Kennedy also outlined plans to continue to increase Pandora's sales teams, while relying less on what he called "third parties." Given Pandora's pressures from rising royalty costs and service-related expenses, building out the sales force will certainly test investors' patience through next year. The CEO attempted to make the case that direct sales are more valuable, and therefore will ultimately more than offset the costs. (Kennedy told analysts that Pandora added 127 staffers over the past year.)
"In terms of mobile pricing, we continue to see that where we direct sell advertising whether it’s on mobile or on the desktop that these CPM price realization of a direct sales product on mobile and desktop are in the same ballpark," Kennedy said. "I think what you can see from the numbers we released, the big delta as we previously articulated is the difference between when we direct-sell an ad versus when it’s sold through a third party. The price realization through a third party is significantly lower compared with when we direct sell it or sells and that really is the dominant difference."
In making a case for mobile, Kennedy cited a survey released by the Mobile Marketing Association that said advertisers believe 7 percent their marketing budgets should be spent on mobile, while a year ago, marketers said they would spend 1 percent or less in the space.
"Those numbers reflect the view that mobile drives ROI," Kennedy said. "The consumer’s focus on a mobile device is dramatically different and more intense than the focus that a consumer typically gives a consumer screen and I think that is reflected in the kind of clickthroughs and other response rates that marketers have seen and continue to see on the mobile device."