Pandora is buying the audio ad tech firm AdsWizz for $145 million.

The move could put the streaming service in a central role in the nascent but promising market for so-called programmatic audio advertising.

Pandora sees AdsWizz helping to play a role in accelerating the growth of podcast ads and voice-assistant ads in the near future.

Pandora is becoming an ad-tech platform.

Pandora will acquire AdsWizz, a startup that specializes in helping deliver audio ads to streaming-music services, in a cash-and-stock deal valued at $145 million.

Founded a decade ago, AdsWizz is an early player in the verdant realm of so-called programmatic audio advertising. The company's suite of software is not unlike what Google or AppNexus have built in the display-advertising business.

AdsWizz's suite of software and tools can be used to buy audio ads, package them for sale, and ensure they are automatically delivered to the right person at the right time.

The Belgium-based startup works with streaming companies ranging from the Pandora rival Spotify, Cox Media Group, and the podcast network Podcast One.

Pandora has weathered a tough time as a public company — particularly in light of Spotify's explosive growth over the past several years — leading to multiple shifts in leadership and strategy.

The move to acquire AdsWizz thrusts the company into another category — it has essentially become a facilitator for the audio-ad industry as much as a company that sells ads and streaming-music subscriptions.

Pandora has mostly built its ad business by putting sales reps on the ground in local markets, going after ad budgets that traditionally have gone to terrestrial radio. But Roger Lynch, who took on the role of CEO five months ago, sees acquiring AdsWizz as accelerating Pandora's — and the industry's — adoption of programmatic audio ads.

"The internet breaks down broadcast models," Lynch told Business Insider. "There's a multibillion radio industry to be replaced someday. That's not all going to go to subscriptions. So this is a very, very large opportunity."

Ads on Pandora. Pandora

Right now, programmatic audio ads are still nascent, said Maja Milicevic, a principal and founder of Sparrow Advisers, a management consultancy that works with marketing tech firms.

"In the US overall, it's tiny," she said. "But they own it. In the programmatic audio space, there is really nobody else but them."

AdsWizz had focused on web video ads until it saw an opening and shifted to audio in 2011. CEO Alexis van de Wyer said his company was not necessarily seeking a buyer but felt the timing was right when Pandora expressed interest.

Van de Wyer said that in some markets in Europe, 80% to 100% of streaming radio ads were already sold via programmatic platforms, giving him confidence that the same dynamic will play out in the US.

"We've seen extremely aggressive growth in some markets," he said. "Our goal is to continue to serve the industry, and it's also a very clear set goal to remain independent."

That independence would seem crucial. And it's unclear how Pandora's competitors will react to working with an ad-tech company Pandora owns.

Lynch says he's not worried. Besides streaming services, he sees AdsWizz playing a big role in accelerating ad growth for podcasts and, eventually, voice assistants.

In the meantime, he thinks audio ads within music streaming have tons of upside, given all the recent brand-safety challenges in display advertising and on social networks.

"Ads are a way, best as I can tell, for Spotify to drive people to subscriptions," he said. "For us, it's core to our business. And it's a huge opportunity that nobody's really investing in. This deal allows us to really set standards in the business.

"That's something that Google did quite effectively, and frankly, there is an opportunity to do that in digital audio."