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For the most part, Pandora’s quarterly numbers show a company headed in the right direction, with revenue numbers up substantially along with the population of active listeners. But questions linger about whether music listeners will pay attention to display advertising and just how many audio ads will users put up with.
As the internet radio company looks to maintain its ad revenue growth in hopes of reaching profitability by next year, CEO Joe Kennedy told analysts that there are no plans to in the near term to insert more than three audio ads per listening hour. But he conceded that Pandora (NYSE: P) will gradually increase that number over an unspecified period of time.
Kennedy didn’t provide much in the way of how much of its revenues come from audio ads and how many come from display beyond saying that both were growing. In the meantime, Pandora will be concentrating more on local advertising and that will likely mean more audio ads. However, he was quick to say that he would not be offering any more inventory beyond the three spots per listening hour to the ad sales force.
“Audio ads continue to grow in absolute terms and as a share of the total,” Kennedy said. “We have a foundation of graphic ads, in terms of video ads, and audio. Both are significant. It’s worth noting that we had no audio ads two years ago and its grown to become a substantial part of our offerings. Gradually, we see an opportunity to increase that. We won’t get remotely close to broadcast radio. We will be very careful and thoughtful in growing that.”