Pandora Media Inc. is pulling multiple levers to get users to spend more time playing music through its various offerings, but soon the company’s fortunes could be a bit less tied to actual Pandora listening.
The streaming pioneer recently completed its acquisition of AdsWizz[1], an ad-tech platform that serves as a marketplace of sorts for programmatic audio ads. AdsWizz counts a variety of industry players as customers, and the idea is that the platform will help Pandora P, -6.55%[2] benefit from secular growth in audio and voice. In other words, the success of AdsWizz on a quarterly basis wouldn’t be completely correlated with listening trends at Pandora.
Pandora Chief Financial Officer Naveen Chopra told MarketWatch last month[3] that he sees his company as having “beachfront real estate” through its place in the audio-advertising world.
“We continue to believe there will be a lot of publishers who see great value in making sure that there’s a single platform for both buyers and sellers of audio,” he said. “That’s something that has really helped other digital formats scale.”
Read more: Pandora CFO says partnerships and programmatic ads will drive growth[4]
Now that the deal has closed, investors should expect more commentary on the business strategy around AdsWizz when Pandora reports its quarterly results Tuesday after the market closes.
Analysts have expressed mixed feelings about the potential of AdsWizz, especially since the programmatic landscape is getting more crowded.
“Acquiring AdsWizz (closed end of May) could put Pandora in a position to catalyze the development of a programmatic digital audio market, although Google announcing the availability of programmatic audio through DoubleClick Bid Manager in late May represents competition for that position,” Morgan Stanley analyst Benjamin Swinburne wrote in early July.
He rates the stock at equal weight with an $8 price target.
Instinet analyst Mark Kelley, who recently began coverage[5] of the stock with a neutral rating and $8 price target, took a somewhat more optimistic view.
“We believe Pandora’s acquisition of AdsWizz and efforts to boost non-music content position it to benefit from secular tailwinds resulting from the shift in listening time from broadcast radio to digital audio,” he wrote.
Another interesting point related to AdsWizz is that Spotify Technology SA SPOT, -5.10%[6] was reportedly a customer of the service[7] before Pandora’s move, according to B. Riley analyst Barton Crockett. When MarketWatch asked Chopra about Spotify’s status nowadays, he said the company didn’t comment on any specific partners. ...