Podcasting continues to lead the digital charge at iHeartMedia. The company says its podcast revenue soared 74% during the third quarter compared to a year ago. And in a sign of the continuing recovery of the ad market from last spring’s pandemic whack, iHeart said podcast revenue also increased 21% between second and third quarters.
“Podcasting continues to be our strongest performing business line,” said CEO Bob Pittman on a conference call with analysts Monday. “Podcasting is already a profitable business for us,” he said. One of the strongest lures to podcast continues to be its newness, which Pittman says is helping media planners facing pandemic-era budget cuts embrace new ideas – and new media.
“The good news about podcasts is it is sort of the shiny new thing,” said Pittman who explained that it is bringing major advertisers back to audio. “I see no signs that abating. If anything, I think it is increasing,” he said. That has meant that iHeartMedia has seen many podcast advertisers expand into broadcast radio, grabbing a bigger share of dollars for audio overall. “They are pulling the money from wherever they pull it from, presumably TV or digital budgets,” Pittman said.
The ‘Secret Sauce’
Behind the revenue results are another set of numbers that Pittman wanted to make sure were not overlooked. He boasted iHeart had 252 million downloads a month as of September, up 71% year over year. And according to Podtrac, the iHeartPodcast Network was No. 1 in downloads each month in Q3. Pittman also noted the iHeartRadio app has been downloaded over 2.9 billion times.
The “secret sauce” for iHeart is a model that is a mix of in-house and partnerships according to Pittman. “We partner with the best content creators in the world, some of whom are our very own radio talent, and distribute their content to the largest audience possible,” he said. “It's how we continue to build, hit podcast after hit podcast, and how we continue to grow our leadership position.”
It is what was behind the just-announced deal with Pushkin Industries, the podcast studio co-founded by Jacob Weisberg and Malcolm Gladwell. Under the agreement, Pushkin and the iHeartPodcast Network will also co-produce a slate of new, original podcasts over the next two years. And iHeart will become the exclusive sales partner for Pushkin’s catalog of podcasts. It came just days after actor Alec Baldwin said he would relocate his Here’s The Thingpodcast to iHeart after a decade at WNYC Studios.
Pittman said in what have become the podcast “talent wars,” the best weapon for iHeart is having the largest platform that not only includes its digital reach but also the reach of 850 radio stations around the U.S. “If you've got a podcast, or you think you're going to have a big podcast, you really want it on the biggest platform. You want to be able to use the power we've got of our radio promotional platform behind it. And we've got the largest sales force in audio and podcasting to maximize monetization,” he said. “We're able to offer them something that's very healthy, which is an opportunity to have the biggest return on their investment.”
Voxnest Price Tag Revealed: $50 Million
The biggest deals struck by iHeartMedia in recent years have been in the podcast space, including the acquisition last month of Voxnest. The company revealed that it paid $50 million for the company. “We believe this addition will be another driver for increased monetization of our podcast business,” said Pittman.
Attracting iHeart to Voxnest was not just what Pittman said was a “meaningful addition” in targetable inventory to existing podcast advertisers, but also technology that he said will allow for the more efficient monetization of our inventory. It will do that by connecting the fragmented programmatic marketplaces that exist in podcasting to create what Pittman said will be the first at-scale real-time bidding podcast platform for nonpremium podcast inventory.
“We've done extraordinarily well selling the big premium inventory for the high-profile big podcasts we have, but there's always a piece of it that remains unsold,” said Pittman. “By putting an electronic platform together, being able to combine that with data, being able to combine these fragmented podcast marketplaces that are out there, and deliver it as a real-time bidding platform, I think it gives us a tremendous way to add additional value to what we already have.”
Ad Tech Pie Still Growing
Interest in ad technology has led to several deals in recent months, including Spotify’s $235 million deal to buy Megaphone and SiriusXM’s $28 million deal to buy Simplecast and its deal valued as much as $325 million to buy Stitcher and its ad unit Midroll. In a growing industry, Pittman said he believes for the foreseeable future competition won’t be much of a problem since each is benefiting from a growing marketplace. Pittman also did not rule out other acquisitions, but he assured analysts iHeart will not pay “outrageous prices” to get a deal done.
Overall, iHeartMedia said its total revenue declined 22% during third quarter to $744 million.