With the assumed announcement of Spotify brand apps at the Ad Age Digital Conference next week, online radio stations have been discussed and debated in the news a fair amount as of late—in particular Spotify and Pandora.

For those unfamiliar with each vehicle, you can check these links to read more about Spotify and Pandora here.

What does the rise in online radio mean for advertising and marketers? It’s an interesting question as both services offer users the chance to cut out advertising all together through subscriptions.  Yet, both services have relatively high licensing fees and royalty costs that need to be offset and need brands and advertisers to remain profitable.

Spotify hopes the brand apps announced next week will attract more advertisers.  One example of a “branded app” includes AT&T’s “Surround Sounds,” which plays songs based near where they were geographically played, recorded or written.  Reebok plans on introducing a Spotify app that streams songs more suited for working out.  Chief Marketing Solutions Officer Jeff Levick told AdAge that Spotify assumes that more money will roll in once marketers spend more on promoting their branded app.

As for Pandora, a recent New York Times’ article discusses its effort to reach out to more local businesses.  The article states that this year Pandora has already had 400 local advertising campaigns across the country.  It goes on to say that one of the advantages of marketing on Pandora is that the one 15 or 30 second ad spots run only every 20 minutes, as opposed to the traditional radio stations that can run for many minutes at a time — with your brand’s ad potentially lost in the middle of a long commercial break.  Ads on Pandora are prompted once a user has interacted with the site, thus increasing the likelihood that the ads will be heard.

It will be interesting to see how well the Spotify brand apps fare after they are launched next week.  They seem to be much better suited for larger brands like AT&T, McDonald’s, Reebok, and Intel who have already expressed interest.  Done properly, a Spotify app can become a new, dynamic way brands can become more a part of users’ worlds and shared through Facebook.

With Pandora, the targeted nature of the ads is a huge positive for marketers.  Advertisers can target Pandora users by age, gender, ZIP code and musical preferences.  The aforementioned New York Times’ article details how local advertisers have been able to reduce radio budgeting because Pandora ads can be so narrowly targeted.

As the advertising landscape continues to shift, these tools will continue to be major players.  Keep your eye out for innovative ways both Spotify and Pandora offer marketing solutions for brands.

Do you use Pandora or Spotify personally?  To market your brand? Do you think you would listen to and interact with one of the new brand apps for Spotify? Leave us your thoughts below.

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