(Bob McCurdy) Late last week I was on MSN.com and came across a banner ad for Pandora’s 2018 Definitive Guide to Audio. I clicked. As one would expect, there was a whole lotta skewing going on. The following looks to set the record straight.
Pandora: Between 2007 and 2017, average daily time spent listening to radio has fallen by 34%.
Pandora doesn’t reference the PPM methodological change implemented by Arbitron. Makes for a good headline but purposely misleading.
Pandora: With a median age of 52, radio has the oldest audience among the audio platforms.
Let’s look at the 12+ median age of radio from a cross-section of markets: Philly (45), Boston (45), Charlotte (44), Augusta (43), Fayetteville (40), Las Vegas (43), Wilmington (45), Middlesex (45). The median age of the United States of those 10+ is 46. It should be no surprise that radio, a medium that reaches virtually everyone, has a median age that reflects the population. Darned near mathematically impossible for it not to.
Pandora: Radio’s long-held dominance in the car is crumbling as more connected vehicles hit the road. Other foreboding motor trends that are likely to impact AM/FM usage include a shrinking proportion of licensed drivers, fewer privately owned cars, and the promise of autonomous vehicles.
The words “crumbling” and “foreboding” are simply over-the-top. Several paragraphs later, Pandora quotes AM/FM radio’s share of in-car listening at 70%. That figure is hardly “crumbling” and actually quite dominating. Autonomous vehicles will present a challenge and opportunity for many forms of media and businesses, including radio. But level 5 (full autonomy) is several years away, and with 17,000,000 cars sold annually, and 260,000,000 cars on the road, it will take years to proliferate.
Pandora: Voice control of smart speakers and other devices reflect not only a technological achievement, but is revolutionizing the way we interact with all Internet devices moving forward.
AM/FM broadcasters are excited about getting back into the home with these devices, and according to Bridge Research it will lead to more AM/FM listening. Their recent study found that 55% of all smart-speaker users listened to FM radio (#1 Music option). NPR/Edison also found that heavy smart-speaker owners are using their devices to listen to AM/FM radio in large numbers. A long term “positive” for radio.
Pandora: As much as the radio industry loves to promote its wide reach, another critical metric, time spent listening, has been riding a steady decline. Daily time spent listening to AM/FM has fallen 34% between 2007 and 2017. Clearly, listeners are not using AM/FM for as long or as often as they did before.
The methodological changes referenced above contributed to the “illusion” of declining TSL. Since Pandora likes quoting stats from Nielsen, let’s quote one from their Q2 2017 Total Audience Report which shows radio TSL among “listeners” to be steady from 2015-2017 (hours: minutes): 2:42, 2:44, 2:43.
Nielsen’s Q2 2017 Comparable Metric Report highlights the magnitude of AM/FM radio listening, concluding that in an average week 188.6 billion minutes of AM/FM programming are consumed, versus 13.4 billion minutes of streamed audio on a smart phone, computer or tablet, meaning that AM/FM usage is 14x that of streamed audio.
Since Pandora referenced radio’s “reach,” let’s note that the same percentage of Americans are tuning to radio weekly in 2017 as did in 1970, and they are tuning in more than five days/week. Not bad.
Pandora: Self-Inflicted wounds. Music stations will pack as many as 10 ads into a break as a strategy to game the ratings system, but that strategy can’t possibly help an advertiser command attention; besides more ads equal unhappy listeners.
Pandora knows about unhappy listeners. Per a 2017 Digital Music News headline, “Pandora Is Losing 850,000 Listeners a Month.” As of November 2017, the company had 73 million active users. At the start of 2017, that number was 81 million.
There was more bad news for Pandora in 2017, with a Piper Jaffray study finding that teens are turning their backs on Pandora at a staggering rate. Piper Jaffray asked teens the question: “Do you listen to music on Pandora.” Only 35% of respondents said “yes.” Some context as to how brutal that is, in 2014 74% answered “yes” to the same question.
One more bad-news stat: Pandora’s net loss expanded in Q3 2017, from $61.5 million to $66.2 million.
Regarding commercials, Pandora seems to be seems to be quite adept at adding them:
2007: Pandora begins experimenting with audio ads.
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.
2012: Pandora begins airing three commercials per hour.
2013: Pandora begins airing up to five commercials per hour.
2014: Pandora’s commercial load is up to six units per hour.
2017: Pandora’s commercial load is up to nine units/hr.
In a 10-year period, Pandora has gone from no commercials to nine per hour. Maybe this is why a major retailer stated that Pandora listeners light up social media in anger, “complaining bitterly about hearing their ad over and over.”
Research has shown time and again that listeners are more tolerant of commercials on AM/FM than streamed audio. A study done several years ago by Arbitron that included second-by-second analysis of over 18 million commercial pods confirmed this, finding that the audience throughout a commercial pod is 93% as large as it was immediately prior. For some context, compare this stat to 21% of TV viewers who leave the room during a break and 40% whose eyes are on a second screen during a TV commercial break. Pretty good.
Additionally, Nielsen’s ROAS studies have continually demonstrated that radio, with its current commercial load, delivers a huge return on ad spend, so radio commercials are doing their job.
Some additional Pandora insights culled from the past year:
Commercial frequency overkill: This issue will only get worse due to Pandora’s decreased listenership and the need to meet “impression goals.”
“Empty room” syndrome: Two-thirds of all Pandora listening occurs at home and no one has any idea if anyone is in the room or even in the house. Not an issue with PPM.
Five percent of the U.S. population accounts for 72% of all Pandora listening according to an Edison Share of Ear study. The same study also showed AM/FM share of audio to be steady.
While every individual, company, or industry has to earn its future, radio is in a solid position to maintain its audio dominance for many years to come.
What’s that saying about “glass houses?”
Bob McCurdy is The Vice President of Sales for The Beasley Media Group and can be reached at firstname.lastname@example.org