Originally published on Pandora.com on July 18, 2016
The road to making smarter media buying decisions starts with understanding your audience. And even more important, is knowing the difference between an addressable and non-addressable audience.
Understanding Addressable Audiences: Pandora vs. Spotify
We define “addressable audience” as the actual number of streaming audio listeners that a U.S. advertiser can reach. In other words, this is the number of listeners that enjoy their music in a free, ad-supported environment. People who have paid for a subscription that lets them listen in an ad-free environment are non-addressable.
Both Pandora and Spotify have addressable portions of their U.S. audience, but their business models are very different:
- Spotify uses a freemium model that’s engineered to funnel free, ad-supported listeners into paid subscribers. These subscribers do not receive advertisements because they pay for an ad-free listening experience.
- Pandora’s core business is a free, ad-supported service. While Pandora offers a paid subscription option, the vast majority (95%) of its listeners use the free, ad-supported version. These listeners are addressable by advertisers.
To put this into perspective, Spotify recently announced that it reached 100 million active users globally. This number represents their entire audience: free addressable and paid non-addressable, U.S. and global. When we look at comScore metrics, Spotify’s U.S. listener base is 53 million, with only 63% being addressable. This is important for U.S. advertisers to consider when making media decisions.
Spotify 100 MM global user count from news reports, June 20, 2016.
Spotify U.S. MUV metric from comScore Multi Platform Top Properties, June 2016.
Spotify U.S. paid and free user estimates are based on global 37 MM paying subscribers, reported on July 8, 2016.
Pandora MUV metric from comScore Multi Platform Top Properties, June 2016.
Pandora paid subscriber count from Pandora internal metrics, June 2016.
Addressable Millennials Spend 2.3x More Time With Pandora
Until recently, advertisers had no way of easily comparing addressable audience sizes using third-party research. But new data from Edison Research’s Share of Ear study helps paint a clearer picture, particularly as it relates to Millennial listening behaviors.
The latest Share of Ear (Q1, 2016) shows that addressable U.S. Millennials spend 2.3x more time streaming on Pandora than Spotify.
How to Make a Smarter and More Effective Digital Audio Media Plan:
The more you know about a publisher’s addressable audience, the smarter decisions you can make about where to spend your dollars.
1. Examine the numbers: The headline doesn’t always tell the whole story. Dig into the numbers so you can intelligently compare your investment options side-by-side.
2. Ask for addressable audience metrics in your RFP: Request that your campaign reach and frequency goals measure against accurate U.S. addressable numbers.
3. Get more data: Your Pandora sales representative can provide you with additional Edison addressable data based on age, gender and ethnicity. Just ask!