The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- Despite my bearishness toward terrestrial radio, I have a soft spot in my heart for the business. I literally grew up in and on the radio. I wish the people running the business were not so inept. It pains me to watch the industry continue to fade into irrelevancy. For nostalgic reasons and because of my continued interest in all things radio, I receive a daily email blast from Radio-Info.com. The summary transcends terrestrial radio and provides valuable information and insights on everything from the modern version of AM radio, Sirius XM ( SIRI), to burgeoning Internet radio. It also publishes data that shows how much money radio stations across the country bring in in sales each year.
I estimate that Pandora's sales efforts accounted for about 6.9% of all mobile ad revenue in 2011. If the company secured just 7% of all mobile ad revenue in 2016, it would generate mobile ad revenue of $758.1 million, based on eMarketer's forecast. That presents the very real possibility of more than $1 billion in sales. And, of course, that 7% number is incredibly conservative, given Pandora's current growth rate and investments into the sales end of the business.Also earlier this week, the New York Times ran
Pandora's pitch to advertisers is that its technology can cater to consumers with far greater precision than radio - it can pinpoint listeners by age and sex, ZIP code or even musical taste - and that as it grows, Pandora will effectively be the top station in many cities... This year, Pandora has had 400 local advertising campaigns across the country. One new client was Planet Honda in Union, N.J., whose president, William Feinstein, said he gave up on terrestrial radio years ago because he felt it cast too wide and expensive a demographic net. But attracted by Pandora's ZIP-code targeting, he spent $10,000 to advertise on the service in January. IPhone traffic to his Web site - which he attributes to the ads - more than quadrupled, Mr. Feinstein said, and so he increased his spending to $15,000, then $20,000. "A light bulb went off," he said at Pandora's party, holding a glass of wine. "We don't need to buy five radio stations. We can buy one."Pandora already generates