Podcasts have grown into a powerful form of media in recent months, with eMarketer reporting that ad spending in the US market will more than double from 2017 to 2020, reaching $659 million. Yet, overall ad spending on the format ranks low compared to radio and television. That’s mainly because of two issues, the lack of data for brand advertisers and the challenge of show discovery in an extremely crowded space.
Although the podcasting industry has been primarily driven by direct-response advertisers using each show’s download numbers, URL referrals and special code redemptions as KPIs, brand advertisers have been more hesitant. That’s beginning to change as brands continue to recognize the success direct-response has seen in the space, but not having detailed dashboards or national ratings services that other platforms have to provide data remains a challenge for the space.
“But brand advertisers are getting more interested,” said Suzanne Grimes, EVP of marketing at Cumulus Media and president of Westwood One, speaking with AList. “I think that if those that can measure sales, costs per order or costs per acquisition that are cleanly are coming back over and over again, then there must be something to it, even if they can’t prove it out yet.”
For now, the number of downloads, which indicates a show’s popularity, determines ad pricing. Whether it’s a CPM pricing model or cost per read model, it’s all rooted in the perceived audience size. That has been enough for some shows to retain up to 80 percent of its advertisers, but steps are being taken to create a standard measurement.
Podcast Media Marketing president David Raphael is on the IAB Audio Committee, which was formed to establish a standardized metric for downloads. He told AList that all major networks will be working toward IAB compliance in the coming months and that the standard will allow podcasts to expand with true brand campaigns.
“This is different from any other form of media,” Raphael explained. “Each listener is a program director. They get to take their devices and decide what they’re going to listen to. They’ve made the choice to listen to something, and that’s an experience that delivers different results for advertisers than from the TV or radio world.”
That choice creates a very engaged listening audience, with top shows having listening completion rates above 90 percent. Performance between pre-, mid- and post-rolls differ between shows, with some having equal performance across all spots. Post rolls are also effective if users decide to binge past seasons of a show, or if there’s a preview of the next episode at the end.
“I think you would be hard pressed to find a more engaged audience than the podcast listener because the ad load is so light, and they’re entertained by the ads,” said Sarah van Mosel, chief podcast sales and strategy officer at Market Enginuity.
For ads to be successful, they need to be integrated well into each program. Live read ads usually perform significantly better than pre-produced ads because the audience has a connection with the host and is therefore more likely to follow their endorsements. Meanwhile, some shows will fully integrate ads as content, as scripted mystery show The Truth did when it played an ad as part of an amusement park’s loudspeaker announcement.
Having a few creative and relevant advertisements are the key to preventing the ad fatigue that has set in on media such as radio or television. For example, a product endorsement on one show will sound very different on another, and there shouldn’t be too many of them. Another potential risk is ads living forever on podcast shows—audiences may become frustrated if the product from an old episode is no longer offered.
According to a recent study conducted by Westwood One exploring audience demographics, podcast listeners tend to be younger, more upscale and more employed than audiences of other media. Although listening audiences are predominately men, the study found that women are a fast-growing audience demographic, growing by 20 percent in 2017—driven mainly by genres such as true crime and increased smart speaker adoption. That led the media company to launch the Empow(h)er podcast network at the IAB Podcast Upfront to provide more female-oriented programming.
But that still leaves the issue of discovery. There are hundreds of thousands of podcasts currently on the market, making it difficult for new shows to find an audience.
“No one has figured out the genome of the podcast the way Pandora has with music. People have made a stab at it, but the challenge still remains,” explained van Mosel.
Serial was originally launched from This American Life, which is usually ranked as the top podcast in the nation, but those kinds of cross promotions remain rare. Some hosts have audiences from other platforms such as YouTube, but having audiences cross over isn’t always guaranteed.
Apple Podcasts remains the top platform for finding shows, and van Mosel explained that studies show that Android users tend to be very different from Apple users, stating that they tend to be “more culturally diverse and international.” Google launched a podcast app in June that offers recommendations, and music streaming platforms such as Spotify and Pandora host shows, but searching for them still remains an issue. There are also over 100 million Americans who don’t know how to download and listen to podcasts, which adds to the challenge.
“Marketing to existing podcast consumers is a good strategy, but a lot of us need to look outside of our ecosystem if we want to raise the ceiling for this industry,” said Raphael. “The way to get there is through mass market.”
Networks are beginning to rely on well-known celebrities from TV and radio to educate people about podcasts, sometimes even expanding them. For example, Univision vice president of podcasts and experimental growth initiatives Stephen Hobbs told AList about working with a liquor brand from Spain to engage with Hispanic American podcast listeners (comprised of over 4.8 million people) with Latin pop star and radio host Thalía. The company turned the podcast promotion into a 360 radio, TV and influencer campaign across 27 markets across its platforms.
Hobbs also said that since some of its hosts come from radio or television, its listeners are already accustomed to live read advertisements, which usually relate personal experiences from the host. While Univision tries to align Spanish and English ads to the same language shows use whenever possible, there are instances of mixed language content.
“It’s about the ability for an influencer to connect with our audience. It’s not about language, it’s about the authenticity of the content,” said Hobbs.
Univision also has the opposite challenge when it comes to discovery compared to most other networks, since about 70 percent of Hispanics are Android users. As it seeks to create a larger presence on Apple’s platform, Hobbs said that Univision’s greatest advantage is its ability to take podcasts to its local markets.
“Being able to see a podcast live in a 1,000-person venue is something the Univision will be able to deliver better than most,” he said, adding that advertisers shouldn’t be afraid of branded content. “Why make ads that people are blocking when you can create programming that tells the narrative of the brand in a great story?”
