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Pandora CEO Joe Kennedy says the company just wants its “fair share” of the radio advertising market.Speaking on stage at the Billboard FutureSound conference, Kennedy said that the radio ad market today is between $13 and $14 billion.
Pandora has the equivalent of 3.7% share of all radio listening.
That means Pandora should be collecting at least $480 million a year in ad revenues.
It’s not. In its last quarter, it had ad sales of $66 million, for a runrate of about $260 million a year.
So the bull’s case for Pandora would suggest that the company should be able to nearly double its sales without any more gains in market share.
But that assumes that advertisers will someday be willing to pay the same rates for online and mobile ads as it does for terrestrial radio. For that to happen, Pandora will have to prove to advertisers that its ads are just as effective at driving purchases and building brand awareness as traditional radio ads are.
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