Pandora Hires DigitasLBi SF as Lead Media Agency

Internet Radio Service Has Been Putting More Money Behind Its Marketing

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Credit: Andrew Harrer/Bloomberg
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As the number of competitive music streaming services increases, so will Pandora's marketing efforts.

Pandora has named DigitasLBi's San Francisco office to be the internet radio company's lead media agency. The Publicis Groupe shop replaces Compass Point Media, part of Interpublic Group's Mithun, and joins lead creative agency TwoFifteenMcCann on the Pandora agency roster. Several agencies pitched for Pandora's business, though the company declined to name specific shops. A spokesman for Compass Point Media did not respond to a request for comment.

Pandora CMO Simon Fleming-Wood said the company tapped DigitasLBi for its digital marketing experience and "great respect for data and what can be accomplished with data."

The company's needs have evolved in part as the landscape as evolved, Mr. Fleming-Wood added.

Pandora is more popular than rivals iHeartRadio, Spotify and Apple's iTunes Radio, according to a study conducted by Edison Research and Triton Digital published in March 2015. Based on a phone survey of 2,002 people in the U.S. that were at least 12 years old, 34% of respondents said they had listened to Pandora within the last month, while only 11% said the same about iHeartRadio or iTunes Radio and 10% for Spotify.

But Pandora -- which started out in 2000 as TheSavageBeast.com and changed its name to Pandora Media in 2005 -- has had a head start on the competition. IHeartMedia (née Clear Channel) introduced iHeartRadio in 2008, while Spotify didn't make its U.S. debut until 2011. And Apple rolled out iTunes Radio in 2013, then last month bundled it into a larger music streaming service called Apple Music.

Amid the new competition, Pandora has increased its marketing budget in the past year.

Pandora spent $277.3 million on sales and marketing overall in 2014, up 157% from the year before.

In the first quarter of 2015, Pandora spent $84.3 million on sales and marketing, a 36% increase from the quarter a year earlier. Most of that increase came from added employee-related costs, though the company also spent $5.6 million more on brand marketing, direct-response advertising and search ads.

Until last year Pandora had largely relied on word-of-mouth marketing to make people aware of the service and get them to sign up to use it, according to Mr. Fleming-Wood. "The first 250 million registered users of Pandora came before the first brand media dollar was spent," he said.

That can be interpreted two ways: Pandora has done pretty well for itself with little marketing effort, but it also could do better, considering that only 79.2 million people actually used the service in March 2015, despite the far higher number signed up.

Pandora ran its first brand campaign at the end of 2013, but only on Pandora. "2014 was the first time we spent brand dollars off of Pandora," Mr. Fleming-Wood said.

Pandora's most notable campaign to date was called "Thumb Moments," which surprised some listeners with personal live concerts by one of five artists when users gave one of their songs a thumbs up in the app. The campaign won a bronze Cannes Lion this year in the radio category.

Pandora and DigitasLBi execs declined to comment on the company's marketing plans. "We officially kicked off July 1st and are well into planning what the back half of the year will look like for Pandora," said Dave Marsey, exec VP and managing director of DigitasLBi's San Francisco office.