A Deeper Look At Pandora vs. Spotify When It Comes To RTB Advertising
Online music streaming has continued to grow its audience exponentially over the past ten years, so it should be no surprise that advertisers have found new and creative ways to run ads to these audiences. While there are several ways people can stream audio, the two platforms that stand head and shoulders above the rest are Spotify and Pandora.
While users can stream music on both Pandora and Spotify, how the music is delivered and how users engage with each platform is very different.
Below, we will examine everything you need to know about which music streaming platform is better for your company. This includes how users interact with each app, the cost of advertising on Pandora and Spotify, the average revenue of audio ads on music streaming services, and most importantly, where brands can buy effective ad space.
How RTB Audio Ads Work
Advertising on Spotify and Pandora works differently from other websites and applications. Through both platforms, advertisers can purchase display and audio ads nearly instantly through a process known as “real-time bidding,” or RTB for short.
Spotify popularized RTB in 2016 through their original ad platform called Spotify Ad Studio. The platform allowed advertisers to purchase display ads for users’ curated playlists or audio ads for listeners without Spotify’s premium service. In addition, RTB allowed companies to skip costly single-use or licensing payments and instead compete with other advertisers through a real-time auction.
RTB advertising was an instant success, both for Spotify and advertisers. One year after Spotify Ad Studio launched, over 18% of the service’s ad-supported revenue came from real-time bidding audio ads. Meanwhile, massive brands, like Adidas, that paid for advertisements received tens of thousands of engagements from only one display ad. RTB became so popular that Pandora adopted a similar service a few years later.
Beyond high engagement rates without expensive licensing fees, advertisers love RTB ads for how simple it is to buy the inventory. Unlike traditional radio advertisements, companies purchase RTB advertisements through a streamlined three-pronged process. Advertisers will first bid for ad space on a demand-side platform, compete against other Ad Exchange bidders, and eventually sell their inventory on the supply-side platform.
Spotify vs. Pandora as an Ad Platform
RTB advertising is faster and more straightforward than older alternatives. But not only is advertising with Spotify and Pandora easier than on most other platforms; it’s also more effective. However, because both apps’ advertising systems are primarily the same, we need to look deeper into each platform to determine which is better between Pandora vs. Spotify advertising.
User Interface and Experience
One of the things advertisers care about the most is how easy it is to create and manage your ad campaigns. While user experience isn’t going to be the ultimate deciding factor, ease of use is still an important factor for many advertisers.
Spotify makes it very easy to buy advertising on its platform. You can quickly set up an RTB campaign using their self-service platform called Spotify Ad Studio. The platform is exceptionally user-friendly, and Spotify has several resources to help advertisers succeed.
On the other hand, Pandora has moved their advertising to SXMmedia, which includes Sirius XM satellite radio, Pandora, and Stitcher. SXM Media is a relatively new service, but they offer several ad solutions that are “proven to captivate audiences and deliver results.” The platform provides a variety of audience targeting and advertising inventory options, making it easy for users to build successful campaigns.
Platform Technology Differences
Like their user interfaces, the technology behind Spotify and Pandora is mostly the same, save for a few minor differences.
Generally speaking, Spotify is the streaming service for a broader listening experience. The music catalogs on the two applications are mostly the same, but Spotify has a more expansive selection of podcasts for users to select, including many exclusive podcasts.
The more expansive library gives Spotify users more categories to choose from while exploring the home tab, which features organized selections of different listening genres. Some of those genres feature specific types of music, while others are more wide-ranging and represent different moods or musical eras. In addition, while Spotify does have a “radio” feature, users tend to use it more for an “on-demand” listening experience.
But while Spotify might have a more comprehensive selection, Pandora is probably the more technologically advanced streaming platform. For example, Pandora offers an engine to its users called “The Music Genome Project,” which analyses a user’s musical preferences and suggests artists and genres based on what they listen to most often. Spotify has music recommendation features as well, but nothing as advanced as Pandora’s.
Which Platform Reaches More People?
Spotify is more accessible and has more users than Pandora. As of 2018, Spotify had over 170 million active users, while Pandora lagged behind with roughly 74 million. Pandora is only available in the United States, while Spotify is a global platform.
However, companies debating Pandora vs. Spotify advertising should look past the surface-level numbers to see the bigger picture. For example, 44% of Spotify’s 170 million users in 2018 were paying for premium services, meaning they don’t receive audio advertisements. Meanwhile, only 5.6 million of Pandora’s 74 million users were paying enough to skip audio ads.
Additionally, because of their technological differences, Spotify and Pandora each appeal to different types of audio streamers. So, while the total number of users on each platform should be a factor that you consider, it’s also important to consider how users engage with the platform and how they will hear your ads.
Typical User Interaction On Each Platform
There are two types of streaming content listeners – active and passive listeners. In short, active listeners are fully engaged in the content they are listening to, and passive listeners are streaming the audio as “background noise.”
Studies into streaming retention have revealed that the majority of podcast streamers remember the brands they hear advertisements for, as well as the services they sell. Additionally, over half of the participants in a recent Midroll Media survey claimed that they had an active interest in the brands whose advertisements they heard.
