• by Joe Mandese  @mp_joemandese, February 22, 2018

Pandora, the mostly ad-supported digital music service, has finally embraced programmatic. It reported mixed quarterly results, but touted future revenue potential, based largely on its programmatic embrace.

To emphasize that, the company used the term “programmatic” seven times during its prepared remarks to investors and securities analysts. While that’s less than half the times it referenced “subscription” services, it signals the future of Pandora’s “monetization” strategy is moving more toward digital media buyers and advertisers than consumers.

“Last quarter, we spoke about our need to invest in ad tech, including increased focus on programmatic, which will leverage many of the strong capabilities we already have -- scale, targeting and innovative ad formats,” CEO Roger Lynch said.

This week, he noted, the company announced the beta release of its “programmatic audio offering” in a pilot with Volkswagen, its media shop Omnicom Media Group and DSPs, including The Trade Desk, MediaMath and AdsWizz AudioMatic.

“These offerings are expected to drive RPM growth over time by increasing sell-through and optimizing CPMs,” he asserted, adding  the company is investing in other “important ad tech initiatives,” including new ad formats, measurement and a “self-serve” interface. It will not share details until later in 2018.

Reactions from securities analysts were mixed.

In a note to investors, BMO Capital Markets Dan Salmon described it as “both positives and negatives, but progress being made.”

“Active users/listener hours remain under pressure (as expected), but we are encouraged by further improvements in the monetization of the core advertising business,” he explained. “That should continue to get a boost from the launch of programmatic audio/video and ongoing ad-tech investments.

“While the near-term outlook for user growth remains challenging, we believe pressure should abate as the year progresses and, when combined with the growing contribution from the subscription business, see the company returning to double-digit revenue growth in 4Q18.”

“The financial metrics are lumpy in the near term,” wrote Raymond James’ Justin Patterson. “Nevertheless, the company is moving in the right direction; subscription is benefiting revenue and operating cash flow, advertising has several potential levers (e.g. programmatic).”