The Flawed Pandora White Paper


(by Bob McCurdy)

A couple of thoughts came to mind after reviewing Pandora’s recently published white paper, The State Of In-Car Audio, New Insights On Today’s Consumers that focused on the results from Edison’s study, “hacking the computer code: what really happens when commuters are driving”.

There’s no doubt that there are more audio options in the car than ever before and we were not at all surprised when Edison concluded that over 90% of the population listens to Broadcast Radio while driving. We were intrigued to discover however, how narrow the in-car usage gap was between those streaming of AM/FM programming in-car (36%) and those streaming Internet Radio in-car (42%). There were a couple of key takeaways that we took from these figures. The first was with 42% of driver’s already streaming Internet Radio in-car with 40% of commuters stating they connect their phones to their cars “regularly” according
to Pandora’s white paper, there might not be as much of an upside in in-car and total  Internet Radio listening as Pandora and other streamers have been hoping for when the center stack becomes completely digitized.

The second was, as we have long believed, that a lot of listeners would and do stream AM/FM programming in-car. The Edison study confirms that this belief was correct. What we also found particularly noteworthy was that drivers, by a wide margin, preferred their own “digitized music files” over streaming Internet Radio. Not a great stat for the Internet Radio streamers.

Edison also asked respondents to name the audio choice they’d have in their car if they could only have one. While it might make for an interesting hypothetical question, we’re not sure about the overall importance of this question. What we felt was interesting in this particular chart was that Streaming Internet was the first choice of only 28% of those who currently stream Internet Radio in-car. Again, not a particularly great stat for Internet Radio streamers. The study then delved into the button pushing habits of the in-car Broadcast Radio listener, Pandora in their white paper summarizing the Edison study, clearly intimated that switching stations was a negative habit that advertisers need to be aware of, while highlighting that the top 2 reasons for changing stations was “commercials” and “not liking a song”. Newsflash to Pandora, these are the same two top complaints that Pandora users have voiced about Pandora for years.

The Pandora white paper goes on to state: “Drivers know that radio stations often play 10 or more commercials in a row. They also know they can avoid them with a simple push of a preset. 7 out of 10 commuters don’t listen to the full commercial break, and nearly half of them don’t even last through the first commercial. But it’s not just the ads that are causing them to switch—it’s equally due to repetitive, un-personalized playlists.”

A couple of thoughts regarding these claims.

First, the statement “often play 10 or more commercials in a row” is misleading and rebutted by Media Monitors.

Second is the observation that, “7 out of 10 commuters don’t listen to the full commercial break, and nearly half of them don’t even last through the first commercial.” This stat is the result of observing only 101 drivers for one day of whom we know nothing about in terms of demo, gender, etc. and just because these individuals switched from a station during a commercial break, doesn’t mean they weren’t immediately exposed to commercials on the other stations to which they tuned, who also happened to be in a commercial break.

Third, “But it’s not just the ads that are causing them to switch—it’s equally due to repetitive, un-personalized playlists”. Even their vaunted Genome project which allegedly personalizes playlists, can’t prevent their listeners from thumbing songs down, the digital audio equivalent of changing the channel, tens of billions of times. Pandora must have forgotten when writing this paper, that another major complaint their listeners have continually voiced is the limited number of song skips they are allowed in an hour/day. So much Genome excellence.

Speaking of commercials, it makes for an interesting exercise to track Pandora’s commercial load timeline:
– Early 2007: Pandora begins experimenting with audio ads.
– January 2009: Pandora begins airing one :15 per hour.
– 2010- April 2012: Pandora begins airing two :15’s per hour, adds :30’s to their commercial mix..
– April 2012: Pandora begins airing 3 commercials per hour.
– August 2013: Pandora begins airing commercials back-to-back, airing up to 5 commercials per hour.
– May 2014: Pandora’s CFO admits to that Pandora’s commercial load is now up to 6 units per hour.

It’s easy to see where this trend is going and it’s not going down. Pandora’s major takeaway headline” of this Edison study is clearly the number of times listeners change the station during their commute when listening to Broadcast Radio. One question that comes to mind is, is it really a bad thing for an advertiser if a listener switches from one station that’s playing a song they don’t care for, to another station that’s playing a commercial? We don’t think so. So “switching” stations need not be a negative and could well benefit an advertiser.

We also don’t believe switching stations is a bad thing for another reason. The very act of changing a station requires the listener to be cognitively “engaged” with the station’s music and commercials. This contrasts with the oft voiced concern about the Internet Radio listener being disengaged, listening in a lean-back, implicit mode.

One final benefit of switching stations, and it is one that is often overlooked, is that the listener will likely be exposed to more total commercials in this “engaged” mode and this ultimately is a good thing. We’ll explain. Most advertising, Radio, TV or Digital, is meant to “remind’ and not “teach” and this is especially true after a listener, viewer or internet surfer has been exposed to the same commercial multiple times.

As commercials become “worn in”, they no longer require our full attention for thirty or sixty seconds in order for its messaging to effectively register, unless of course, we’re stuck in an endless time loop like Bill Murray in Groundhog Day. Once “worn in”, it only takes at most a few seconds of exposure, the kind of exposure that can be had while switching between stations, to recall and register the commercial messaging, enabling the advertiser to maintain it’share-of-mind and share-of-voice.

It should be readily apparent to all, that we process a commercial differently the fifth time we hear or view it, versus the first time. It’s this fact that leads us to conclude that the more commercials the listener is exposed to in this “engaged’ mode, even if some portion of them are only several seconds in length, the better it is for Radio advertisers.

The TV industry has conducted a number of studies over the years to illustrate the impact of DVR fast forwarded commercials and have concluded that there is indeed value in commercial exposures even if they only last a second or two. Pandora’s negative slant on channel switching is simplistic and based on the faulty premise that when a listener switches stations, they switch from one airing commercials to one airing music. This is often not the case as the following Arbitron study illustrated.

