Radio stations have only marginally leveraged the Web, generally via streaming news and music. Very little unique advertising has been sold. Aiming to fix that is TargetSpot, a two-year-old company that is working with 70 station groups to produce and sell both local and national audio ads.

Founded in summer 2006 and launched in January 2007, the 30-person company has raised $10.5 million. Funders include CBS Interactive, Bain Capital and Union Square Ventures (a seeming constant in NYC start-ups).

I visited last week with founder and CEO Doug Perlson, a former exec with Kanoodle/Seevast at the company’s vinyl and album cover festooned headquarters in midtown Manhattan. Perlson noted that while radio stations have long been part of the mix for local advertisers, their online streams haven’t generally had the volume to attract local ad dollars. “The ability to target even more granularly — by city or ZIP code — makes online radio more cost effective for local advertisers,” he said.

TargetSpot’s solution is to aggregate radio stations as an online network and to sell national and local audio ads. With “thousands” of stations participating, Perlson said, “we have the critical mass.” Earlier this year, comScore reported that TargetSpot had 15.3 million unique visitors. That number is likely to be higher now with the addition of new partners.

Advertising-wise, Perlson believes the potential of online audio ads is huge — especially with ads sold on a ZIP code and GPS-driven, geotargeted basis. “That’s where the market is going. It will become more and more granular and more local. You can run an ad between 34th Street and 42nd Street along Ninth Avenue.” One Manhattan advertiser, 123 Burger Shot Beer, for instance, has effectively used the system to target users going nears its location on 10th Avenue and 51st Street.

One surprise for Perlson is that it has been the traditional ad agencies that have reached out to work with TargetSpot, rather than the digital marketers. They “get” radio and also appreciate the real-time reporting and conversion rates that online delivers, he said. The digital marketers, however, have not really recognized the opportunity, even though it gives them “a captive online audience, and a rich ad format that stands out among other online formats.”

While Perlson believes that he’s set a solid foundation for TargetSpot, he knows he won’t have the stage to himself much longer. Google, which recently pulled out of the radio spot market, is apparently poised to launch a radio network that will compete for much of TargetSpot’s bandwidth.

Perlson is looking at the bright side of Google’s arrival. “Google’s new platform will alert more advertisers on the multifaceted benefits of Internet radio advertising,” he said.