RBR-TVBR Exclusive: Pandora is apparently willing to overpay for credibility in the marketplace. The company wants reps that have established relationships with agencies and advertisers that use traditional radio. The thought is a 360-degree perspective on the business will lend more credibility and provide comparative answers to Radio vs. Pandora questions on metrics, reach, frequency, CPMs, etc. But it’s much more than that, as you’ll read in this in-depth analysis. This is one of the packages Pandora is offering radio ad reps to move over. We received it in an email and it was confirmed by high-level sources:
(RBR-TVBR has restated the exact details into ranges so that the individual can’t be identified.)
A base salary of $80,000-$90,000 (non draw); A regional account list totaling $80,000-$90,000 in commission, with opportunity for growth; 6,000-8,000 shares of stock, vesting over three years; Total compensation package for year one: $160,000-$180,000.
Pandora [P] is a publicly traded company attempting to compete with the entire radio medium. The company is looking to do this by establishing regions and specific markets where they will compete with the existing radio clusters. They are trying to sway the best of the best, so they can build their own sales department. Sales is based on relationships. Pandora wants salespeople that have relationships with clients that trust them.
It’s a process…
Pandora disappointed Wall Street with its most recent quarterly results as revenue growth of 71% was nonetheless below expectations and the company’s net loss was worse than expected. The company is working to ramp up local sales efforts to try to close the gap where expenses continue to exceed revenues, but executives have told Wall Street that local sales effort won’t produce significant ad sales for 18-24 months.
The stock of Pandora Media, which trades on the NYSE, was only briefly above last June’s IPO price of $16.00 and has recently been trading around ten bucks.
From what we understand, Pandora has had some trouble gaining serious traction locally as well as nationally. It’s hard to be a standalone entity in a market where you’re competing against a company like Clear Channel, for example, with all of their powerhouse stations and iHeartRadio.
So Pandora needs an infrastructure to gain that traction. If they can accomplish that by offering the above kind of dollars, you are going to find some men and women that are tired of being beaten up–tired of looking over their shoulder–that are maybe in their 40’s-50’s-60’s that are going to jump ship. We hear it all the time—the big groups are consistently firing people. Everyone wants some form of stability in their life and they know they have a career that they can try and build upon. Even it you’re a seasoned sales vet and you’re up there in age, they will often want you out because you’re making too much money.
If the assorted cities Pandora is planting local and regional offices in become successful, the folks they recruited from radio will start bringing their colleagues and associates in from the local radio clusters—and some other markets–as well. It’s a real danger. These few cities will become many cities. Radio—and national rep firm–will have to compete with Pandora everywhere: not just with advertisers, but with finding and retaining salespeople. If they don’t have the hassles they had with traditional radio, if they have better benefits, it all adds to the problem for radio. It becomes viral.
Pandora has got to have a structured strategy here to offer that kind of compensation. From what we understand, it’s a combination of local and regional sales offices. They likely so far include NYC, Detroit, LA and Atlanta.
Radio has to take Pandora seriously. Look at this analysis. Look at the depth Pandora has already established against iHeartRadio in the internet space. Look at how far it has gone in the consumer electronics space. Click here to see it all, but here are a couple of lists showing its progress:
Pandora in the box
– Slim devices/Logitech devices: Squeezebox radios and boomboxes, Squeezebox Touch
– Roku DVP (formerly Netflix player)
– Reciva-based radios from companies like Grace Digital, Sanyo, and Sangean
– Sonos Play:5 and Play:3 systems
– Panasonic, Samsung, Sony Blu-Ray Players
– Panasonic, Sony televisions
– Verizon FiOS set-top boxes
– Acoustic Research ARIR201
– Cambridge Audio NP30
– Chumby
– HP DreamScreen
– Livio Radio
– Rotel Hi-Fi Tuners
– Sangean Internet Radios
– Sonoro’s elements W
– Sony Dash
– Autonomic Controls: Mirage Media Servers
– Boxee Box
– Sony Network Media Player
– TiVo DVR
– VUDU
– WD TV Live Home Theater Systems
– LG, Panasonic, Samsung, Sony Home Theater Systems
Pandora in the dash
– 2012 Hyundai Veloster
– Ford’s Sync: most every model in the Ford and Lincoln-Mercury line
– Toyota’ Entune system: 2012 Tacoma, Camry and Prius V
– BMWs equipped with the BMW Apps option
– MINIs equipped with the MINI Connected option
–Kia
–Acura
– Also being integrated into Chevrolet’s upcoming Mylink system – a new touchscreen, voice recognition system that allows users to access their Pandora and SiriusXM stations, connect with their phone contacts and access USB drives right from the driver’s seat.
Pandora has some heavy royalty fees to pay for and for them to make a profit and be competitive with radio’s marketplace on a national scale, they have to establish a local presence. They’re going after regional and local salespeople to do it. So, again, radio should take note: Salespeople typically do not get put under contracts like on-air talent. Local sales people have been battered and bruised from layoffs and an unstable work environment at the big radio groups. If you are a top salesperson or a hungry salesperson and you’re tired of being beaten up by Clear Channel, Cumulus or some other large group through the throes of consolidation, mergers and the tough economy, you may decide to take your trade and experience and desire to stay in radio and transfer it to internet radio with a hot brand name like Pandora. It’s a pretty easy sell—especially with a cheap rate card.
Radio should keep all of this in mind before the next round of layoffs. Keep your salespeople happy, because they are your bread and butter—and if they don’t yet, they likely will have another option in your market or region to work their magic.
