Comments for Pandora's Advertising Model

Pandora's Advertising Model

2006-11-17T04:32:49Z

I, like many of my engineering colleagues, think of advertising as nothing more than a nuisance because most online advertising is just that. Why? Because it is completely uninnovative. When companies need to increase their advertising revenue, rarely do they bring to bear creative ways to establish more value in the inventory they have, they simply find more ways to introduce more of the same advertising across an already crowded site.

Rarely do companies treat their inventory as a product, in the way that they treat their application as a product. Case in point: MySpace - a horribly ad ridden product.

But then there are companies like Pandora that are approaching advertising with a new perspective. They do not think of a rectangle on the page as an ad, they think of the whole page as an ad. And in this format, which maybe considered to be by some to be more invasive is actually not. The ads do not pop out at you. They do not autoplay video. They do not interrupt or disrupt the user's experience, they simply frame the experience. And as a result, the ads feel more integrated, and the page as a whole looks more coordinated. Granted, it turns the page into a billboard, but in this context, I think it works.

But what is also interesting is that Pandora in this implementation has solved another problem - a problem that is likely to plague a lot of Web 2.0 Ajax-heavy applications: how to manufacture inventory for a product, that if successful in its design will produce very few page turns per visitor. Pandora then responds to the "moral equivalent" to a page turn. If a user pauses the music player, or chooses a different channel, then a new ad is rotated into view.

Here is Pandora with a standard ad in place - in this case, just a house ad for Pandora.

Here is the same page after a T-Mobile ad has been rotated in:

]]> And now an ad for Nike:

And finally, the same page with a skyscraper ad rotated in in-lieu of the original medium rectangle.

Now why is this a good product? Remember that the customer here is not the user, it is the advertiser, and for that customer this is fantastic. They aren't just getting a 768x160 ad unit, they are getting a 1024x768 ad unit. Their brand permeates every aspect of the page.

Comment from cre8 on 2006-11-17

2006-11-17T16:07:05Z

I, too, like Pandora as a brand experience that makes sense for advertisers. That said, it's a common model that is executed all over the web to varying degrees of success. And it doesn't surprise me one bit that you like this so much, given your vocation and mindset. Bet you like a lot of other approaches too, as they've clearly helped you feel good about buying brands that help identify what you stand for... am I right?

Comment from Byrne Reese on 2006-11-17

2006-11-17T16:32:09Z

Its funny you should ask. There are other approaches I like, but not many. I sincerely appreciate LiveJournal's model of advertising. We at Six Apart made a very difficult choice in regards to how to deploy advertising to that audience, and I consider our approach just as innovative as Pandora's, but in a different way.

We could have easily deployed ads to all users who use the product for free, and turned LiveJournal into a fully ad-supported product. But the value we saw for advertisers was that if all the people who saw their ads were people who elected to see them, then they would be a more receptive market for our advertisers and thus, more valuable to them.

We did that despite the risk that it would reduce our overall marketable inventory (and thus our revenue), but our hunch was correct. The audience is more valuable to the advertiser for precisely this fact.

Comment from john on 2006-12-20

2006-12-20T18:48:47Z

great article! BTW - note that (For us wide-screen junkies) pandora ads span a huge width... brilliant! as screens get bigger, there's more inventory!

Comment from jwoodruff on 2008-11-15

2008-11-15T21:08:38Z

I actually don't subscribe to pandora because I wouldn't get to see the ads. They are amazing.

john - I have a dual monitor setup and have seen one ad that appeared to span almost the full width of both monitors - each at 1600x1200! I love it.