At CES, Pandora Finds Amazon’s Alexa, Connected Cars Already Meaningful

The rise of audio activation is squarely in Pandora's space, says the music streaming service's Steven Kritzman at CES.

Pandora has been working to improve the ad creativity and engagement rates in order to better connect marketers to its nearly 80 million monthly listeners. As the ways to experience online audio proliferate, as showcased at this past week’s annual CES event, Pandora is already well-placed across connected cars and Amazon’s Echo.

We checked in with Steven Kritzman, Pandora’s SVP, Sales, in a quiet area of The Cosmopolitan Hotel.

GeoMarketing: What’s excited you about CES this year from Pandora’s perspective?

Steven Kritzman: The thing that excites me about our business here is a lot of the new technology is non-visual. The auditory component has become such a big piece of so much of the technology advancements you’re seeing at CES and in the marketplace in general.

There’s Amazon’s Alexa and other voice-activated, connected devices that allow you to fire up your entire house by talking to it, rather than having to touch it. And that’s in Pandora’s sweet spot.

Most people think about us as primarily an auditory platform, and we’re excited about the future of voice activation in products like Alexa. We are excited about it as it relates to our ad business. Outside of that, I’m mainly seeing upgrades of what was great last year: the use of virtual reality, as well as improvements in TVs, the appliances, etc. I haven’t seen any flying cars yet.

What was Pandora highlighting at CES?

Our key value proposition as a platform is time spent. We have been developing ad products that directly lean into promoting that idea. It’s been a problem for marketers. There’s so much proliferation of content. So the products that we’ve built harness time spent and engagement.

We know when people are looking at the screen and engaged that they’re likely to use various products.

There are two new offerings that were talking about a lot this past week. One has to do with the new features for our ad-supported listeners that launched when we debuted Pandora Plus last fall. This lets listeners unlock a certain amount of skips and replays by watching a 15 or 30 second video from a client. It’s a great value exchange for listeners and marketers.

Then we redesigned our visual ad experience in order to provide lifts in time spent, brand awareness and quality clicks for advertisers. Our new Muted Video format is part of that as well. It gives listeners the ability to be watching a video ad while they’re still in the music listening experience which doesn’t interrupt what they’re doing, but if they’re interested, they can click on the ad. They can get the auditory components of the video. When that’s done, it goes right back into where their song left off. So it’s a seamless in-and-out experience which we think consumers will appreciate.

As mobile has become the primary way to reach consumers, how do you deal with the general challenges associated with creativity and advertising aimed at smartphones?

I think we have to be smarter about the ads that we serve, smarter about when we serve them — which we’re doing — and then also smarter about the creative approach.

There are a few ways we’ve been doing this. We’ve IP that allows us to be smarter about ad insertion. For example, we’ll serve a different cadence of ads to a 13-year-old girl than we will a 55-year-old guy, who tends to have a much higher tolerance for ads.

We know that when that 13-year-old girl comes to our platform, she needs to hear, for example, five, six, seven songs, and then get an ad; whereas an older person is still receptive to ads after playing them a song or two.

When it comes to brands, if you think about a marketer like a L’Oreal, they tend to have multiple products.

So if we want to sell lipstick to a woman on a Friday night, we know if she’s listening to dance music and likely getting ready to go out, that’s a trigger to serve that ad. Whereas if it’s 10:00 in the morning, they’re listening to adult contemporary, but the same age, we might want to serve them a different product ad.

While flying cars haven’t made it to CES, the connected car certainly has. Does the connected car mean anything meaningful to Pandora?

The connected car is already huge for us for audio advertising. As we talk about dynamic audio creative innovation, the connected car will be continue to be key.

We’ve got to develop something in ad products that is super-desirable to people that are in the car in that it doesn’t require them to look at their phone when we know that they’re driving. That will be a big thing you’ll see us working on this year.

This past year, one-in-three cars sold in America had Pandora embedded in the dashboard. We see that as a huge usage opportunity for us as we continue to move forward, as those cars get off the lot. What we also see is the time spent of users that use us through a connected car is infinitely longer overall. They’re our core power users. So the connected car is a big opportunity.

Can you target ads specifically to the device or experience, whether it’s Amazon’s Echo or a mobile phone or a car?

We can and we do. We have certain clients that just want to buy in-car and we nail it down to the device level. We have some CPG advertisers that sometimes just want to buy in the home. We can target by device.

Our ability to target by device, and then by telco carrier, tells us what the usage is like and that is very interesting to advertisers, naturally.

For example, I was talking with a huge telco advertiser a couple of months ago. They traditionally had bought on our all our platforms, but they tended to target very heavily towards Hispanic and African American audiences.

After looking at our data, I said to their CMO, ‘Do you know what the number one genre is on the Pandora platform for your listeners on your carrier?’ He said no, and I told him it was actually country music.

He was totally blown away. Country music was not something that they would buy traditionally. He and his team immediately started talking about the need to start thinking about buying country music. They had no idea that for their tens of millions of customers on Pandora, that was actually their format of preference. Those types of insights are what we’re trying to bring to our clients at a higher level, to help them develop smarter media planning, and then be able to put it into action.

Looking ahead to how new devices and voice activation is affecting advertising, what are you thinking about?

We have people on our team that look at easing our business partners’ integration stress. We’re integrated into 1,800 connected devices and 190 car models. We are on smart TVs. We are on smart refrigerators. We’re on Alexa. We’re in retail. We’re in a lot of the brand devices.

In the example of Amazon, it helps that our chief product officer [Chris Phillips] came from Amazon. We have a nice relationship with those guys. So we’ve been on Alexa since the very beginning. If you play with it at all, the user experience is amazingly simple and elegant.

When it comes to the way we think about ad formats, it’s test and learn, what works what doesn’t. As the connected world evolves and things become more associated with voice activation, we have to confront the questions of how do we develop for that? There’s not a really good technology out there today that advertisers can use for a call-to-action on a specific advertisement from an auditory perspective. We want to help solve that problem. I think it’s going to be a big opportunity for us.