After purchasing programmatic audio platform AdsWizz in March, Pandora has become a force in the market.
In February, Pandora began beta testing a private marketplace for video and audio. It also offers display inventory on the open exchange. As it jumps into programmatic, it’s training and staffing its 300-plus sales employees to become experts across digital, broadcast and programmatic audio.
Buyers have long asked for programmatic capabilities, said Steven Kritzman, SVP of sales at Pandora.
“If a customer at a retailer wants to pay with a credit card, the retailer has to be able to take money that way,” he said. “That’s what happens when we talk to an ad agency. As the business shifts from direct sold to programmatic, our sellers all have to be trained on it.”
Programmatically, 2018 will be a big year for Pandora. The company will exit beta testing in Q3, when programmatic buying will be generally available. The company will also release a self-serve buying platform for local buyers, a customer base that spends in the nine figures with Pandora, Kritzman said.
For now, most of Pandora’s inventory is direct sold, but programmatic is growing by double digits quarter over quarter.
“As audio and video get to general availability, based on what we’re seeing in the early signs of the beta and the conversations we’re having with clients, the early signs are super positive,” Kritzman said.
Pandora is also making a big push on podcasts, where it hopes to not only become a major content provider but solve some of its advertising and measurement issues. Pandora now has just three podcasts, but the platform has added 3.5 million incremental listeners to “Serial,” and it runs an original podcast with Questlove that has more than 300,000 monthly listeners.
Kritzman spoke with AdExchanger.
AdExchanger: How will your sales team change as you start to sell more programmatically?
STEVEN KRITZMAN: Long term, I don’t know how much change is going to happen to our sales structure.
I have a team of programmatic experts that function as shadow account managers. They support the seller that has the brand relationship and teach them about programmatic. A lot of brand sellers have embraced programmatic, and others need a little more help. So, it’s an evolution. It’s not too different than 10 years ago when we hired a bunch of radio sellers and we had to teach them digital. That’s what I’m envisioning for programmatic.
Everybody at Pandora is going to have to sell programmatically. As we grow, the profile of the person we’re looking for is going to evolve. We may be looking for people from DSPs, DMPs or trading desks, where two years ago that wasn’t the case.
Right now, you have inventory on The Trade Desk, MediaMath and AdsWizz. Will you open that up to more partners?
We want to be working with as many DSPs as we need to, depending on what our clients want. The marketplace will continue to shift and there will be a few standard bearers. But we really need to be in a position to catch the money as it’s coming in. It’s a prioritization exercise now. Start with the biggest DSPs and most sophisticated clients and then we’ll keep adding.
Since you launched programmatic in February, what’s the split between PMP and open-market deals?
Most buyers want PMPs. They want to understand the inventory, layer on data and targeting and automate the transaction. We’re getting programmatic RFPs from trading desks now that look a little bit like our direct RFPs. We’ll get specific flight dates and time windows. They’re buying that in a guaranteed fashion.
How do you navigate the specialized buying teams at agencies? Where does Pandora fit?
There’s a big debate within agencies around who is going to own [digital audio]: the trading team, the digital team or the audio team. Ten years ago, the fight was over whether Pandora is radio or digital, and which team is going to buy it.
Some say Pandora falls into the audio bucket, but then where should we sell our video and display products? Other agencies look at us as a platform. There’s no consistency, so it makes it challenging to set up a sales structure and coverage model.
We have to be in a place to catch the money however the agencies want to give it to us. It’s been the opportunity for us but it’s also one of the biggest challenges. We’re covering the trading, digital, broadcast, strategy, planning and client teams.
You have a growing subscription tier. Are buyers ever concerned that you’ll move away from a focus on ads?
We want a diverse offering for whatever a listener may want. The reality is, the vast majority of people in America don’t want to pay for music. The numbers bear that out.
For the most part, all the buy side really cares about is how big the scale and addressable audience is. That’s all they’re measured against.
Pandora is helping the MRC establish digital audio measurement standards. Are buyers asking for those?
Our team has been involved in setting up the criteria for an audible or heard impression and measurement of it. My hope is the same way viewability has been driving investment in video, audibility helps steer confidence in audio. There’s a unique opportunity to prove that efficacy. That is something radio can’t measure.
Podcasts are a big push for you this year. Are you generating revenue from that? Where would you like to see that by the end of the year?
From a sales standpoint, it’s going to be as big as we can aggregate the audience. We’ve got an ability to aggregate and bring scale to the space, make the impressions smarter by layering on our first-party data and bring accountable measurement. AdsWizz is going to upgrade our tech capabilities and backbone that.
There’s already a ton of demand for it, but there are a couple of fundamental challenges. It’s a very niche opportunity right now. And the measurement piece is a real issue for advertisers.
How big of an opportunity is voice?
Voice-activated devices are going to be in 55% of homes by 2022. We’re having that conversation around the audience migration and how the addition of these devices is growing the listener base. The No. 1 thing people do on these devices is listen to music.
What becomes the advertising opportunity? Candidly, that space is incredibly nascent, but our product guys are knee-deep in trying to tackle the opportunity.
This interview has been condensed.
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