Apple's iTunes Radio has poached a top radio ad exec as it prepares to offer the service widely to advertisers in 2014.
Former Cumulus Media executive VP-sales Michael Pallad is now overseeing ad sales for iTunes Radio internationally, according to people familiar with the matter.
Mr. Pallad started with Apple on December 2 and spent last week at the company's Cupertino, CA, headquarters getting oriented, the people said. Radio industry email newsletter Tom Taylor Now had previously reported that Mr. Pallad may be leaving Cumulus Media to join Apple.
Apple did not immediately respond to a request for comment. Mr. Pallad will report into the iAd organization led by VP and former Yahoo exec Todd Teresi.
Mr. Pallad's appointment suggests that Apple plans to make a stronger play at the $1.56 billion U.S. digital radio advertising market, as estimated by eMarketer. One media buyer said the executive should gain traction quickly among agencies.
Apple launched music streaming service iTunes Radio in September with a handful of category-exclusive launch advertisers, such as Nissan, Pepsi and Procter & Gamble. Those initial deals expire at the end of this year, when Apple will begin pitching the service more broadly to brands. The initial campaigns included audio, video and display ads that air between songs.
Like everything Apple has tried in advertising, it's going out with ambitious pricing, reportedly looking to sign 12-month commitments that are worth at least $1 million apiece.
The hire of Mr. Pallad "seems like a big bet for [Apple] on going after the radio advertising audience," said DigitasLBi senior VP-media Adam Shlachter. EMarketer projected that domestic ad spending on digital radio will rise by 157% over the next several years to hit $4.01 billion by 2017. But that's only a fraction of the $15.62 billion U.S. advertisers will spend on AM/FM radio this year and $16.05 billion in 2017.
"To have someone at the helm with that much experience and connections [Mr. Pallad] must have and the knowledge he would bring to the party, it will only help to continue to make the case for [iTunes Radio] as a viable alternative or a considered part of the mix given the volume of streaming audio consumed," Mr. Shlachter said.
Nissan's director and chief marketing manager Phil O'Connor said the iTunes Radio ads have performed better than expected but declined to share numbers. "We were able to reach the impression loads that we had targeted to reach, and that's with protections like not overloading any individual with too many ads...which would suggest that their growth was good," Mr. O'Connor said.
In the first month that iTunes Radio was available, the service attracted 20 million people who listened to 1 billion songs, Apple CEO Tim Cook said in October. However that trails the 72.4 million people who listened to Pandora in November and the 68 million who tune in each month to Clear Channel's iHeartRadio Network, which includes the company's local radio station sites.
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