Pandora‘s share price sunk by a painful 8.2% yesterday, following a fault-finding report from an influential analyst.
OTR Global analyst Michael Foster zoned in on the digital radio firm’s new programmatic buying platform for advertisers but came away with some less-than-glowing conclusions.
Suggesting that the platform has resulted in “tepid buyer enthusiasm”, Foster included quotes from anonymous sources, including brands who had tried out the ad platform.
“We were approached earlier this year to test out Pandora’s private exchange. It has boosted both CTRs and conversion rates,” said one source.
“However, what we can do with it is fairly limited, and total volume is still miniscule compared to Facebook or Google, so that has limited our spend on it.”
Other sources expressed “disappointment” that the programmatic platform was visual only and did not cover audio advertisements.
MBW reported earlier this year that Facebook now has more than ten times the users of Pandora and Spotify combined.
There was worse to come for Pandora, with other commentary from Foster and his sources looking at the market share of streaming music.
Quotes from sources on this area included:
- “This quarter, we were looking more at Spotify instead of Pandora. The reason is that we have a much younger market; Pandora doesn’t fit in with our objectives.”
- “Spotify is stealing a little share from Pandora because its total inventory is growing.”
However, other sources were wary of pouring too much praise on Spotify:
- “Spotify has audio everywhere and business-level targeting; their share is still not significant.”
- “Nothing can compete with Pandora in terms of size, scale and the quality of their sales folk. I know Spotify gets a lot of news, but they don’t have the inventory where we need it. As for iHeart [Media Inc.] and CBS, they’re light years behind Pandora on digital.”
At last count, Spotify had 75m active users, with 25m paying subscribers.
Pandora revealed in April that its active user tally – the vast majority of which are free listeners – dropped by 2m people to 79.5m in the first three months of 2015.
Elsewhere in Foster’s report, he noted that total ad spending in the second quarter of 2015 on Pandora rose year-on-year.
The analyst noted that the new Pandora programmatic platform brought a “small-but-limited” lift to this ad income, which would have fallen otherwise.
Pandora’s share price of US $14, having dropped $1.25 yesterday, is now the lowest it’s been in over two years.
As a result, its market cap has dipped under $3bn to $2.96bn.
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