Pandora 2012 Annual Report Download - page 16

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Table of Contents
Advertising
We generate revenue primarily from advertising. In fiscal 2010, 2011 and 2012, advertising revenue accounted for approximately 91%, 87% and 87%
of our total revenue, respectively, and we expect that advertising will comprise a substantial majority of revenue for the foreseeable future.
We offer a comprehensive suite of display, audio and video advertising products across our traditional computer, mobile and connected device
platforms. Our advertising products allow both national and local advertisers to target and connect with listeners based on attributes including age, gender, zip
code and content preferences, and we provide analytics for our advertisers detailing campaign performance.
• Display Advertising. Our display products offer advertisers opportunities to maximize exposure to our listeners through our desktop and mobile
service interfaces, which are divided between our tuner containing our player and "now playing" information, and the information space
surrounding our tuner. Our display ads include industry standard banner ads of various sizes and placements depending on platform and listener
interaction.
• Audio Advertising. Our audio advertising products allow custom audio messages to be delivered between songs during short ad interludes. Audio
ads are available across all of our delivery platforms. On supported platforms, the audio ads can be accompanied by display ads to further
enhance advertisers' messages.
• Video Advertising. Our video advertising products allow delivery of rich branded messages to further engage listeners through in-banner click-
initiated videos, videos that automatically play when a listener changes stations or skips a song and opt-in videos that pause the music and cover
the tuner.
Our advertising strategy focuses on developing our core suite of display, audio and video advertising products and marketing these products to
advertisers for delivery across traditional computer, mobile and other connected device platforms. As listenership on our mobile platforms has grown more
rapidly than on our other platforms, we have sought to improve our advertising products for the mobile environment. For example, our introduction of audio
ads was driven by the growth of mobile listenership. In addition, our banner advertising products for display on mobile devices include standard banner ads
displayed on the Pandora app "now-playing" screen, "welcome" screen banners which are the first to display upon launch of the app, and other multi-
functional banners of different shapes and sizes. Further, advertisers can create "drag-and-drop" stations where listeners select among branded icons and drag
and drop the selected icon to automatically launch a station. We have also incorporated rich media touch screen initiated functionality, or "tap-to" technology,
to enhance connections between our mobile listeners and advertisers. "Tap-to" technology allows mobile listeners to expand banner ads, launch videos,
receive advertiser emails, dial advertiser phone numbers, download applications and access links to advertiser websites, offering increased listener and
advertiser engagement.
Our display, audio and video advertising products can be designed and modified by us and advertisers to create advertising campaigns tailored across
all of our high volume delivery platforms to fit specific advertiser needs. For example, our advertisers can create custom "branded" stations from our music
library that can be accessed by our listeners, as well as engage listeners by allowing them to personalize the branded stations through listener-controlled
variables.
Sales and Marketing
We organize our sales force into five teams focused on selling advertising across our traditional computer, mobile and other connected device
platforms. Teams are located in our Oakland, California headquarters, in regional sales offices in Chicago, Illinois; Santa Monica, California; and New York,
New York and local sales offices throughout the country.
Our marketing team is charged with amplifying Pandora's brand message to grow awareness and drive listening hours. We organize the marketing team
into three groups focused on communications, marketing analytics, and brand marketing.
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