SAN FRANCISCO — Pandora’s date with destiny may begin in the car.
This year, 135 car models from 26 auto makers will be coming off the lot with Pandora built in, Pandora’s VP of strategic solutions Heidi Browning said during a panel at MobileBeat Wednesday. That’s a third of all new 2014 cars. Ten out of the 10 best-selling passenger vehicles in the U.S. now come with Pandora in the dash.
Most Pandora in-car integrations rely on the user’s smartphone and its internet connection. However, some Volvo models use an embedded modem for delivery of the Pandora application.
The car represents a huge opportunity for Pandora. The radio ad industry generated over $17.6 billion in revenue last year, and analysts say half of all radio listening happens in the car.
So, of course, Pandora would love to steal away some of that listening time from terrestrial radio.
Already, there are signs that people might prefer Pandora over AM, FM and satellite radio in the car. Five million users have now activated memberships in cars that have Pandora built in.
Pandora believes people are listening to its service in cars for about 6 hours a month. Pandora currently accounts for about 9 percent of all radio listening (digital and terrestrial) in the country, according to its Q1 2014 earnings report.
That’s mainly because people use Pandora for listening to music while driving. Only terrestrial radio can provide talk programming like local news, traffic and weather.
But Pandora has made some motions toward talk already. It’s begun offering a number of themed comedy channels. More types of talk may come later.
Pandora’s secret weapon against traditional radio may be its advertising tech. Ads on Pandora in the car may be more effective that ads on terrestrial radio.
Browning says all Pandora ads have a visual component and an audio component. Pandora believes this method is better than visual-only because consumers can intake an ad without having to stop what they’re doing, like driving.
And Browning says the audio in its ads result in more click throughs. “One thing about humans, when you give them an audio cue to click on that ad, they do that,” Browning said during the MobileBeat panel.
Pandora began running the in-car ads of six corporate partners in January. The partners include BP, Ford, State Farm and Taco Bell. Pandora’s stock shot up 15 points when this announced.
Right now Pandora mobile ads are targeted to users based only on zip code, but ads could eventually be targeted based on GPS location, or how close the car is to a Taco Bell, for example. The system could even predict when a driver will see a Taco Bell and send an ad or offer in advance.
Advertisers might be able to learn more about the response to their advertisements in the car, too. Pandora may one day be able to tell advertisers when and where a driver responded to an ad, or even if and when a driver turned off the radio in the middle of an ad. As of now, Pandora says it isn’t sending any of this kind of analytics data back to its advertisers.
Pandora says it now has just shy of 80 million active users of its free service per month, while more than 3 million people have premium memberships.
Pandora’s model is offering consumers a free music service with ads, with an upsell to a premium service without ads.
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