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 sensitivity of consumers to advertising, an important topic of study in the era of ad-supported digital content provision.  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 (also known as the price of ad-supported listening). 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 much difference to listeners beyond their impact on the total number of ads per hour. Lastly, we find that increased ad load causes a significant increase in the number of paid ad-free subscriptions to Pandora, particularly among older listeners.


This version: 3 November 2017

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