Smart Phone Advertising Essay

1220 Words Apr 4th, 2015 5 Pages
The music was pumping and the finger food laid out in abundance one recent evening in a subterranean Manhattan bar, as executives of Pandora Media, the Internet radio service, mingled with some of their most prized new advertisers.

Most of the clients, however, were not representing big corporate accounts or multimillion-dollar national campaigns, but rather local businesses whose budget might top off at $20,000 a month. Yet they are the focus of one of Pandora's most important new corporate strategies as it competes with terrestrial broadcasters for a chunk of radio's $17 billion ad market.
Pandora's pitch to advertisers is that its technology can cater to consumers with far greater precision than radio -- it can pinpoint listeners by
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The company's costs are a concern. Under the terms of its music licenses, it must pay more in royalties with each new user; last year it paid out $149 million, or 54 percent of its revenue -- a far higher percentage than broadcasters pay.
The path to profitability, as Pandora's executives and some of its champions on Wall Street see it, is through car dealerships and mattress shops.
''Local advertising dollars are the key component of Pandora's future success,'' said Jordan Rohan, an analyst at Stifel Nicolaus. ''And the company has amassed enough of an audience that it can no longer be overlooked by radio advertising dollars.''
This year, Pandora has had 400 local advertising campaigns across the country. One new client was Planet Honda in Union, N.J., whose president, William Feinstein, said he gave up on terrestrial radio years ago because he felt it cast too wide and expensive a demographic net.
But attracted by Pandora's ZIP-code targeting, he spent $10,000 to advertise on the service in January. IPhone traffic to his Web site -- which he attributes to the ads -- more than quadrupled, Mr. Feinstein said, and so he increased his spending to $15,000, then $20,000.
''A light bulb went off,'' he said at Pandora's party, holding a glass of wine. ''We don't need to buy five radio stations. We can buy one.''
Pandora believes the targetability of its ads will lead local businesses to see it as an attractive alternative to terrestrial radio. ''This is really

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