For Pandora Media (P) , 2016 is pacing to be the breakout year for political advertising -- and it could be a proving ground for the company's business model even as management changes, unhappy investors and tough competition have pushed the stock price below IPO levels. 

About four years after formally introducing its advertising model, the 2016 election cycle could very well be the one that gives the streaming music provider a blueprint for success, especially as it continues to lure African-American and Hispanic listeners. The magic lies in Pandora's ability to hyper-target voters and its disruptive advertising model, according to company observers.

Oakland, Calif.-based Pandora formally launched its political advertising business in 2012 after receiving positive feedback from politicians who had used it in 2010, said Sean Duggan, vice president of political advertising at Pandora. Since then, Pandora has quietly served politicians, including New York City mayor Bill De Blasio in 2013 and Florida governor Rick Scott in 2014. Pandora saw the number of political campaigns that used its advertising platform triple to around 600 in 2014 from about 200 the previous cycle.

Pandora allows campaigns to cross-reference user data and ZIP codes and then serve them the appropriate ads between songs. To add a further layer of targeting, the system matches up a user's musical preferences with whether the musicians they're listening to are generally listened to by Democrats or Republicans. 

"What Pandora allows you to do is look at somebody who is listening to a Christian pop music band versus somebody who's listening to Queen. You get a different audience," said Albert Fried analyst Rich Tullo who covers Internet and entertainment stocks including Pandora. "If you're Hillary Clinton, you're probably going to after Queen people. If you're Donald Trump, you're going to go after Christian rock people."

This season, Pandora is on track for a total count that's "significantly higher" than 600, Duggan said, attributing this increase to the demand from advertisers from both Republican and Democratic campaigns to reach African-American voters.

As campaigners look at places to advertise outside television, they have been reaching out to Pandora to engage multicultural voters, he explained. While the multicultural-driven demand typically comes during the fall, Pandora has already been seeing a healthy level of interest.

Pandora, which saw over 500% increase in demand from advertisers seeking to reach multicultural voters during the 2014 cycle, contends that Hispanic and African-American voters visit political sites on mobile phones more than the broader group of voters. And campaigns have started to leverage Pandora's mobile offerings, Duggan said.

So far this year, Pandora has already worked with nearly 100 campaigns from presidential to local state races, and political advertising revenue is on pace to more than double since 2014. While Pandora doesn't break down its revenue figures, the company saw its overall advertising revenue grow 23% year-over-year to $220.3 million in the first quarter. In 2015, Pandora reported $933.3 million in advertising revenue out of $1.2 billion in total revenue. 

"Pandora benefits no matter what," said Tullo.

According to Tullo, Pandora will particularly enjoy healthy levels of advertising from local house and senate races. More advertising spending is expected to be spent in the senate and congressional races than the presidential election. This cycle, the local races will be competitive as the Republicans try to defend their control of the Senate and the House against the Democrats. In certain states, senate races will be hard fought as Republicans attempt to navigate through the Trump effect and prepare for a potential decline in voter turnout.

The thinking is that this election cycle will validate Pandora's model of advertising that hinges on its ability to hyper-target demographics. This particular strategy of targeting listeners is made possible by Pandora's deep database of users and what they're listening to. Deep dive: 2016 is a make-or-break year for Twitter

"It's thought of as cable advertising for radio," said Bill Day, vice president at media consulting firm Frank N. Magid Associates who has advised on political campaigns. "Depending on how robustly they created their user profiles and demographics, they can do much better messages that will drive voter suppression or voter execution." By "suppression" Day means that campaigns will use negative advertising to try to dampen enthusiasm for rival candidates. On the other hand, "voter execution," with the message of urging people to go to the polls, has proven to be effective on mediums like Pandora. It is expected to be an unusually negative campaign, with Donald Trump and Hillary Clinton, the two major party candidates, having high disapproval ratings. 

Another advantage Pandora has is its ability to enforce disruptive advertising, referring to a type of advertising that interrupts what a consumer may want to do, whether it's listening to music or watching a video.

Generally speaking, disruptive advertising has a disproportionate effect on consumer behavior compared to advertising that one can easily ignore, according to Day, comparing ads on Pandora to ads on sites like Facebook.

"It's a living, breathing ad versus a banner ad," said John Rowley, a political media consultant at Fletcher Rowley, who thinks that 2016 will be the Internet radio services provider's biggest political cycle than the last few cycles combined. 

Meanwhile, the election season is taking place as Pandora tries to find its way through management shakeup and pressure from a disgruntled investor. The stock has been trading at pre-IPO levels and is about 67% off its all-time high of $37.97, which it hit in February 2014. 

Just in April, Pandora founder Tim Westergren was named CEO and former chief executive Brian McAndrew stepped down. The following month, 10% stakeholder Corvex Management launched a campaign, urging the company to hire an investment bank and explore a sale.

At the same time, Pandora isn't the only player in the online music streaming sector that has started to test the political advertising market.

Privately held Spotify, for instance, has long been a platform for politicians in Europe, with the U.K. Tories being the first U.K. political party to launch a campaign on the streaming services company in 2009.

Still, the business models of Spotify and Pandora differ in that the former is an on-demand service that allows users to choose music. And campaigns are turning to Spotify to engage with potential voters. Hillary Clinton, for instance, has used Spotify to make playlists for She's With Us concert in June and Official 2016 playlist. Spotify did not return requests for comment. 

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