There is an alternative radio advertising opportunity available, one that indeed bears watching in the coming years. Some dealerships already use it on a local level; others have not embraced Pandora Radio Advertising. On a national level, however, they are already a major player.
Internet radio powerhouse Pandora, the country’s leading online radio service, has announced a national in-car radio advertising campaign beginning with many well-known national brands such as BP, Ford Motor Company, State Farm and Taco Bell.
Pandora radio advertising lets listeners create custom radio stations based on songs or artists they like. It then streams similar music to the song or artist the listener highlighted.
Pandora is currently available on nine of the 10 highest-selling vehicles on the road today, and can be found in 130 current vehicles. (This does not include the 200-plus aftermarket listening devices allowing Pandora access in cars.)
All told, Pandora reported more than 76 million active listeners in December, and 1.58 billion listening hours (up 13% from December 2012). According to Pandora CMO Simon Fleming, his company holds an 8.6% share of total US radio listening. That number continues to climb, as these figures are up from December 2012’s 7.6% share.
How Pandora Radio Advertising Will Work
The first in-car ads will be either 15- or 30-second spots, with 1-2 spots airing in each 20-30 minute session. There will be an initial adjustment period for Pandora in-car consumers who currently hear no ads, but these will still air at a lesser rate than any other Pandora radio advertising platform. Pandora One premium subscription service is always available for listeners who want commercial-free listening, but ads make up about 80% of Pandora’s revenue (with subscriptions accounting for the remaining 20%).
Pandora radio advertising is counting on its in-car radio advertising venture to be successful. While its revenues are up, Pandora has also taken on additional costs, such as increased marketing expenses and, of course, content. For example, it has expanded its sales force by more than 70% year-over-year to pursue a bigger piece of the $15 billion radio advertising dollars available to be won.
To become a truly profitable business venture in the future, Pandora must be able to increase its per-ad charge, and find ways to reduce its sales and marketing expenses.
FREE Radio Advertising Review
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