Pandora says improved marketing will help win back listeners

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Pandora Media Inc.’s recovery showed signs of momentum Thursday when the company reported better-than-expected financial results, though listener-hours for the quarter still declined relative to a year earlier.

Chief Executive Roger Lynch told MarketWatch that Pandora P, +2.13%  started to gain speed in March as it benefited from new marketing initiatives. Pandora installed a new chief marketing officer at the end of last year and began conducting data-based marketing, whereas previously the company had focused on brand marketing.

Data-based marketing involves using the information that Pandora has on users’ listening preferences to entice them into spending more time listening to music on the platform. “We really have world-class data-science capabilities,” Lynch said. “We just never used them in our own marketing.”

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Lynch said March was the first month in a year and a half that Pandora brought back more lapsed users than it did a year earlier.

Pandora’s Premium Access feature, which lets users of the free online-radio product unlock a period of on-demand listening in exchange for watching a 15-second video ad, enables the company to call back listeners through knowledge of what they like to hear.

Premium Access lets listeners play any song on Pandora and is “not limited to any song or any playlist,” Lynch said, in what seemed like a reference to Spotify Technology SA’s SPOT, -5.66%  recently announced upgrades to its free product. Spotify’s version will let free users listen on demand to songs only in certain playlists.

Asked about the comparison to Spotify, Lynch said that Pandora “has the most expansive free music service there is” and that while there are theoretical limitations to the number of Premium Access sessions a user could unlock, they’re “so high we don’t see people hitting them.”

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Lynch also shared a bit more about Pandora’s purchase of AdsWizz, an ad-tech company. He believes AdsWizz will not only enable Pandora to enhance its ad-tech capabilities but also allow the company to be a platform for other audio companies and benefit from broader industry growth. Lynch called the AdsWizz acquisition “similar to what Google did when they bought DoubleClick.”

Chief Financial Officer Naveen Chopra said that from a financial perspective, the impact of AdsWizz will likely take place in “2019 and beyond,” though the company plans to speak with existing ad clients and publishers before that about some of the ad-tech initiatives it will be rolling out.

Pandora shares are down 46% over the past 12 months, while the S&P 500 SPX, -0.23%  has gained 10%.