Pandora gives a clue to how it’s pitching to local advertisers

As it works to penetrate the local radio ad market, Pandora provided a peek into its ad sales pitch during a presentation yesterday at the Barclays Capital conference in New York. To illustrate how hyper-targeting can make for a more efficient buy, CEO Joe Kennedy singled out a Honda dealership currently running an ad campaign on the pureplay service. Located in Union, NJ, Planet Honda is well within the signal coverage of most New York City stations but draws a majority of its customers from a slice of the metro in Northern New Jersey. The dealer could buy local New York radio, Kennedy said, “but they don’t get people coming in from Long Island, Connecticut or upper Westchester County to Rt. 22 to buy their cars.” Because Pandora collects email addresses, age, gender and ZIP code information from its listeners, advertisers such as Planet Honda “can focus 100% of their spend on the ZIP codes that they know, based on their experience, are the sources of their business,” Kennedy said. In what may be a standard boilerplate pitch as it puts more feet on the street in the top 10 markets, Kennedy contended that a time buy on a pricey New York station would “probably waste two-thirds of their spend on consumers who have no chance whatsoever to show up in a Planet Honda dealership.” In addition to positioning itself as a more efficient buy than broadcast radio, Pandora is also touting the advantages of giving clients the only audio spot in a commercial pod, as opposed to being one of many. It currently averages 1.5 audio commercials an hour and has capped spotloads at three units an hour. The company is also posturing itself as more measurable and interactive than broadcast radio. With Pandora’s monetization efforts not keeping pace with its mobile consumption, penetrating the local ad market is a critical part of the webcaster’s strategy. Mobile usage accounts for roughly 70% of Pandora listening but only one-third of its revenue. As music royalties gobble up more than half of its revenue, Pandora’s mobile usage-revenue mismatch has spooked some investors. Kennedy reports “very significant success” in executing the company’s mobile monetization strategy but notes that it is at a “tremendously early stage of development.”