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WARNING! WARNING! Pandora Targeting Radio's Advertisers And Station Clutter.

July 12, 2011


Pandora executives are making it crystal clear how they plan to grow revenue. They are going after radio's advertisers, both national and local and they say they are delivering a "dramatically better radio experience." And, Pandora is going after an Achilles heal for radio, overloaded stopsets and hours and hours of clutter, be it commercials, talk, liners, whatever. Pandora is downloaded on one out of every two smartphones purchased. It has delivered 3.9 billion listener hours in fiscal year 2011. And, Pandora executives say, "listeners are in control." "A far cry from what listeners are used to with radio" according to Tim Westegren.

Pandora President and CEO Joe Kennedy explained to investors why Pandora is seeing early results at the expense of radio. "We get a modest premium over traditional broadcast radio. We'll get that for a :15 spot over what advertisers would pay for a :30 or :60 spot on radio. The key differences are: our ads are targeted, interactive and measurable, which is not the case for radio. And it's such a superior environment, less cluttered. If you are the advertiser on broadcast radio, you are one of 13 minutes of advertising in an hour. It's much less valuable to an advertiser to be stuck in the middle of a 6-minute pod." He added "Pandora is this wonderful environment that really allows an advertiser to focus on communicating its message to the target consumer as opposed to trying to break through the clutter."

Pandora Chief Revenue Officer John Trimble discussed the $37 billion radio advertising pie. "While that pie is not growing, we see it as an opportunity." Trimble also discussed the local sales teams calling them "our feet on the street" offering advertisers sight, sound, motion and emotion. He showed investors a slide with details of the company's expanding sales offices. And he said Pandora has had 8 quarters of triple digit revenue growth. Another very interesting point made by Tim Westegren in today's call was the fact that Pandora has been holding listener town hall meetings all around the country to get feedback. When was the last time your radio station held a town hall listener meeting? When you do, perhaps the opening question should be, are you all comfortable hearing 15-20 minutes of commercials and chatter every hour? just remember to duck after you ask.

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