There’s no denying that radio’s commercial loads are way too long on most stations around the country. Executives — and programmers — have complained for years about how overloading hour after hour with unending stopsets is driving away listeners. And Pandora CEO Roger Lynch sees that as an opportunity to take away some of radio’s $16 billion in annual advertising revenue. Lynch was a speaker at the Morgan Stanley Technology, Media & Telecom Conference on Wednesday where that very topic came up. Here’s what he had to say.
While Lynch did not agree with a questioner who said broadcast radio is dead because of its never-ending commercial loads, he did see that flaw as an opportunity for his company. “Ad load on Pandora is a fraction of the ad load on radio. We couldn’t just increase ad loads, because our listeners would not let us get away with that. But, that pain point, of the ad loads on terrestrial radio is an opportunity for us.”
Lynch revealed a three-point plan that Pandora has to incorporate in order to chip away at radio’s revenue. “For us to really attack that in an effective way there are three things we need to do. One is we have to make Pandora as easy to use as when you get in your car and you push the ‘on’ button on your radio. Pandora has to become that easy to use.”
“Secondly, we have to expand our content offers. Even though 80% of listening on FM radio is music, there’s still 20% that matters, and that 20%, if you don’t have it, becomes an off-ramp. So its not a question of I’ll spend 80% of my time listening to Pandora and 20% listening to radio. No, they will stay on the radio and switch back and forth on the dial. As we start to expand our content offer that gives us a more effective way to go after that (20%).” Lynch is referring to Pandora getting into more spoken-word programming, such as podcasts, where the cost of content is nowhere near it is for music. He says the company is building a Genome Project for Podcasts, much like it created for music, making it easier to match podcasts to the likes of the listener.
And lastly, Lynch says Pandora is going to have to shine at personalization. “We have to make sure our personalization is so good that we know every morning when you get into your car and know what you like to listen to, whether it’s a certain kind of music, or a podcast.” Lynch says if Pandora can deliver on that personalization strategy it will help the company go after terrestrial radio.
Lynch also said Pandora still has local salespeople in 37 U.S. markets but the company is moving away from the high cost of local sellers and more toward inside sales — automation and programmatic.
He said the company wants to eventually be able to offer small businesses the opportunity to easily purchase ads like they are now able to do with Facebook and Google. Of course, for radio reps that also means less time for them to be in front of clients, creating relationships, which is where good radio salespeople shine. It also means radio will continue to dominate when it comes to serving the community with events, raising money for local charities, and local news…those that still provide it anyway.