14 DAY TRIAL // Online radio may be facing a less uncertain future but it's not out of the woods yet and there is plenty of room to grow so a new advertising deal for Pandora, one of the biggest Internet radios, is a good sign that the business has a future. The company struck a deal with Clear Channel subsidiary Katz Media Group to provide it with audio ads, a segment that is getting a bigger focus lately, with more and more users listening on the go, as AdAge reports.
Pandora is seeing a big growth in user numbers and revenue but it wants to increase the frequency of audio ads partly because many are now listening to the service in their cars or on other mobile devices where traditional display ads don't make too much sense. As such, there may be two or three 15-second audio ads per hour, compared to just one or even none now, still a drop in the bucket compared to traditional radio.
The company also has to pay a license for the music it plays, something that regular radio stations don't have to deal with, yet Pandora expects to be profitable by next year and will bring in $40 million this year. It also secured $35 million in funding after a new licensing deal with the big music labels, which significantly lowered the fees per song.
Katz Media, Clear Channel's radio ad sales arm, will be supplementing the 18 digital sales team and the five audio sales representatives Pandora currently employs. There have been some concerns that partnering with Clear Channel, a company that has seen its share of criticism, might damage some of the credibility the online radio station has built up but Pandora founder Tim Westergren was quick to dismiss them saying that the partnership was just with the subsidiary and should not affect the company's goals and behavior in any way.