Digital ad veteran Brian McAndrews has been named chairman, president and CEO of streaming music service Pandora. He replaced Joe Kennedy, who announced his intention to retire in March. (Read the release.)
McAndrews built one of the first digital agency networks at aQuantive, where beginning in 1999 he began rolling up firms including Razorfish, Avenue A and Atlas under one roof. He later sold the company to Microsoft for an estimated $6.3 billion in Aug. 2007.
McAndrews has kept a fairly low profile since leaving Microsoft four years ago. Although he has served on a number of corporate boards -- including AppNexus, Seamless, Clearwire and the New York Times Co. -- McAndrews hasn't held a major executive position in years. Still, his reputation remains solid among media executives.
Tim Westergren, Pandora's founder and chief strategy officer, said in a statement, "No one better understands the intersection of technology and advertising, which he clearly demonstrated during aQuantive's meteoric rise."
McAndrews arrived at Microsoft as CEO of aQuantive, a title he relinquished shortly after the acquisition was completed. He resigned his post SVP, Microsoft's Advertiser & Publisher Solutions Group in early 2009 after he was passed over for the post president of its Online Services Group. That position went to former Yahoo executive Qi Lu, who is currently EVP of Microsoft's Applications and Services Group where he oversees properties such as Bing. After McAndrews left Microsoft, he was widely considered to be a candidate to be CEO of Yahoo.
Instead, McAndrews, who wasn't in need of a job after the aQuantive sale, primarily spent time on various company boards of directors. More recently he was a venture partner at Madrona Venture Group.
As for Pandora, its Q2 earnings was pretty solid, as revenues gained 58%, while mobile revenue soared 92%. And with listening hours rising 18% over the same time the year before, Pandora was in a better position to take advantage of audio ads, which now account for 60% of revenues total. All of which makes Pandora the fullest digital approximation to the $15 billion over-the-air radio market and the chance to unlock even more billions of local ad dollars.
Tapping the local ad market has been difficult, but Pandora has been diligently adding sales staffers around key markets. As of last spring, Oakland-based Pandora had sales coverage in 30 of the top 100 local radio listening areas. On top of a physical presence on the ground, Pandora also began turning to the media buying tools of Mediaocean and STRATA, which brought it greater efficiency through their software connections to agencies. It's not quite programmatic, but it's close.
So far, Pandora appears to be fending off challenges from other streaming music players that have also been betting on mobile as the choice form of music listening and buying. Companies like Spotify, Rdio and Clear Channel's app I "heart" Radio, haven't dented Pandora's business. If anything, they've proved there is a wide market of streaming music listeners. And that has got advertisers' attention.
The first big test McAndrews will face at Pandora will be next week's release of iTunes Radio by Apple. Still, that seems more about promoting music in Apple's online shop, rather than competing for ad dollars. But given the promotion and placement of the service on the Apple's new iOS 7, which powers the iPhone and iPad that Pandora has benefited from, there is at least some cause for concern by Pandora.
In addition to his digital management skills, McAndrews has the advantages that come from building his career as an executive at old line marketers like General Mills and in broadcasting at ABC. That wide experience should help him understand how to manage Pandora's blurred line between old form radio and new media streaming when it comes to knowing how to deliver to consumers and advertisers.
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