Back in September, we speculated some of the reasons why streaming audio service Pandora could be a natural fit for local advertising. Now the story unfolds, as ClickZ reports it has shown interest in doing just that.
It is essentially spinning out an SMB-focused ad sales unit. This came from the need to free up national ad sales staff who were getting bogged down by incoming requests from local advertisers. On the other end, it has partnered with AdReady to have a ready-made display ad creation tool to offer to local advertisers.
AdReady could be a good choice in its simplicity (an imperative for small-business ad sales) and its success with display ad units. Display is the primary format seen on Pandora’s mobile and online consumer dashboards. AdReady has also worked with other local ad sales forces such as The New York Times and Univision.
The geolocation that Pandora brings to the table could meanwhile add more value to how these ads are targeted and measured. ClickZ quotes Pandora’s VP of performance ad sales, Brian Mikalis (formerly of AdReady):
“One of the differentiators for Pandora from other traditional sites is every single one of our users registers and gives us their zip code, so we can do that local marketing down to the DMA level very easily,” he said. “If you’re advertising on local markets on radio, you can do the same thing on Pandora.”
ZIP code level targeting isn’t such a rarity (especially in mobile), but his point is taken if the comparison is online banners or radio advertising. Pandora will also likely find that it will need a larger channel partner to augment/scale the effort. This is based simply on how advertiser acquisition costs stack up against average SMB spending budgets. Meaningful revenues only result from scale.
Yes, they’re getting incoming interest, which has motivated this expansion. But that could be an anomaly, not representative of the larger universe of SMB demand. Local ad sales is more push than pull — that much has been consistently proved over the past many decades. Size and strategy of the new ad sales team should play a factor.
But overall, we like what they’re doing here and their SMB targets are fitting to the product. AdReady CEO Aaron Finn tells my colleague Peter Krasilovsky that likely advertisers are music festivals, bands and colleges. Access to Pandora’s audience should resonate with this lot.
“The formation of a new inside sales organization is six months old but could represent a new direction for Pandora,” says Finn. “Working with AdReady will give them the ability to accept smaller advertisers in a more cost-effective way.”