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Why Microsoft, Zynga, Pandora Are Better Investments Than Facebook

NEW YORK ( TheStreet) -- A quick skim of my article history on TheStreet reveals that I am a long-term Facebook (FB - Get Report) bull. With that in mind, I intend no bearish takeaways from this piece.

It's just that if I am ranking stocks in order of bullishness, several in the broad space -- other than the obvious -- get the nod before Facebook.

The overall concept and future of mobile monetization confuses investors. While understandable, it's a shame. By not buying weakness on the companies that will lead the mobile revolution, you miss out.

I've covered several angles regarding this confusion already, but I have hardly touched on what might be the most important one. And it's what makes Pandora (P - Get Report) a better long play than Facebook.

Practically every take you read or hear on mobile monetization includes the same meme: ... As Facebook and Pandora struggle to monetize growing numbers of mobile users ... It gets repeated so often that, in short order, recipients of the information uncritically accept it as fact. That's how a meme rolls.

It's at this juncture where an understanding of what Pandora is actually doing can come in handy for investors.

Simply stated, Pandora is going after ad budgets historically dedicated to traditional radio. It's doing this on the national level; however, the real disruptive power comes at the local level. Pandora will see more success than Google (GOOG) at the local level because Pandora enjoys a relatively clean and targeted sell.

When it pitches a local advertiser who has traditionally spent his or her money on local radio, Pandora needs to sell the prospect on why it is a better choice than terrestrial radio. It's hardly about selling the value of mobile to this type of advertiser; instead, it's all about getting this person to move some portion of the business ad budget away from terrestrial radio and to Pandora.

Examples showing this transition is well underway continue to roll in. The latest evidence comes from the nation's third-largest radio market, Chicago, where Pandora has just expanded its sales team.

In Chicago, Pandora already counts advertisers as diverse as local car dealers, restaurants and the Chicago Cubs as clients. As a local agency ad buyer told the Chicago Tribune: "We've utilized Pandora ... from the audio side and from the mobile display side. But the money for Pandora is absolutely coming out of the radio budget."

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