Pandora Woos Drive-Time Radio Advertisers, says Bloomberg

October 20, 2010

As mobile broadband continues to find ways to deliver in-car Web content, traditional radio advertisers such as MillerCoors and Hallmark are keenly interested in the kind of targeted listening that interactive Web music services such as Pandora may soon provide during drive-time commutes. According to a story, the introduction of in-car Web-based audio devices may compete aggressively with terrestrial radio for national advertisers because Pandora and similar services provide not only individual listener psycho/demographic data to advertisers, but can also match ads with individual users based on those profiles.

One example cited a spokesman from MillerCoors who suggests that Web-based ad delivery makes it possible to deliver their spots to a 21 and over crowd only -- something that's virtually impossible to do with satellite or terrestrial radio.

Pandora figures to more than double its revenue this year, and will rely on ad revenues for much of it. By tapping into the high volume of commuters who traditionally have relied on terrestrial radios or personal playlists in the car, the company hopes to reach profitability in spite of demanding statutory performance royalties required by SoundExchange. And Pandora won't be alone. Similar plans are afoot at CBS-owned, Slacker, Spotify, and other customizable Web music services.

The Bloomberg article points out that even though Web-based radio is currently taking only a tiny fraction of total U.S. radio ad revenue, many in the ad industry expect the terrestrial/Web revenue ratio to shrink steadily.

Several domestic and foreign automakers, including Ford and Mercedes, are including OEM Internet radio options in their audio options packages, with more companies planning to add them next year.

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