The Business of Podcast Advertising

By NPR InSites Archives
Cover image for  article: The Business of Podcast Advertising

“I keep hearing about this podcast thing and I want to be part of it.” That’s how Midroll Media’s ad sales chief, Lex Friedman, paraphrased prospects’ inquiries about on-demand audio advertising in a March 2015 article in The Week.

Last week, the first-ever Podcast Upfront, produced by the IAB, answered the question of what these podcast things are. Now the questions advertisers are asking has shifted to “Why podcast advertising?” And, “How do I maximize and measure my podcast advertising?”

The eight companies showcasing their highest profile programs during the long inaugural  Upfront made it apparent just how much the competition for share of podcast ear and sponsor dollar is heating up. Offerings range from the already known and loved “RadioLab” from WNYC and NPR – the company that put podcasting on the map with “Serial,” to the new and noteworthy, such as “So Money” with Farnoosh Torabi rep’d by [full disclosure - my employer] AdLarge Media. In fact, the percentage of Americans who have listened to a podcast in the past month has almost doubled since 2008…and the number of hosted podcasts has also almost doubled - but in just two years!

Excitement for this “next new thing” is helping drive sponsor demand, and many are joining the advertiser ranks of such early adopters as MailChimp and SquareSpace. Direct Response ads make for common success stories, since incorporating URLs and promo codes are easy ways to capture consumers already tuned in on a digital platform.  But the presenting companies, and indeed most podcast creators seeking sponsors, are being confronted with agencies scrutinizing this platform with a more traditional lens.

To reinforce the “Why,” the Podcast Upfront participants underscored the power of personality, and the highly intimate nature of podcasting.  ESPN Fantasy Focuspodcast host, Matthew Berry, touted that value as having him “ your car, in your headphones.  For 45 minutes every day, I've got you. Just me and you, talking. And that's a powerful thing.” And CBS’s personality, “Taz” promised his “real guy” style makes voiced reads authentic and trusted.  They’re probably right. A key advantage of radio and audio advertising in general is listener recall of ads as “word of mouth.” Combining that advantage with the listener self-selecting the content and the intimacy that feels like a one-to-one conversation with a preferred podcaster could offer the holy grail of advertising: trusted, organic messaging.

The How and Where questions -- How do I reach my target? What is the trackability? -- are a little harder to answer, especially for those sticklers for stats in a medium that hasn’t fully scaled.

Demographically, a recent study by Westwood One and Ipsos from a subset of 500 listeners from Edison’s Share of Ear study determined that podcast listeners skew younger than terrestrial radio listeners (and MUCH younger than broadcast TV watchers). This makes sense to Jay Green, VP Digital Sales and Content Partnerships at AdLarge Media:  “This is definitely a young medium and millennials and young - gen-x'ers are looking for more than just music playlists.  They want to laugh, think and cry.  The interaction with a host is very compelling when it comes to listening, and of course brand integrations.” 

However, is the cool-factor and trust appeal enough to satisfy sponsors? When in doubt, ask the audience. Research from a survey implemented by Midroll to listeners of more than 100 of its podcasts resulted in some 280,000 responses that point to ad effectiveness, with a claim of 64% of listeners buying a product advertised on one of their podcasts.

Erik Diehn, VP of Business Development at Midroll Media says, “to date, we've collected 400,000 responses. Response rates for individual shows ranges from 2-10% of the audience, and while not a perfect scientific sample, those responses give us a great deal of insight into who's listening to the shows in our portfolio.” 

Both Mr. Green and Ezra Kucharz, President, CBS Local Digital Media, place confidence in podcasting technology and targetability. Mr., Kucharz claims CBS has “invested in technology that allows for the greatest level of data available in the industry for our clients.  Additionally much of podcasting is streamed on-demand and not necessarily downloaded which gives even more transparency.”

The difference between streamed and downloaded content comes in to play particularly when advertisers are concerned about time-sensitive ads being heard out of flight.  This is being addressed now, as dynamic ad insertion comes to market. As for other data and accountability concerns, according to Mr. Green, “the [podcasting] technology has finally caught up.  We now have the ability to track on the level of display and video.  This includes, behavioral, geo, day date and time and of course all impressions can be tracked via third party services such as DART and Sizmek.  This finally allows pure accountability for our brand advertisers in a space that had not yet previously been able.”

In the meantime, for large advertisers seeking big numbers, Mr. Diehn’s position is that “it's gotten hard to argue that shows like Serial, WTF, Freakonomics, Adam Carolla, and others with 500,000+ person audiences aren't delivering scale. There are plenty of cable shows with smaller audiences!”

As the industry matures and delivers similar tools already available to advertisers in other media, podcasting will still have its unique edge, and the benefits of integrated spots, often read by hosts. “They're native, they're mobile and they're engaging, and that's what advertisers really want and need,” assures Mr. Diehn.

Then there’s just one remaining question in this burgeoning space – this time asked by podcast marketers: “how do I win the competition for share of ear?”

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