Pandora opens Minneapolis office to pull local advertisers to streaming music service

Web-based radio company Pandora is increasing its revenue by growing its physical presence. The latest destination? Minneapolis.

The online music streaming company from Oakland, Calif., hopes its new office will help rake in more advertising dollars from Minnesota companies looking to reach local and national listeners.

Pandora has had a small local sales team since 2012. It's now formalizing its presence with a 5,000-square-foot lease in the city's most recognizable office tower, IDS Center, for about 20 people, with room to grow.

The primary function of its Minneapolis location is to land new contracts, or renew existing ones, with local advertisers. About 77 percent of the company's total revenue comes from ad sales, which experienced 30 percent year-over-year growth in the latest quarter.

"There's something about having someone who is in your city," said Jeff Mikitka, regional vice president of Pandora. "You're not flying in to meet with people. You are walking across the street to meet with people. That makes a significant difference. We've seen that everywhere we've gone across the country."

Minneapolis is the 16th-largest radio market and is Pandora's 37th city with a physical office. The state's number of large and midsize public companies, including 17 on the Fortune 500, and the Twin Cities' robust ad sector caught the company's eye.

"A lot of local advertisers are getting more savvy and moving more dollars to Pandora," Mikitka said.

Pandora's future growth will predominantly focus on increasing these advertising dollars, with the greatest increases coming from local sources, such as car dealerships or other regional vendors. The Minneapolis team has a cadre of existing and potential national clients based in Minnesota it hopes to cultivate. Best Buy Inc. and Target Corp., for example, already advertise on Pandora.

Online music players like Spotify, Google Play and Apple Music are growing — now comprising a combined 3.6 percent — but are still behind Pandora's 10 percent of the market share, according to a presentation at an investor conference this spring.

But the market share Pandora's leaders really want to pull from is traditional AM and FM radio, which still comprise about 78 percent of all radio hours listened.

The company's office is already garnering attention from IDS tenants. A small piece of printer paper emblazoned with the Pandora logo was taped to the glass door several weeks ago while the space was outfitted. "People will come press their face to the window and wave, smiling at us," said Mikitka.

Steve Cramer of the Minneapolis Downtown Council said Pandora brings a certain cachet to a metro area struggling to catch up to peer cities in volume of tech companies located.

Kristen Leigh Painter • 612-673-4767