Pandora is an international phenomenon that allows users and subscribers to tailor their music lists to their personal preferences. But its most recent effort to attract revenue focuses more on its local character, not its global presence.

To appeal to advertisers that might assign their marketing budgets to Pandora, instead of competitive channels such as traditional or satellite radio, it promises precise targeting. Rather than broadcasting to the entire city of Chicago, for example, a local car dealership can buy advertising space for Pandora users located in the same zip code. It also can target listeners of a particular gender or those with certain musical tastes. Such designations may prove particularly appealing for local political candidates who need to get out the vote among young voters, soccer moms, or some other familiar category.

Thus far, only around 400 local advertisers have taken Pandora up on its offer, but a Honda dealership in New Jersey asserts that its $10,000 investment in these ads quadrupled traffic to its website. Furthermore, the Pandora ads run separately, rather than in blocks of advertising, which may make them less intrusive and annoying to listeners. In this effort, Pandora is focusing on smaller businesses, rather than pursuing massive multinational corporations to advertise.

Of course, if they choose to pay a subscription fee, Pandora listeners can avoid advertising altogether. Moreover, Pandora cannot offer the same local appeal that many traditional radio stations do, such as providing local traffic or weather reports.

Discussion Questions

1. What types of segmentation does Pandora offer advertisers?

2. What elements of Pandora’s offer might be most appealing to small, local advertisers?

Source: Ben Sisario and Tanzina Vega, “Pandora Courts Local Advertisers, By Offering Well-Defined Listeners,” The New York Times, April 15, 2012.