"No one better understands the intersection of technology and
advertising, which he clearly demonstrated during aQuantive's
meteoric rise. He has a recognized ability to set strategy, lead
large teams and drive growth and innovation at great scale," said
Pandora founder and chief strategy officer Tim Westergren in a
company statement.
Pandora' stock was up more than 6% in after-hours trading
immediately following the news.
Mr. McAndrews ran the Redmond, Wash.-based software giant's ad
business for a year and then left to join the venture capital world
with Madrona Venture Partners. Microsoft would later take a $6
billion loss on the deal as it divested its ad-tech assets. Mr.
McAndrews sits on the boards of The New York Times Company and ad
tech company AppNexus.
The hire of Mr. McAndrews underscores the importance of
advertising to Pandora's bottom-line. As one of the major digital
music streaming services in the market -- with 72.1 million monthly
active listeners -- Pandora is banking on the migration of
terrestrial radio ad spending to digital. But it is also competing
with some popular and well-funded services like Spotify, Clear Channel's iHeartRadio
and Apple's iTunes Radio that are looking for their share of
advertisers' budgets.
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In the second quarter, advertising accounted for 82% of the
company's revenue, and the segment grew its revenues by 44%
year-over-year to $128.5 million. Pandora has a subscription
service that's ad-free.
Last month Pandora walked back an effort to convert users of its
free service into subscribers by capping the amount of music they
could stream on the service. The company's chief revenue officer
John Trimble
told Ad Age at the time that the shift resulted from greater
success with Pandora's ad business, including mobile ads on tablets
and smart phones.
"We don't need a cap anymore. We used the cap as a lever to
control some of the [content] costs, but we've always looked at the
business as 80% ad-supported and 20% subscription-based," Mr.
Trimble said at the time.
