After challenges with royalties and the lackluster introduction of iTunes Radio, the state of streaming music for advertisers, particularly the current market leader, Pandora, is being put under the microscope. Radio execs everywhere rejoiced at a piece written by Rich Greenfield, blogger for BTIG Research, an arm of financial service/trading company BTIG, LLC. His blog post (registration required) took hit after hit on Pandora’s validity as an advertising medium, starting with the legitimacy of measurement company Triton Digital’s data:

There is no verification of age, sex, no demographic data is captured and the system has no way of knowing if you are even still listening and left the room. Furthermore, if you move from LA to NYC, and you do not update the player’s backend with your new zip code, Triton does not know your correct location.

Greenfield also took issue with the lack of genre targeting on Pandora (i.e. you can’t buy a country station vs. an adult contemporary station), and the obscurity of  listening  hours of subscription users vs. free users who are delivered ads. This all calls into question the accuracy of the reach and frequency of any Pandora campaign.

While I agree with Mr. Greenfield on the flawed methodology of Pandora’s measurement, no media measurement is perfect and no medium is completely without waste. If you’re looking to reach women 18-34 in Hartford, CT, your radio ads will spill into other MSAs; your billboard on I-91 will be seen by travelers passing through; your HGTV buy will reach people outside of your demo. Smart media planners take all of these things into consideration. The author is correct in pointing out that if you include Pandora in this buy, you will hit some listeners who have moved to out of state. What I can’t understand, though, is the complete dismissal of Pandora as a viable media. After stating that Pandora cannot fit into the “two broad buckets” of advertising, “One is buying reach/frequency and the other is buying highly targeted demographics,” he goes on to say:

Pandora has set its sites instead on going after the market share of traditional radio advertising, where you are buying local reach – often delivered in context by a DJ.  However, as you dig into Pandora’s claims of reach versus traditional radio you start to realize the comparisons are “Apples and Oranges” and should not be utilized by an informed brand/agency.

I would argue that informed brands and agencies realize that the way people consume media is constantly evolving. Instead of holding on to the notion that terrestrial radio is the be-all and end-all of  local reach as this article seems to argue, marketers need to continually analyze the media habits of their own target audience and mirror their media placements with those habits. Of course Pandora is going after market share of traditional radio—just like consumers opting for Hulu and Netflix as alternatives to cable subscriptions, many are choosing online streaming to consume their music content.

While radio reaches 93% of people ages 12+ on a weekly basis, time spent listening to terrestrial radio has been rapidly declining, decreasing by 25% between 2007 and 2012. And while I haven’t seen time spent listening reports for digital radio, I have a hunch that the 142% growth in Online Radio Listenership that Nielsen Audio measured between 2007 and 2012 has something to do with the drop off in AM/FM.

At the end of the day, your media mix depends on your audience and should always be evolving with the target. Streaming radio is a great media product with options for very specific demo- and geo-targeting and great reporting and tracking capabilities. Terrestrial radio is a great way for a brand to reach a local audience, target by demo and genre, and to have dynamic integration with local content like contests and interviews. Both are viable and valuable media products and both are here to stay.