Pandora Media Inc (NYSE:P) looks to be running a strong advertising business heading into the new year, according to sampling conducted by analysts at Canaccord Genuity. They looked at advertising load covering 16 hours in four major cities.

Pandora

Examining Pandora’s December ad load

Michael Graham and Marla Ripps and report hearing, on average, 5.3 audio ads per hour in December. They note that is a mall decrease from November when they heard 5.4 ads per hour. December’s number was in line with October’s number. They expect that when Pandora Media Inc (NYSE:P) reports fourth quarter results, the audio ad load will be about the same as the third quarter at 5.3 ads per hour.

They noted a 70% – 30% split between 30-second and 15-second spots. That’s compared to an 84% –16% split in November. The analysts believe this suggests that the average ad load across the four geographies they sampled is 2.2 minutes per hour.

Local audio, display ads remain strong for Pandora

The Canaccord Genuity team reports that local ad spots made up 45% of Decembers ads on Pandora, compared to 45% in November and 48% in October. Overall for the fourth quarter, they’re estimating that the local mix was 46%, compared to about 41% in the previous quarter. They say this suggests “a possibility of additional RPM expansion from mix shift to local.

The analysts also noted stability in display ads on Pandora. They saw pure display ads continue to average 7.3 this month, which is in line with their samples from previous months. During December, they report that the total number of display ads, including those which go along with audio and video ads, was 12.7 for the month of December. That’s compared to 12.9 in November and 12.8 in October.

Pandora sees good mix of advertisers

In terms of local ads, Pandora Media Inc (NYSE:P) saw retailers and automakers as being the largest categories. Retailers were approximately 27% of Pandora’s audio spots, which was less than November’s mix of retail ads, probably because the holiday shopping period was coming to a close. The auto industry made up 24% of all the ads in December.

Here’s the full breakdown according to Canaccord Genuity’s figures.

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Pandora sees more higher quality advertisers

They also see a continued shift toward “higher quality advertisers,” reporting that “Tier III” advertisers made up about 9% of advertising on Pandora Media Inc (NYSE:P) during the month of December. Tier III includes mobile app game downloads like Candy Crush and Call of Duty. This number was offset by a larger proportion of small and local businesses advertising on Pandora.

Tier I advertisers like Intel Corporation (NASDAQ:INTC), T-Mobile US Inc (NYSE:TMUS), Chevy and others made up 49% of display ads on Pandora in December, while Tier II advertisers like Seamless.com, RetailMeNot Inc (NASDAQ:SALE) and Jamba, Inc. (NASDAQ:JMBA) made up 43% of them. That’s compared to 58% for Tier I, 33% for Tier II and 9% for Tier III in November.

The analysts also noted that November was the first month with the mix of Tier III advertisers for pure display ads fell to 9% from the low-to-mid 20% in the months before. They said they were encouraged that the quality of Pandora’s display ads continued into December. They believe that this shift toward higher quality advertisers could mean “higher pricing power” for Pandora Media Inc (NYSE:P)’s display advertising segment.

Valuing Pandora Media

Canaccord Genuity continues to rate Pandora as a Buy with a $35 per share price target.