Despite the impact of COVID-19 on advertising, Audioboom reports its revenue grew 20% during the first half of the year to $11.8 million. The company said advertiser demand was “quickly and deeply” impacted by pandemic in March, which led to the cancellation of pre-booked campaigns from mid-April through to the end of June. That resulted in lower-than-expected revenue during the second quarter. That was driven in part by a 4% decline in the CPMs paid by advertisers.
But in its latest update for investors, Audioboom said advertiser demand is “increasing again” in the third quarter. “New bookings are picking up pace, while COVID-related advertising cancellations are decreasing,” it said. “Combined with strong inventory levels, this demand is expected to lead to further expansion of the business across the second half of the year.” Despite the challenges posed by the pandemic, Audioboom also said its losses shrank to $2 million during the first half compared with $2.8 million a year ago.
“I am delighted to report that Audioboom’s growth story continues in 2020, despite the immense challenges the sector has seen from the COVID-19 pandemic,” CEO Stuart Last told investors. “Continued cost control and working capital management, new partnerships, and the continued growth of our creative content operation will enable us to continue our progress as the pandemic subsides.”
A more detailed analysis of advertiser demand by Audioboom revealed that top-tier podcasts, which average more than 100,000 downloads per episode, have been more resilient to market declines than smaller shows. It said a majority of brands operating in podcasting are direct response advertisers, who are able to track campaign performance at individual podcast level through promotional codes and vanity URLs. Audioboom says they have “remained committed” to those shows with larger audience reach that have proven sales conversions.
But the second-tier shows, which average less than 100,000 downloads per episode, have been impacted more. “Advertisers have also been significantly more risk averse, which has reduced their testing of spend on new shows, making it an extremely difficult environment in which to launch new, unproven podcasts,” the company told investors. That has hit close to home. The Audioboom Originals Network “has been impacted most severely,” it said, because a majority of the company’s in-house productions fall into the second tier and new launches have seen “softer than expected” advertiser support, it said.
Similar to advertising, Audioboom said it suffered a 10%-12% decline in downloads during the last two weeks of March, when the pandemic lockdowns swept the U.S. and commuting decreased overnight. But the company said its listening levels “recovered” in April to pre-COVID levels. Audioboom has since grown downloads during May and June, which it said can partly be attributed to the signing of new publishers to the network. New signings so far this year include Tiny Meat Gang, ID10T with Chris Hardwick, and Coffee Convos with Kail Lowry & Lindsie Chrisley.
Expansion Plans Delayed To 2021
Despite the challenge monetizing Audioboom Originals Network shows during the first half, Audioboom said its in-house production continues to push forward developing new podcasts. That is because the overall financial metrics are favorable, with AON shows providing a higher gross margin than its independent podcast partnerships. During the first half, it said in-house productions had a 47% margin rate. The Audioboom Originals Network division also develops branded content treatments and provides production services to a number of other podcasts.
Yet because COVID-19 forced the closure of Audioboom’s Production studios in New York in March and on-location recording has not been possible, the company is delaying several planned Audioboom Originals Network show launches for 2020 to either later in the year or to early 2021. The company is also delaying plans to open production facilities in Los Angeles and fill a number of senior production roles until early next year at the earliest, with a ripple effect likely on other new show launches during the next 18 months.
There are still some original podcasts set for release in the second half, including Huddled Masses from the production team behind the Audioboom Original Dead Man Talking; Dance Moms; and Crime Weekly, a co-production with Main Event Media.
Sale Or Merger Still Possible
In February, Audioboom hired an outside financial advisor to explore “strategic options” for the company, including a potential sale. New York-based Raine Advisors is providing advice as the company also looks at strategic partnerships and potential merger options. The company said that process is “ongoing” and that it has “engaged with a number of interested parties.” Audioboom earlier told investors the sale process could take longer than expected because of the pandemic.
Last didn’t offer any specific financial guidance on the second half of the year but told investors that things are moving in the right direction. “The most severe impact of COVID-19 was felt in May and June. However, July and August bookings are displaying signs of rebounding, with advertiser demand increasing from previous lows,” he said. “I am confident that Audioboom’s expansion will continue in the second half of 2020 and I look forward to updating shareholders regarding future developments.”