Music to Brands’ Ears: Measuring Ad Effectiveness of Pandora
Everyone’s talking about streaming audio and podcasting, but do you ever wonder what the impact of streaming audio could be on your media mix? As the Head of Sales Research & Analytics at Pandora, I often hear from our advertising partners that Nielsen is their preferred Marketing Mix Modelling (MMM) vendor providing business results on the media plan executed in the market. Visibility into Pandora’s performance is rarely shared, therefore we partnered with Nielsen to commission a MMM study to understand methodology and measure Pandora’s impact on the bottom line for consumer packaged goods.
Pandora partnered with Nielsen’s Marketing Effectiveness Publisher Program. The study analyzed 63 campaigns comprised of three Carbonated Soft Drink (CSD) manufacturers over a two year period. The analysis included the following tactics - TV, Radio, Outdoor, Print, Radio, Digital and Pandora - with the goal of quantifying Pandora’s return on ad spend and sales impact to offline sales channels.
1. Pandora is the most efficient sales driver and Pandora’s Return on Ad Spend (ROAS) outperforms all other media vehicles measured. The ROAS on Pandora within the CSD Category was $1.90, compared to overall Digital Media $0.86 and Traditional Media $0.53, respectively. Nielsen was able to further analyze ROAS by individual media tactics in order to see how Pandora compared.
Simply stated, an additional dollar spent on Pandora drives higher category revenue than any other media tactic.
2. Pandora provides OLV Lifts at banner CPMs and the strong ROAS for Pandora compared to other digital vehicles is a function of both cost and effectiveness. Compared to online video, Pandora saw similar lifts at half the CPM cost. Against digital display, Pandora experienced 3X lift at a comparable CPM.
While consumers are increasingly cutting the cord and switching to digital forms of entertainment, including Pandora in the mix influences marketing efficiency to maximize overall return on investment for the CSD category.
3. Maximizing reach on Pandora while maintaining frequency will increase effectiveness for the category. Pandora received <1% share of total category ad spend, but generated 22% share of ROAS. The Nielsen analysis identified the CSD category is undersaturated on Pandora and would see higher effectiveness with an increased media spend.
The MMM analysis shows that the average CSD manufacturer that fine tunes plan reach, while maintaining frequency, should expect a 40-50% increase in the sales driven per impression moving forward.
4. Returns are optimized with minimal tactical plan re-allocation given there is room to grow the CSD category incrementally. In this scenario, reducing spend from other less efficient tactics and optimizing airing levels closer to optimal Pandora ranges can grow revenue impact and improve ROAS from $1.90 to $2.16.
The net net of this minimal plan tweak is that CSD revenue can grow by a net impact of $9.4 million dollars by shifting $4.5 million in spend.
Want to hear more about Pandora’s Marketing Mix Study results for the CSD category? Listen to the on-demand webinar recording here.
Source: Nielsen, Prepared for Pandora CSD Category Mix 2018 [Year 1: 52 WE 12/31/2016; Year 2: 12/30/2017]