Pandora names former aQuantive head Brian McAndrews as CEO

Pandora Media Inc., the Internet radio giant, has hired former aQuantive head and Microsoft Corp. executive Brian McAndrews as its chief executive, president and chairman as it fends off growing competition and tries to increase revenue from advertising.

Effective immediately, McAndrews replaces Joe Kennedy, who helped build the Oakland-based company’s audience to 72 million monthly listeners, the company said Wednesday. Kennedy announced his decision to step down in March after nine years at Pandora.

McAndrews’ background is in Internet marketing.

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In 1999, McAndrews took over Avenue A, a small digital ad company in Seattle, and turned it into aQuantive, which he sold to Microsoft Corp. in 2007 for $6 billion. He became a senior vice president at Microsoft, where he ran its advertising business and left in 2009 to join Madrona Venture Group, an investment firm.

“No one better understands the intersection of technology and advertising, which he clearly demonstrated during aQuantive’s meteoric rise,” Tim Westergren, Pandora’s founder and chief strategy officer, said in a statement.

Shares of Pandora rose in after-hours trading after they closed Wednesday at $21.38.

Michael Pachter, an analyst with Wedbush Securities who covers the company, said Pandora has succeeded in building a service that consumers enjoy and McAndrews is a good choice for a company that needs an experienced chief who can start increasing the amount of ad money it takes in.

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Though the service does have a version for paying subscribers, Pandora makes the vast majority of its money from ads. Pachter said Pandora can boost sales by raising the number of ads per hour and targeting commercials to individuals’ interests, which will let them charge higher rates.

“Essentially, Pandora’s in the advertising business,” Pachter said. “They didn’t need a product guy, because they’ve got that part right, but they needed someone who could help bring in the revenue. I think this guy’s a very good hire.”

In the second quarter of this fiscal year, Pandora generated $157.4 million, up 55% from the same period last year, the company said in August. In mobile revenue, it made $116 million, up 92%. Its users listened to 3.9 billion hours of music during the quarter, up 18% year over year.

Pandora faces growing competition in the Internet streaming music industry from current players such as Spotify and Rdio, along with tech giants with their own new entrants into the crowded field. Those include Google Inc., which has already launched an on-demand streaming service, and Apple Inc., which is releasing its iTunes Radio later this month.

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ryan.faughnder@latimes.com