How Pandora Is Winning Over Local Advertisers

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Pandora recently announced it reached 400 local advertising campaigns in 2012. The figure represents a strong start in the company’s foray into local, although clearly it’s just a beginning.

Street Fight spoke with John Hilton, the company’s executive director of sales strategy, communication & development, about the challenges of selling Pandora to local merchants, fighting off challenges from iHeartRadio and Spotify, and the future of local sales.

You recently passed 400 local campaigns. Where will you be in six months?
A lot more. [Laughs] We’re very aspirational. Our company, from the founder and CEO to chief revenue officer, is aligned in creating a great platform for local advertisers to get their message out to a targeted audience. Things are going well. You can always hope to introduce new advertisers to a platform, but you can’t hope to control their experience. We’re just ecstatic that the overwhelming majority of our advertisers are having a great experience. They are getting a lot of interaction with the listeners. They are getting new customers. They are getting people to buy new cars or whatever their intent is.

What are some of the advantages you have when selling local advertising?
We started first with traditional radio advertisers, because they are familiar with the platform. Our key message is that Pandora is working tirelessly to redefine radio. When you think about the great aspects of radio, it’s everywhere. It’s in your car, in your room. It’s accessible. It’s easy to use. Just flick it on and it works. We’ve leveraged those two things as well. Most of our users are on mobile, but we also have the web and 500 consumer electronic devices out there. We have a lot of automobiles rolling off the lot that include Pandora. As we redefine radio, we are essentially everywhere now. We are easy. You put in an artist or a song and that’s about as much technology as you need. Where we start redefining radio is that we have great reach that is comparable to the major stations in every market, so it’s how you approach local advertisers that is the key. They have a limited marketing budget.

It’s really about helping the advertisers target their specific audiences. Is the target male vs. female? Certain age ranges?  Or is it more location based and will advertising in 3 counties versus the entire New York DMA do the trick? Just those three subtle differences right there could really target a campaign quite significantly, and make every single ad dollar that local advertiser spends with Pandora much more efficient.

Tell me about Pandora’s focus on political advertising.
You take an advertising segment that really thinks about demographics, and political is right up that alley. One of the things we’ve done to make it easier is to create Congressional districts that political advertisers can use in order to put their message in certain districts that they care about. On a national as well as local level, we expect that political advertisers who have a message to get out are going to use Pandora increasingly over the past couple of months. Based on some of the campaigns we’ve seen in the past, we’re hoping that we can deliver some results there.

On a local level, there are definitely going to be iHeartRadios, Clear Channel’s sales professionals telling their version of the story. Day in and day out I think we expect our sales professionals to show specific metrics with third-party sources and balance out some of the misinformation that is being spread out there.

What are some disadvantages of trying to sell Pandora to local advertisers?
From a radio perspective, there have been decades of certain buying styles using estimations of audience for traditional radio. The great thing about the digital world is that we know exactly how many people are listening and when, so we don’t have to estimate, but in order to accommodate and get into the style of buying that traditional advertisers are used to, we have to work backwards. That’s one of our hurdles. Having equal measurements of Pandora and other radio stations is beginning to happen now, but it’s really educating those buyers that it’s a new day, a new age, and we are redefining radio.

iHeartRadio is not selling advertising yet, but it seems like a natural move. Are you worried about them at all on a local level?
First and foremost, it shows that the industry is at a tipping point. iHeartRadio, Spotify — it’s really hard to question the viability of the streaming audio market when you see these large and significant companies making pretty tremendous investments in the space.

From a competitive sense, when you look at the numbers, the emotion that I would use to describe when we wake up every morning is one of enthusiastic optimism. Pandora right now has 69% of the marketshare. iHeartRadio, Spotify, all the others right now make up that 31% slice of the pie. That in itself is a tremendous lead. Not one that we’re resting our laurels on, but that Google Search-type marketshare [is great]. On a local level, there are definitely going to be iHeartRadios, Clear Channel’s sales professionals telling their version of the story. Day in and day out I think we expect our sales professionals to show specific metrics with third-party sources and make sure that we tell as accurate a story as possible and balance out some of the misinformation that is being spread out there.

You’re hiring more staff to beef up the local efforts, correct?
Over the last couple of years, Pandora’s revenue has doubled and our team has doubled. We’re over 500 employees in the company, and half of that is sales and sales support. What we’re really looking for is great local sales professionals in the market that we’re entering. Most of the time, those local professionals have sold both national brands as well as very local, single location spots. We don’t necessarily like to split our teams out solely local vs. national, but we have hired several people who have been in these important markets for the last several years. In our state, it’s really about educating local advertisers about the power of Pandora.

Are you looking to any specific markets?
We really are looking to bring in local advertisers from across the nation and in all verticals. When we look at the progress over the past couple months, it’s really evenly distributed amongst auto, education, retail, finance, energy, and others. We’re finding that a lot of advertisers are taking on to the efficiency and the ability in a local market, not to just reach a lot of people but reach a lot of the right people.

Noah Davis is a senior editor at Street Fight.

This interview has been edited for length and clarity.