Report: Pandora Re-Focuses As Ad-Supported Service

After months of looking for a buyer and experimenting with a new on-demand streaming service, Pandora is trying to become the old Pandora again by refocusing its efforts on ad-supported radio, reports Barron's Next. Though the stock is down more than 35% so far this year, some think the old-school focus could give shares a jolt.

Ad-supported radio isn’t as cool as on-demand streaming these days, but there’s still demand among advertisers for audio spots, and Pandora looks well-positioned to keep capturing those dollars, according to Needham analyst Laura Martin. “The most undervalued asset at Pandora is the fact that the company now represents nearly 70% of total digital audio advertising ad units,” she writes. “Consequently, any brand or agency that wants to buy targeted audio ads must buy them from Pandora.”

Martin is encouraged by Pandora’s efforts to introduce new types of ads that can fetch premium prices from advertisers. These include shorter, 15-second spots as well as ads that give users the option of watching a video spot in order to get an hour of free listening afterwards.

Finally, there are big opportunities for the company to cut costs. Martin thinks that the shift back to ad-supported radio will enable Pandora to negotiate better terms with the record labels over the next two years.