That high engagement often results in users interacting with their advertisements. For example, clothing chain Lane Bryant created a series of audio ads to run on Pandora near the holiday season and had reported a 17% increase of in-store appearances following their campaign. Similarly, the ice cream chain Baskin-Robbins saw a 12% increase in customers following a series of recent audio ads on Spotify.
As both platforms offer very similar content, in some cases, it’s as simple as choosing the platform that’s content aligns most closely with your target audience. For example, if you wanted to target listeners of “The Joe Rogan Experience,” you would need to advertise on Spotify as that is the only place this content is available.
Typical Ad Costs On Spotify & Pandora
Spotify and Pandora each charge different rates for ads depending on the types of advertising you want to reach your target audience. Spotify’s price points range anywhere from $5 to $30 CPM, or per thousand impressions. Meanwhile, average costs on Pandora are slightly lower, ranging from $5 to as high as $25 CPM. However, additional pricing complexities can impact the cost of advertising on both platforms.
To run an ad campaign on Spotify, you must agree to a campaign package. Spotify’s packages begin at a minimum of $25,000 and range upward, but the platform also allows brands to run individual ads for a minimum of $250.
Advertising on Pandora is slightly more flexible and affordable than on Spotify. Pandora’s campaign packages cost as little as $1,500, which often makes them more appealing for smaller businesses on tight budgets. However, the obvious trade-off is that Pandora doesn’t have nearly the user base nor the global reach of Spotify.
What Types Of Ads Can Be Run On Each Platform?
Brands can run one of three types of ads on Spotify or Pandora: audio ads, a visual advertisement with an image, or a full-video ad with audio and a visual recording. Like the cost of the ads themselves, the types of ads Pandora and Spotify allow you to run are similar and separated only by differing levels of flexibility.
If your top priority in audio ads is a wide range of uploadable file formats, Pandora is a clear winner. The less-used streaming platform lets advertisers upload MP3, MP4, M4A, WAV, and AIFF files for audio advertising. Meanwhile, Spotify permits only MP3, WAV, and OGG audio files.
However, Spotify has the upper hand in ad length flexibility. While Pandora will force you to choose between a 10, 15, or 30-second audio advertisement, companies choosing Spotify can upload any length of audio at or below 30 seconds.
Advertisers can purchase full-video ads on both Spotify and Pandora. There are minimal differences in acceptable lengths and file types between the two platforms; however, ad cost is a slight difference worth considering.
Video ads are the most expensive advertisements on both Spotify and Pandora. But while a high-end video might cost companies $30 per thousand impressions on Spotify, the price ranges anywhere from $15 to $25 on Pandora.
Companies can advertise a banner photo or logo on Pandora and Spotify. Like video ads, there aren’t many differences in what kinds of files you can upload for your photo advertisements. However, there are barriers to purchasing advertisements in general on Pandora that Spotify does not have.
Buying a visual ad on Pandora requires companies to register as official advertisers. On the other hand, Spotify has a “self-serve” program that lets brands purchase ad space without enrolling on their platform.
Which Platform Offers Better Streaming Quality?
In the premium versions of Spotify and Pandora, users can choose between several audio qualities. That flexibility allows people to listen to songs and podcasts at higher or lower fidelities, depending on their internet access and personal preferences. However, the free versions of both platforms force users to stream at a fixed, equally-low quality.
While that shared approach technically means Spotify and Pandora are equal regarding audio quality, Spotify still might have the edge here. Since Spotify has a higher percentage of users on their premium package, more Spotify users can give themselves higher-quality audio than Pandora loyalists.
What Types Of Content Are Available On Pandora & Spotify
With roughly 60 million songs each, both platforms have dedicated the vast majority of their library to music. But just because Spotify and Pandora are both music streaming applications at their core doesn’t mean they don’t offer other forms of entertainment.
While there are no public plans for either Spotify or Pandora to introduce video content to their platforms, both are rich in other audio mediums, particularly podcasts. Spotify does have a more extensive catalog of big-name podcasts, but Pandora features plenty for users to listen to as well.
The most significant way both Pandora and Spotify have begun establishing a brand outside of music streaming is through social media features. Users on either platform can post the songs and stations they’re listening to on social media apps, encouraging more people to download the apps. However, Spotify does have a slight advantage in social features.
Spotify allows users to follow each other’s playlists on the app and collaborate to build new ones. Additionally, the app has unique barcodes attached to each song so people can scan a user’s phone for a direct link to the artist’s page. While Pandora and Spotify both stream similar amounts of songs, Spotify’s diverse podcast library and social features make it the app with slightly more content.
Buying Remnant Radio Ad Space On Pandora & Spotify
Deciding between Pandora and Spotify advertising may be tricky if you’re unfamiliar with the online streaming advertising space. If you’re a small business in the United States, Pandora might be the better option. On the other hand, if you’re a big company with an even bigger budget looking to cast a wide advertising net, Spotify might be the better choice.
Whether you’re thinking of running your ads on Pandora, Spotify, or even both, The Remnant Agency can help you secure premium inventory at a fraction of the price. Our team helps companies of all sizes find unsold ad inventory in premium slots that allow you to stretch your ad budget and maximize your ROI.