The rising tide of podcast listeners over the past few years has been matched by surging advertiser interest. It’s on full display this week in Orlando where big marketers and ad agency media buyers descended on the Podcast Movement conference. According to figures released by the organization Friday morning, the event attracted a record 3,000 attendees.
Regarding the audience for the platform, “We are seeing growth exponentially across the board,” said Kelli Hurley, Senior VP of Digital Partnerships at Westwood One, summing up what most podcast companies are experiencing. The podcast executive says it’s not just growing audience figures that are helping sell the medium, but also better technology, measurement and industry metrics that’s making it easier for buyers to gobble up inventory.
Ken Lagana, head of Sales and Marketing at Megaphone, said after his company addressed some of the measurement and technology hurdles that were holding brand advertisers back, they’ve seen a shift in the business. “We were very direct response last year, and this year we’re predominately brand advertiser-driven,” he said. “Big brands love this space, but it’s all about cracking the code to reduce those barriers of entry.”
U.S. podcast revenue is expected to reach $678.7 million this year, according to the Interactive Advertising Bureau (IAB). That would be a 42% increase over what advertisers spent on the medium last year when $479.1 million in revenue was logged. The IAB/PwC Podcast Advertising Revenue Study expects the pace of growth to remain strong with podcast ad market revenue forecast to surpass $1 billion by 2021.
“The big news is podcast revenue is growing and it’s growing rapidly,” said IAB President/COO Patrick Dolan. He said it’s easy to explain: “Podcast listening is surging—and there are more places to listen.”
The IAB data also shows traditional branding advertising is a growing factor, as direct response ads are now comprising a smaller share of the total. “Host-read ads are still the most dominant forms but there’s a change in direction with some of the other types of ads,” said Dolan. “And the buying cycle is being more dynamic. We’re seeing a rise in programmatic, remnant and quarterly deals.”
Technology has made it easier for big national media buyers to access podcast inventory, including more programmatic buying platforms that now embrace on-demand audio. “For the agencies that do the majority of buying today, it’s incumbent to push programmatic solutions,” Lagana stressed, although now, “the technology needs to get better.”
Hurley believes one area programmatic platforms can improve is dealing with product exclusivity. He calls this “one of the biggest challenges” since the platforms don’t always taken into account the host-read ads.
There are also questions about how to match the tone of a podcast with ads being placed programmatically, a disconnect infamously spoofed by Saturday Night Live. Tyler Moody, GM/VP at Warner Podcast Network, suggested there’s a relatively easy fix for that. “There needs to be some human ear on that creative before it goes into the pool of spots,” he suggested.
Lagana was also skeptical that traditional broadcast radio commercials can work in the podcast environment. “You can’t just drop a local radio ad into podcasts. It will kill the medium,” he insisted.
As more advertising shifts to brand messages and away from direct response ads, there’s some question about what role host-read ads will play moving forward. Hurley dismissed the idea that host-reads are inherently better, saying at Westwood One they examine all options. “Some shows make a lot of sense for direct response advertisers. Ben Shapiro is one of the best ad readers in the space,” she said. “But there are other shows where it makes a lot of sense to insert ads in the content to tell the story. It’s really a show-by-show basis and it’s a lot about what the advertiser is trying to achieve.”
Brett Robinson, VP of Ad Operations at National Public Media, said that regardless of how the ad is delivered, more podcast-specific copy needs to be drafted rather than simply using what’s written for other media like broadcast radio. “What’s going to be the net Super Bowl buzz-worthy ad that happens in podcasting? It’s not the host-read ad that was made for broadcast radio, which has a different type of sound,” he explained.
Too Many Ads?
With the growth of advertiser demand come concerns that podcasters may be too willing to boost ad inventory levels beyond what is good for the medium. Robinson said podcast listeners over-index on advertising avoidance; he fears if the platform mirrors over-the-air radio it could be a turn-off. “It’s very easy for people to opt out, so you have to be very careful with that relationship,” he said. “We need to be careful not to kill the golden goose just because the technology has evolved.”
Just as important as ad loads is ad placement. Executives say a lot of effort is going toward testing where the best place with a podcast may be to break for ads. It’s also shaking up the meaning of what a pre-roll ad is. Robinson said National Public Media has begun testing the first break a few minutes into a show rather than at the outset. Moody said Warner Podcast Network has done the same. In both cases they calculate that once the listener is engaged with the episode, they’re less likely to skip past the spot.
Lagana said Megaphone estimates that listeners are willing to trade an inserted ad for 10 to 12 minutes of commercial-free content. But he also encourages well-known brands to create spots that are as short as possible: “Big brands probably don’t need 60-second ads. They could get away with 6 seconds.” Lagana adds that the company tries to limit one-minute mid-roll spots to those clients selling a highly technical or complicated product that needs explaining.
Robinson said the best metric for whether an ad is too long is what impact they have on skip rates—or worse yet, metrics that show a listener abandoning an episode altogether: “It’s easy money for a three-minute endorsement, but that’s teaching everyone where the skip button is and that’s not a help to the medium.”