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Pandora?s mobile monetization strategy is working

Pandora is proving to be one of the early success stories when it comes to monetizing mobile via advertising, with the company reporting that its mobile revenue in the second quarter was up 86 percent from a year ago.

With such big brands as McDonald?s, Sony Pictures and IKEA running mobile ads on Pandora in recent months, it is clear that marketers are seeing an opportunity to reach Pandora users as more and more them spend time engaging with the platform on mobile devices. During the second quarter, Pandora?s mobile revenue, including subscription revenue, totaled $59.2 million and while the number of mobile hours was up 96 percent.

?Our core mobile monetization strategies are working and we believe that our scale coupled with our products and unique advertising capabilities give Pandora an advantage in capturing an out size share of media buying from advertisers as they shift their spending from traditional forms of media to online and mobile,? said Joe Kennedy, chairman and CEO of Pandora, Oakland, CA, during a conference call with analysts to discuss the results.

Mobile RPMs increase
Of the $59.2 million in mobile revenue, $53.2 million was ad revenue and the remainder came from subscriptions.

Pandora?s overall revenues grew 51 percent during the same period for a total of $101.3 million.

Pandora?s mobile advertising strategy focuses on enabling marketers to extend their Web-centric spending to multi-platform spending on Pandora so they can speak to the full range of their target audience as these consumers spend more time on mobile.

Additionally, the company is focused on offering mobile advertising solutions that bring targeting, interactivity and measurability.

Pandora also continues to focus on building out its mobile offerings for consumers. It recently released a new version of its Android app and updated its iOS app.

Where Pandora direct sells advertising, it is finding that the cost per thousand views, or CPM, for mobile and desktop products are similar.

Total revenue per thousand impressions, or RPM, on mobile and other devices increased from $19.8 in the 12 month period ended July 31, 2011, to $21.5 this year. Ad RPMs on mobile increased from $18.07 to $20.4 during the same period.

The numbers reflect an improvement in Pandora?s ability to monetize mobile through advertising. Total RPMs on traditional computers decreased from $61.3 to $54 during the same period.

Brands embrace Pandora
Over the past few months, Pandora has attracted an impressive list of big brands to run mobile ads within its applications.

For example, McDonald?s recently interactive campaign within Pandora?s iPhone application encouraging users to tap on the ad to find out about a summer promotion offering any size soft drink or sweet tea for $1 (see story).

Sony Pictures partnered with Pandora to promote is Total Recall film using mobile advertising, a branded radio station and a giveaway (see story).

Additionally, this summer Swedish furniture retailer IKEA ran an interactive promotion in Pandora?s iPhone app to helps consumers find the products they need for the upcoming school season (see story). 

?The consumer?s focus on a mobile device is dramatically different and more intense than the focus that a consumer typically gives a consumer screen and I think that is reflected in the kind of quick through and other response rates that marketers have seen and continue to see on the mobile device,? Mr. Kennedy said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York