see the company’s latest announced earlier this week. Pandora and Soundcloud announced a partnership, which to quote Billboard:
Pandora will begin handling U.S. advertising sales for fellow streaming platform SoundCloud in 2019, the two companies announced on Wednesday. The agreement will allow SoundCloud to tap into Pandora’s direct sales capabilities, sea of data and recently launched audio marketplace to allow brands and advertisers the ability to purchase its U.S. ad inventory directly.
The companies said that they have more than 100 million unduplicated listeners between them in the U.S. alone, and only 13 percent audience overlap.
I’m sure Pandora would love to live in a world where they were able to still partner with Spotify but at least retaining Soundcloud isn’t a too bad of a prize.
Now I haven’t written nearly at all about music in the context of any of this. The reason is that at this point I’m not exactly sure what Pandora can do to make a further impact in the music space. Their product isn’t going anywhere as they face so much competition and I’m not really sure the company is heavily eyeing new way for people to engage with music. Yet there is so much territory to discover with digital audio advertising that my eyes with SiriusXM will continue to be in a space that is far less defined and will spread well beyond the music industry.