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Pandora CEO Pounds Radio's Weak Spot


Pandora CEO Joe Kennedy was interviewed by Goldman Sach's Internet analyst Heath Terry Wednesday morning where he continued his attack on traditional radio and his plan to chip away at radio's $15 billion in annual ad revenue. He said, "We see this year enabling us to accelerate our penetration of the traditional radio market." Kennedy also used Wednesday's appearance as an opportunity to take a swipe at radio's huge spot loads. An area he certainly makes a very good point as the radio industry has never seriously addressed its massive hourly spot loads.

Kennedy said the ad load on traditional radio is crushing at 13 minutes an hour, adding, in radio's model, the more you bury an advertiser in a stopset the more they want to do something goofy to get attention. "Pandora is closer to 1 minute. Traditional radio uses more 60 second ads and Pandora mostly 15 and 30 second spots." And although Kennedy was not specific with how many commercials Pandora will go to, he says the ad load three years ago was zero. "We gradually raised that to 1-2 ads per ads. We'll continue to raise the ad load but it will be much lower compared to where traditional radio is.

Kennedy said in 2013, Pandora will have salespeople selling in radio's top 25 markets, up from top 10. He says those salespeople will not be going after local restaurants and local spa's. "We're going after the bigger advertisers. These are large and medium sized businesses in the local markets. We are in earliest stages to disrupt traditional market of radio advertising.

On content cost, Kennedy said Pandora content cost Pandora pays is unfairly high and we're working to try to get that to a more fair level. At the same time we are so good at monetizing at what we do that we can build and make a good business model with costs where they are (40% of revenue). That, he admits, will come from adding more spots every hour.

EDITOR'S NOTE: I listen to Pandora every day during my workouts. Mostly because Kennedy is correct about stopsets on radio stations. They are way too long and most creative is very bad. So I use Pandora because it's too time consuming to flip through apps or TuneIn to find music when working out. However, it's just as annoying when constantly hit with a pop-up ad from Pandora on my phone. Most of those ads have zero relevance to me. Analysts have never asked Pandora about those.

Ed Ryan
Radio Ink

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