### Measuring Consumer Sensitivity to Audio Advertising:

A Field Experiment on Pandora Internet Radio

A randomized experiment with almost 35 million Pandora listeners
enables us to measure the sensi-tivity of consumers to advertising, also known as the demand curve for Pandora ad-supported listening.

The experiment randomized listeners into nine treatment groups, each of which received a different level

of audio advertising interrupting their music listening, with the highest treatment group receiving more

than twice as many ads as the lowest treatment group. By keeping consistent treatment assignment for

21 months, we can see that the long-term effects of a change in "ad load," or number of ads per hour,

take over a year to be fully realized. We estimate a demand curve that is strikingly linear, with the

number of hours listened decreasing linearly in the number of ads per hour. We also show the negative

impact on the number of days listened and on the probability of listening at all in the final month. Using

an experimental design that separately varies the number of commercial interruptions per hour and the

number of ads per commercial interruption, we find that neither makes any difference to listeners except

for the way they increase the total number of ads per hour. Lastly, we find increased ad load causes

a significant increase in the number of paid ad-free subscriptions to Pandora, particularly among older

listeners.

*This version: 20 March 2017*