In 2011 Arbtron, using minute by minute PPM data, fused with Media Monitors commercial data, quantified the audience of various length commercial pods. All 48 PPM markets were included in the study and 17,896,325 commercial breaks were analyzed, and with all due respect to Edison, this is considerably more statisitcally sound than the 1,117 online respondents in Edison study and the 101 GoPro drivers who were monitored for a single day.

The study’s conclusion was that the audience present during a commercial break of any length, was on average 93% of the audience that was listening immediately prior to the break. This study reconfimed the results of an initial commercial retention study that was conducted in 2005 using the same methodology and there is zero reason to believe things are different in 2016.

Let’s use a simple subway analogy to further clarify the findings of this Arbitron study and put the channel switching into some kind of perspective. Some people get on at each subway stop (tune in), some get off (tune out) but the number of people who are present at any given stop is roughly equivalent to the number who started on the trip, due the number of people who get off the subway being offset by the number of new riders who get on the subway.

This analogy holds true for Broadcast Radio during a commercial break. The number of listeners tuning away from a station is offset by the number of new listeners tuning in to the station. Contrary to what Pandora would like their reader of their white paper to read, all channel switching is not “away” from a station. Much channel switching is “to” a station.

Let’s focus now on the impact of Broadcast Radio commercials vs. streamed Internet Radio commercials. There’s been a number of research companies that have concluded that commercials on Broadcast Radio stations are more impactful than those heard on streaming Internet Radio but the one that stands out to us was done several years ago by MediaVest, one of the largest media buying shops in the country. Their study concluded that:
– Those who favor regular AM/FM find ads most acceptable.
– Broadcast Radio advertising is the strongest for driving brand engagement.
– Broadcast Radio and Streaming AM/FM are the most impactful platforms for driving action.
– Regular AM/FM listeners are also more likely to have awareness, seek out information, and consider brands/products than other audio platform users.
– Pretty powerful conclusions from an unbiased and well respected advertising agency.

Finally, the only thing that really matters, is if Broadcast Radio advertising works. Nielsen is the gold standard in American media research with no special interest in Radio or any other medium and via their single source methodology has concluded that Broadcast Radio produces a terrific payback, a payback that is often larger than any other medium:
– Radio payback per $1 invested
– Retail payback: $23.21
– Home Improvement payback: $9.78
– Department Store payback: $17.00
– Telecom payback: $14.00
– Snack payback: $7.33
– Mass Merchandiser payback: $16.37

Regardless of how many commercials Broadcast Radio airs or the number of times its listener’s switch stations while driving, an awful lot of listeners have to be hearing an awful lot of Broadcast Radio commercials and more importantly be buying an awful lot of product advertised on Broadcast Radio’s airwaves to deliver the kind of payback Nielsen has confirmed it delivers. It would be interesting to see what kind of results Pandora would generate using this same single source methodology.

The bottom line is that there’s value in all audio and that any advertising that enters the ear is extremely powerful and effective. We just felt the need to set the record straight regarding a couple of claims within this particular Pandora white paper.

Bob McCcurdy is a former executive at Katz and the founder of uppingthevolume. He can be reached at [email protected]


  1. there is no denial…Radio works, TV works, newspaper works, digital works, the all reach people!
    the all have weaknesses! they all have work to do! The predictions, assumptions and the perceptions are incorrect.

    • Hello Simon. Although I thoroughly understand and agree with your general viewpoint, I must respectfully disagree to your 3 word generalization.. Mary Beth’s template response is classic but here, Bob has provided more substantiating (and I believe mostly accurate) info. You can’t expect massive, change overnight. Unless you are a disgruntled ex-employee, we could offer support for any movement in the right direction.

  2. Oh, *Now* I read this after not using any research except my experience and my brain to comment on Mary Beth Garber’s post of the 10th. Well, I like the way Mr. McCurdy communicates. He’s intelligent yet down to earth. I learned from this article / study that there is already more audio choices in the car being utilized than what I thought because of people plugging their phones in. Well, the tipping point is happening even faster than I thought. Thanks for this well-written piece helping explain the data from the secret survey. Now, there were two of these surveys released last week. The other one Jacob’s quoted on his blog last week. It showed that in this other study released re: consumer, In-Car entertainment asked people to select from a list of *Internet* delivered (they called it “streamed”) entertainment options in-car >BUT their list of options made no mention of AM/FM.< This survey/study had a small mention about it posted on Business Insider. I wrote to BI for clarification and got a couple of nice responses from their rep. In essence, I was told that the sponsor of that In-car consumer entertainment survey omitted AM/FM on purpose. She said that they only wanted responses about internet delivered music, etc. Gee, I wonder who would do that?? Would their Name begin with a Pan? Anyway, it's just speculation but because Pandora is in a bit of trouble, I'd expect them to be sponsoring one-sided studies and jumping all over other studies that they could spin for advertisers at the NAB. Btw, when I mentioned to the rep (who passed on my info to the "researchers") that terrestrial stations DO stream over-the-air programming over the internet. Her response *back from them* seemed slightly puzzled. Like oh…wha? It may be that the researchers did the study with the parameters they were *given* without being able to either do their own research or acknowledge that terrestrial stations are delivered over the Net via Iheart, Tune-in, and other services so they could prepare a more *accurate* survey.

  3. Good work, Bob. This is the analysis that Ed Ryan and RadioInk should have done before printing the distorted claims of Edison and Pandora. Instead, RadioInk just prints news releases as if they were “news”-fact and settled. That is very irresponsible. The site is acting as a conduit, not a industry news site. If you hadn’t looked deeper, the original news releases would now be taken as “settled science.”