In December 2017, three months after taking over as president and CEO of Pandora, Roger Lynch laid out his two main priorities for 2018: improving the company’s marketing initiatives and boosting its digital advertising technology.
Over the past several months, Lynch has made several strides towards addressing the former issue, bringing in Gap veteran Aimée Lapic as the company’s new chief marketing officer, announcing the company’s intention to use its rich data archive to optimize its marketing efforts and partnering with Linkfire to allow artists to take more control of their own marketing efforts.
Today, the company announced a significant move towards fulfilling that latter priority with the planned acquisition of digital audio ad-tech firm AdsWizz, in a deal worth $145 million in cash and stock, which Pandora hopes to finalize in Q2. That follows a Jan. 31 announcement that the company would be downsizing its staff by five percent in a restructuring designed to both cut costs and realign its goals towards ad tech and audience development initiatives.
“Since I joined Pandora six months ago, I have highlighted ad tech as a key area of investment for us. Today we took an important step to advance that priority and accelerate our product roadmap,” Lynch said in a statement announcing the acquisition. “With our scale in audio advertising and AdsWizz’s tech expertise, we will create the largest digital audio advertising ecosystem, better serving global publishers and advertisers while improving Pandora’s own monetization capabilities.”
AdsWizz, according to the company itself, is an “end-to-end technology platform” that connects its clients among the music, broadcasting and podcast spaces to the advertising world utilizing a “suite of solutions” that it has developed. Led by CEO Alexis van de Wyer — who will remain in that role following the finalization of the sale — the company operates in 39 different countries, whereas Pandora is currently solely available in the U.S., after shutting down its operations in Australia and New Zealand last year.
“For the last 10 years, our mission at AdsWizz has been to enable the global monetization of digital audio by building innovative advertising technologies for music streaming services, digital broadcasters and podcasters,” van de Wyer said in a statement. “We believe in providing value to all stakeholders — brands, publishers and listeners — through engaging and well-targeted advertising experiences.”
The acquisition will help Pandora as it continues to try to right the ship after sailing through an up-and-down 2017 that saw a slew of executive changes in its uppermost ranks. In the fourth quarter of 2017, advertising revenue dropped by five percent to $297.7 million from $313.3 million during the same period the prior year, the symptom of a six percent year-over-year decline in active users, to 74.7 million. At the same time, however, the company saw 12 percent growth in RPM, which measures revenue generate per 1,000 impressions for its ads. Even brighter, Pandora saw seven percent revenue growth overall year-over-year, boosted by a 25 percent increase in paid subscribers and a 63 percent jump in subscription revenue.