Original article by Paul Kelly, CRO at A Million Ads, in Spiceworks here.
Despite podcasts’ popularity, podcast advertising hasn’t picked up due to their asynchronous nature. That said, podcast advertising has massive potential. Paul Kelly, CRO, A Million Ads, discusses how the podcast advertising ecosystem is growing and how a few players help brands leverage podcast advertising.
Podcasts’ popularity has shot up today, so much so that September 30th is designated International Podcast Day. For all that podcast production values have skyrocketed, recruiting stars, becoming one of the most lucrative categories on Patreon, and causing bidding wars between platforms for exclusivity, podcasting advertising has taken a long time to catch up.
Perhaps because of this, less than 8% of the total U.S. audio ad spend is on podcasting — just $1.33bn. Podcasts’ asynchronous timing between release and listening means there are no personalization engines available as there are for other audio advertising platforms. Programmatic advertising is still the norm — not the exception — and buying podcast advertising usually means long Zoom calls and even longer email chains. Moreover, most standard podcasts cannot use creative forms of advertising like other platforms because they are offline and, again, asynchronous, resulting in more limited data sets available.
The Potential of Podcast Advertising
But rising podcast production values coupled with the amount of time it takes to really build an audience for a podcast, even with over half of all Americans having listened to at least one podcast, means advances are necessary for podcasts to grow sustainably beyond subscriptions and Patreon. In addition, the standard podcast is typically created using MP3 files, which limits advertisers’ creativity. While browser-based ads can adopt several different forms, like interactive quizzes, the inherently offline and asynchronous nature of podcasting makes this extremely challenging.
There are some bright points, though. Consumers have a high degree of recall for podcast ads, and 38% of Americans over 12 listen to podcasts regularly, according to Buzzsprout. (There is a reason that 18-49 remains the critical demographic by which TV networks argue that they are the most popular — and it is about disposable income and advertising.)
And, as a recent Forrester report notes, lifting COVID-19 restrictions (and thus, a return to the commute and business travel) will inevitably lead to greater podcast consumption. It is not just that consumers will have more opportunities to listen, but, as Niemen Lab argued, it is once again possible to produce the kinds of reported, long-form documentary-style shows that are among the most popular with audiences. The return to normalcy means more listeners, advertisers, and (vitally) investment in the essential podcast adtech mechanics.
We are already seeing the early green shoots of this. As a medium, podcasting presents a challenge to brands and the adtech industry alike. This much is undeniable. But it also has inherent advantages over other mediums that make it an irresistible target, least of all its growing audience, and the adtech industry is stepping up to take advantage of them.
The Developing Advertising Ecosystem
Take Audacy, for example. With a massive platform (over 3,000 podcasts, partnerships with major producers, and a reported reach of 28 million unique listeners), Audacy can deliver significant reach, provided it can actually bring the engagement that advertisers desire. That led to the launch of the Digital Audience Network. Rather than focus solely on buying based on the show, the network permits targeting by listener profiles based on the demographics and interests of those listeners, shown by what other podcasts they listen to and data available, even with the limitations inherent to podcasts as a medium.
The proprietary nature of the Digital Audience Network means we do not know how the underlying advertisement targeting works. But the company claims the solution is fully integrated into its tech stack and allows for the kind of dynamic marketing prevalent in other segments of the digital advertising world. Audacy also claims to offer real-time analytics, giving actionable information about the efficacy of an advertisement and providing data-driven justifications for its targeting decisions. Put simply, buyers can see how many people were served an advert and what interest group they fall into.
iHeartMedia is also wading into the smarter podcast advertising ecosystem. It is built a relationship with Sounder, which brings brand-safety assessment to podcasts through machine learning that transcribes podcasts and identifies potential concerns. Brands do not want to be associated with controversial content… and, if you recall, podcast ads usually have high recall among their listeners. If podcast ads are seen as safer than they currently are, since there is less ability to manage brand risk at the moment, then podcast ads can work for both creators looking to monetize and brands looking to reach new audiences.
Sounder’s technology uses sophisticated AI/ML models to analyze the contents of podcasts, with an eye for brand suitability, topics, segmentation, and content. Advertisers and networks gain rapid, actionable insights, ensuring their ad spend is used efficiently and allowing them to avoid potential areas of brand damage.
The iHeartRadio network is home to a diverse array of podcasts, ranging from religious programming to raunchy comedy shows. It is an example of a legacy broadcaster successfully pivoting to a new media format, and the company has spent big on its original programming. Podcasting allows iHeartRadio to access a younger demographic increasingly alienated by traditional broadcast mediums.
According to the company’s Q2 2022 revenue figures, podcasts account for one-quarter of its earnings. Against the backdrop of declining traditional radio listener figures, its podcast business is a bright spot in its balance sheet, with serious potential for long-term growth. For it to capitalize on that, it must ensure a level of brand safety for advertisers while dynamic tools for analytics and targeting that mirror the rest of the digital advertising economy.
Growing Competition, Growing Interest
Meanwhile, smaller startups are also finding workarounds to podcasts’ asynchronous nature, leveraging the rise of smart home speakers to do so. Content creators can now insert dialogue-based voice ads with the power of AI, turning listening into an active experience through Instreamatic’s service, which, in 2021, raised $6.1M from Google Assistant Investment, among others.
Podcasting as we know it — dating to 2004 — is reaching a new level of maturity, and podcast advertising is still catching up. Even as advertisers prepare for a new, privacy-focused world, podcasts are a still-growing medium that can serve massive reach, new forms of engagement, and safe brand exercises, all without needing the same buckets of data as other forms of advertising.