Post-IPO, Will Pandora Go Hyperlocal?

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Over a year ago I got a chance to sit down with Pandora founder Tim Westergren for a long interview about the company. Tim is an incredibly nice guy and a real open interview, which is wonderful for journalists. His story is compelling, and the IPO is a real salute to his endurance and fortitude. But in our conversation about business models and Pandora, the most compelling feature he discussed was a hyperlocal, blue-sky idea that sounded incredibly cool. It left me thinking back then that Pandora could become a hyperlocal powerhouse when that ad market developed.

Here’s the story: As everyone knows, Pandora is primarily ad-supported (users who opt not to pay have to listen to the spots which interrupt audio streams). The company has to date not really pursued heavily targeted advertising. This means lots of spots for and other big SaaS providers. Westergren told me that their ads run at a high premium because people tend to react to them more, for some reason. And Pandora has taken some steps to make the ads more noticeable both on the desktop and in audio streams.

What Westergren — a total music geek, obviously — told me his dream would be to provide a way for, say, the local club owner to advertise the weekly lineup for Friday night to Pandora listeners living with 20 miles of the club who follow similar genres of music. In other words, incredible geo-targeting based on affinity. Another scenario might be for restaurants that serve pizza or organic foods geo-targeting Pandora listeners who live in a particular zip code and are fans of the Grateful Dead (I’m stereotyping here but you get my drift).

Ultimately, Pandora would look to set up some sort of self-service facility that would let Mom-and-Pops buit their audio spots or put in place tools that might easily generate Click-to-Call metrics and other direct measurements of advertising efficacy. For much of the entertainment market, which previously was incredibly tied to the local alternative weekly in terms of getting the word out, a service like the one Westergren described could be nothing short of life saving.

Anyone who plays in a band or runs a club or a small art house movie theater can tell you that the hardest thing to do with these types of ventures is get in front of the right audience. To date, that’s been alt weeklies. You don’t search for bands on Google or on Facebook (you might have on MySpace, but probably not any more). So Tim Westergren’s ultimate gift to the local music scenes he so dearly loves might well be a great way to match listeners that crave new things in their nabe with clubs, bands, musicians (and restaurants, too) that are open to ads suggesting cool things to do related to their stream. Also, this could be part of the reason why the IPO went so well. After all, a highly-targeted hyperlocal advertising market future is part of Facebook’s whisper value. If Pandora can translate its ongoing success in advertising down to the local bar, the local pub, the local club and the local restaurants, then it might tap into a gold mine of a market.

Thoughts on my theory? Comments?

Alex Salkever’s Personal Fight column appears every Friday.