Katz Radio Says Pandora Numbers Don't Add Up
After reading the ratings numbers sent out yesterday by Pandora and Edison Research, Katz EVP of Radio Analysis and Insights Mary Beth Garber penned an opinion piece disputing the numbers. Garber called the Pandora numbers "fuzzy math" and "special math" as you'll see below. In response to Garber's editorial, Pandora spokesperson Deborah Roth said, "We long ago stopped commenting on what others say about Pandora."
The latest release posted on Pandora?s investors? website is another attempt to position Pandora as something it isn?t ? a radio station. I understand their radio envy ? they even refer to themselves as WPAN -- since Pandora is essentially a playlist maker set to shuffle. But what we took away from their announcement was its failure to reach half the country, fuzzy math, and no benefit for advertisers. So when it comes to Pandora comparing itself to broadcast radio, it just doesn?t WPAN out.
Pandora?s release centered around its having a strong presence in the top ten markets. But if the Pandora numbers are valid, then Pandora is essentially announcing that about half or more of its total listenership is restricted to the top ten markets in the U.S. Considering the top ten markets account for only about 25% of the U.S. 18-49 population, that leads us to the conclusion that Pandora is not being embraced outside these ten markets.
On the numbers front, Pandora is making claims based on what I?ll call ?Pandora?s ?Special? Math.? The company hired well-respected Edison Research to create ?average quarter hour? (AQH) ratings for ?Pandora Corporate? (as they are listed by Triton Digital) within two age segments in 10 markets in the U.S. We aren?t challenging Edison?s math ? they?re only crunching the data Pandora gave them. But we do wonder about all the data that seems to be missing. Like the geographic parameters of their ratings. In order to use the only accredited ratings available, the numbers must be reported in terms of TV geographic definitions (or DMA). If so, that would inflate their ratings when compared to the smaller Arbitron radio metro area. Therefore, they cannot be making an apples-to-apples comparison. In addition, we?re missing a statistic that?s critical for any real radio station -- the weekly cume of their listening. As to why that was left out, we?ve pointed out before that the average Pandora listener tunes in just 2.5 times a week ? clearly there?s not much of a cume to be generated by that.
Another example of Pandora?s ?Special? Math: In its initial analysts? call, Pandora claimed that it ?ended 2010 with 2.3 percent market share of all radio listening in the United States. Six months later, Pandora has increased its market share to 3.6 percent.? But anyone who looked at the numbers would see this was a mathematical impossibility. Triton Digital?s published ratings show a net increase of 6% in users for Pandora over that six month period. For Pandora to equal 3.6% of all broadcast listening, broadcast radio listening would have had to drop by a third -- 32.5% -- in that same period. But it didn?t -- In fact, broadcast radio listening remained consistent over that timeframe and, in the top ten markets Pandora targets, radio?s AQH has increased by 3.1%. And calculations by the two actual ratings sources for radio put all digital listening at about 3% of total radio listening. Without Pandora?s ?Special? Math, Pandora would account for possibly 1-1/2% of all radio listening.
As we?ve said before, Pandora is not the ideal vehicle for advertisers. Let?s look at ad targeting ? which is crucial when a buyer is considering which radio stations to include on a buy against 18-49 year olds. Broadcast radio offers targeted environments where advertisers? messages will have relevance and meaning. A rating without an environment is meaningless. Pandora doesn?t offer an environment, period, let alone a targeted one. So, for example, if the advertisement is for a Closed Circuit Boxing match, the spot could easily be surrounded by ballads from Celine Dion. Not what that advertiser signed up for, I bet.
Knowing radio?s place in the hearts, minds and daily lives of hundreds of millions of listeners every month, we don?t blame Pandora for wanting to be a radio station. But as the data continues to bear out, it?s far from succeeding in making that case.
(7/29/2011 10:23:04 AM)
This piece borders on desperate. What's the difference whether Pandora has a 3.6 share or a 2.3? They are big enough to be viable and at their current growth rate, even a 2.3 will be a 3.6 before long. As for not being comperably programmed with terrestrial radio - after 10 AM music TR is the same type of automated playlist vehicle as Pandora, but with inferior sound and much broader, less personal formatting.
Ad environment...jeez! Would you rather be one of four 15 second segments per hour where button pushing is almost impossible, or the last spot in one of three five minute stop set?
No, Pandora will not replace radio. But it will continue to be one of many forms of media that slowly erode it.
(7/29/2011 10:02:23 AM)Agreed - the world is changing, but if Mary Beth sounds like an apologist for the broadcast industry, the three of you sound like part-time air personalities who got fired for lack of talent.
You missed the obvious:
After the dot com bust, the real winners were the brick and mortar companies that leveraged the exposure to build their online brands.
(7/29/2011 9:57:54 AM)Wait, Katz Radio is challenging Edison's Pandora ratings or Mary Beth "Pandora Envy" Garber is challenging the research? Last time I checked Katz represents numerous internet radio properties, including Pandora?! Isn't Clear Channel, Katz' parent company, sort of agreeing that personalized radio is a real product (not a feature as their CEO once described it as) and using their own air to brand their new(?) iHeart Radio app..."just like Pandora"?? Who goofed, I've got to know?? So strange??
(7/29/2011 9:33:35 AM)
It's time for the radio industry to stop acting like Pandora is a "flash in the pan" and start realizing that the world is changing fast. Pandora, along with other companies like Google, Apple, Slacker, Spotify,and even CBS Radio's last.fm are changing the way consumers find and listen to music. There is no turning back. Start embracing this technology and use it to better your on air brands. Forget about streaming your on air product online and HD Radio. That is not the future that your listeners/consumers have in mind.
(7/29/2011 9:28:44 AM)
Mary Beth -- you must have failed to be hired at Pandora because every time I see your name it is attributed to an smut article bashing Pandora and imploring people to stay content with "Boss Radio" or some other cute, yet antiquated vision of radio and today's consumer consumption. You are a joke that has grown tired -please stop making an ass out of yourself with these ridiculous rants and harsh, off base poison pen pieces.
Respectfully, The Real World!
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