Private Ad Exchange: A Strategy from Pandora to Boost Mobile Ad Revenue
Pandora which is the most well known streaming radio service in the US with about 76.5 million unique visitors every month has started banner ads for advertisers which will be running in its mobile app.
To facilitate this process Pandora has created a private ad exchange for conducting live auctions where advertisers will be able to place their bids. In addition to this, at the time of auction the brands will also be able to select the type of listeners to whom the ads will be visible.
Looking Back at Developments From The Last Year
These live auctions were started only last year when Pandora felt the need to sell a few extra ad slots for banner ads that were running on the web site. At that time auctions were utilized by advertisers to focus on people who have been to advertiser’s website before (known as retargeting).
In the latter half of 2014 Pandora tested the functionality where advertisers were allowed to target banner ads on the basis of demographic data of users such as gender, age and zip code.
This was an effective way of increasing value of auctions beyond retargeting and allowed advertisers to reach people who may not have heard about them.
Implementation of Private Exchange Auctioning
Starting this March, Pandora allowed few advertisers like clients of digital agency Essence, Ford and few others to use such demographic data for purchasing in-app ads using the private exchange auctioning.
Now the company is formally rolling it out and planning to brief advertisers about the system next week in France when Cannes Lions festival starts.
Efforts to Increase Ad Revenue via Mobile
This step of private exchange auctioning is being considered as a strategy to improve mobile display ad demand so that the company can close the widening gap between desktop and mobile business.
Despite the fact that out of the company’s overall revenue mobile business accounted for nearly 78% in 1st quarter of last year, Pandora is not making enough from advertising on mobile phones as it does when people are listening on their desktops.
If we look at the statistics, in 1st quarter, the company made $58.04 for every thousand listening hours (TLH) on desktop computers while the figure was considerably low at $34.92 TLH on smart phones.
In-app Display Ads
- It is worth mentioning here that these display ads are only served on a mobile device when Pandora is kept open on the device and is getting displayed on screen of the device.
- Additionally, private exchange auctioning is not open for all advertisers. Only those advertisers who have directly purchased ads from company’s sales team will be allowed to use the auctioning system.
This stipulation has been kept to make sure quality can be maintained for in-app display ads which are sold using the private exchange.
- Advertisers will be able to target ads according to the 350 segments Pandora has developed by utilizing its own as well as 3rd party data.
- Brands will also be allowed to use their own data like mobile device IDs which apps are allowed to collect after getting user’s permission.
We will have to wait and see whether this strategy works and Pandora is able to increase its ad revenue from mobile segment or not.