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Westergren: Ad Dollars Starting to Leave Broadcast for Internet Radio

Pandora’s chief sees ad shift, says tech is helping to drive the change

The future of radio is Internet radio.

That’s according to Pandora Founder/CEO Tim Westergren, whose company went public over the summer. Speaking at a packed Radio and Internet Newsletter Summit here in Chicago on Tuesday, he said Pandora is seeing the beginning of a shift in advertising dollars as money migrates from traditional broadcast to Pandora’s personalized music experience. In other words, Web radio is now part of the local radio ad buy in some markets, like Duluth, Minn. and Waukegan, Ill. to name a couple, according to Westergren.

“We’re seeing car dealerships starting to buy Pandora” as well as the hospitality industry, Westergren said. “Internet radio is beginning to draw advertising dollars because it’s targetable. It’s a richer experience, which leads to higher click-through rates.”

Technology is driving the change, he said, noting devices like Livio Radio’s Internet radio car kit.

Noting that Pandora’s sales staff is growing, Westergren reiterated that Pandora’s goal is “nothing less than having personalized radio on every computer, in every car, gym and home in the country.”

Clear Channel executives, however, are not completely convinced that Pandora or other personalized music services are going to spell the demise of over-the-air radio. The radio group launched the iPhone application for its iHeartRadio streaming music service on Monday.

The latest version of iHeartRadio still offers streaming from some 800 local stations, but Clear Channel Radio is highlighting its new “custom stations” capability. It will draw from a library of 11 million songs, and be offered commercial-free through the end of 2011. Clear Channel Radio pointed out in a release announcing the new iHeartRadio launch that its iHeartRadio has access to 10 times the songs that Pandora has.

— Leslie Stimson