• by Erik Sass  @eriksass1, August 3, 2009

Pandora Media has signed a deal with Katz 360's Katz Online Network, giving the latter responsibility for a large part of the online music emporium's audio advertising sales.

The deal allows Katz to aggregate Pandora's roughly 11 million monthly unique visitors with the other large online properties in its list of affiliates --- including sites for traditional radio stations as well as pure-play Webcasters, like AccuRadio.com, Digitally Imported, RadioIO and 977Music.com -- offering advertisers a single point of purchase for campaigns covering multiple networks.

Pandora began offering audio ad inventory alongside display ads, making up the bulk of the company's revenue, in late 2008.

The Katz-Pandora deal only covers certain geographic areas, since Pandora already has an in-house staff of about two dozen handling sales in New York, Los Angeles, San Francisco and Boston. Pandora will also continue selling display ads in-house.

Katz 360 President Brian Benedik said the Pandora partnership "will allow us to make even greater strides in working with national advertisers to create strategic, geo-targeted ad campaigns that can be customized to any advertiser's needs."

While the traditional radio business is reeling under the blows of a steep economic downturn, online radio is growing by leaps and bounds -- both in terms of audience and ad revenue. These trends have driven a flurry of activity in the online radio advertising arena.

Last October, TargetSpot acquired Ronning Lipset Radio, creating what they said was the country's largest online radio ad network. Since then, TargetSpot has signed up big networks, including AOL Radio, Entercom and CBS Radio, which owns Last.fm.

However, even with online royalty fees set to drop, online monetization remains a concern for traditional radio broadcasters. In the first quarter of 2009 -- the most recent for which data is available -- the radio industry's "off-air" revenues, which include online, totaled just $264 million, less than 8% of the grand total of $3.4 billion, according to the Radio Advertising Bureau.