Pandora 2016 Annual Report Download - page 28

• keeping pace with changes in technology and our competitors;
• competing effectively for advertising dollars from other online marketing and media companies;
• penetrating the market for local radio advertising;
• demonstrating the value of advertisements to reach targeted audiences across all of our delivery platforms, including
the value of mobile digital advertising;
• continuing to develop and diversify our advertising platform, which currently includes delivery of display, audio and
video advertising products through multiple delivery channels, including computers, mobile and other connected devices;
and
• coping with ad blocking technologies that have been developed and are likely to continue to be developed that can
block the display of our ads.
€
Our agreements with advertisers are generally short-term or may be terminated at any time by the advertiser. Advertisers
that are spending only a small amount of their overall advertising budget on our service may view advertising with us as
experimental and unproven and may leave us for competing alternatives at any time. We may never succeed in capturing a
greater share of our advertisers’ core advertising spending, particularly if we are unable to achieve the scale and industry
penetration necessary to demonstrate the effectiveness of our advertising platforms, or if our advertising model proves
ineffective or not competitive when compared to alternatives. Failure to demonstrate the value of our service would result in
reduced spending by, or loss of, existing or potential future advertisers, which would materially harm our revenue and business.
€
Unavailability of, or fluctuations in, third-party measurements of our audience may adversely affect our ability to grow
advertising revenue.
€
Selling ads, locally and nationally, requires that we demonstrate to advertisers that our service has substantial reach and
usage. Third-party measurements may not reflect our true listening audience and their underlying methodologies are subject to
change at any time. In addition, the methodologies we apply to measure the key metrics that we use to monitor and manage our
business may differ from the methodologies used by third-party measurement service providers. For example, we calculate
listener hours based on the total bytes served for each track that is requested and served from our servers, as measured by our
internal analytics systems, whether or not a listener listens to the entire track. By contrast, certain third-party measurement
service providers may calculate and report the number of listener hours using a client-based approach, which measures time
elapsed during listening sessions. Measurement technologies for mobile and consumer electronic devices may be even less
reliable in quantifying the reach, usage and location of our service, and it is not clear whether such technologies will integrate
with our systems or uniformly and comprehensively reflect the reach, usage and location of our service. While we have been
working with third-party measurement service providers and certain of their measurements have earned Media Ratings Council
accreditation, some providers have not yet developed uniform measurement systems that comprehensively measure the reach,
usage and location of our service. In order to demonstrate to potential advertisers the benefits of our service, we supplement
third-party measurement data with our internal research, which may be perceived as less valuable than third-party numbers. If
third-party measurement providers report lower metrics than we do, or if there is wide variance among reported metrics, our
ability to attract advertisers to our service could be adversely affected.
The lack of accurate cross-platform measurements for internet radio and broadcast radio may adversely affect our ability to
grow advertising revenue.
€
We have invested substantial resources to create accurate cross-platform measurements for internet radio and broadcast
radio in the major automated media-buying platforms, attempting to create a one-stop shop that enables media buyers to
compare internet radio audience reach with terrestrial radio audience reach using traditional broadcast radio metrics.
€
Media buying agencies receive measurement metrics from third parties, such as Triton for internet radio and Nielsen for
more traditional media like terrestrial radio and television. Media buying agencies may choose not to show, or may be
prohibited by contract from showing, internet radio metrics alongside traditional terrestrial metrics. Despite our efforts to
achieve parity within the tools available to media buying agencies, a lack of comparable internet radio metrics in these buying
tools could have a materially negative effect on our ability to sell advertising on our service and achieve our revenue goals.
Table of Contents
17