Storyline 2013: Pandora’s new CEO and local sales

Storyline 2013 is a year-end running review of 2013 events, themes, and pivot points. How will you remember 2013? Put your suggestion in the comments.

Storyline 2013 02Pandora, the leading Internet radio brand, is in the news just about every week. On March 8, then-CEO Joe Kennedy resigned his position, and the hunt was on for a new captain. That search took six months. On September 12, Brian McAndrews was named Pandora CEO.

By itself, rearranging the deck chairs might not be an important milestone. But the McAndrews appointment signaled the company’s intention to focus on monetizing the market-leading audience that Kennedy had built. Pandora is a dual-revenue operation, earning about 20 percent of its income through paid subscriptions, and 80 percent through advertising to the non-paying listeners.

As we wrote in our announcement;

“The selection sends a clear signal of Pandora’s intent to double down on monetization of its leadership position in Internet radio, so it’s no wonder that Pandora stock jumped nearly 10% this morning. McAndrews comes with a deep pedigree in digital advertising.”

brian mcandrewsMcAndrews’ three-month tenure cannot be wholly credited with the startling build-out of Pandora’s local ad sales network in 2013, which is at the heart of this storyline. That network today comprises 29 major-market offices staffed by 80 salespeople.

Pandora’s success in this context touches on important points of technology and business modeling. While broadcast radio has the relationship advantage — feet on the ground in its markets for years — Pandora claims to provide better audience targeting and tracking. Pandora also offers a mix of banner and audio ads, scheduled to a much lighter ad load than most broadcast stations. The constrained supply affects CPMs, which VP Dominic Paschel recently described as multiple times higher than non-local CPMs.

As the local sales expansion continues, 2014 shapes up to be a full-on, year-long, head-to-head competition for local ad dollars between Pandora and major-market radio stations.

Brad Hill