Pandora has published a white paper based on testing it says shows radio listeners are significantly more receptive to advertising presented on Pandora (or in similar environments) than on AM/FM radio.
This "receptivity" is enhanced, Pandora says, because listeners have come to have more overall positive feelings towards services like Pandora compared to AM/FM radio.
Study subjects (800 adults, age 18-49) listened to 15 minutes of either simulated AM/FM programming or Pandora radio in the genre of their choice. The programming contained ads presented as they would be on the respective media (that is, a single isolated ad on Pandora, and the same ad but within a multi-unit stopset, on the simulated broadcast).
"When compared to AM/FM radio, the research indicates that internet radio, and Pandora specifically, has been highly successful in establishing an even more positive – and more personal – relationship with listeners. Listeners are far more likely to feel Pandora is innovative, provides a great experience, and even contributes to the happiness of their day-to-day lives," the paper reads. This results in what Pandora calls "better ad receptivity... with engaged listeners tuning in to the ads and feeling positively toward the advertisers."
Pandora worked with a marketing/brand development consultant called Added Value to produce the study. The paper is titled "Personalization and music discovery ignite passion for Internet radio."
While more respondents overall could remember hearing some kind of ad on AM/FM radio (potentially a negative impression), Pandora listeners who recalled hearing an ad while listening were "70% more likely than AM/FM radio listeners to correctly recall the brand" that was advertised. And more of the Pandora listeners said they "noticed (the ad) more" and "(the ad) got my attention" than did the AM/FM listeners in the test.
The paper is now available on Pandora's site here.
RAIN Analysis: It makes sense that there could be more benefit to an advertiser in having a :15 (or :30) spot in a single-unit stopset than in having a longer spot in the middle of a five- or six-unit stopset.
One would think that continued evidence of this would eventually allow Pandora, Slacker, iHeartRadio's custom radio, CBS-owned Last.fm, and other Interet-only offerings created by broadcasters to command premium CPMs. -- KH