If an investor was looking for a reason to put their money into the fast-growing podcasting business during one of the biggest media-focused conferences held this year in New York, it may have come from iHeartMedia CEO Bob Pittman. “The growth of podcasting is tremendous,” he said. “Long ago it surpassed satellite radio in terms of reach. It’s now about the same sort of reach as the streaming music services. It’s not the size of broadcast radio, but it’s getting pretty large.” And if podcasters were looking for their champion of the medium, Pittman played that part as well. He also told Goldman Sachs’ annual Communacopia Conference last week that while broadcast radio and podcasting are both audio media, it’s not the delivery format that makes them so similar. “We think of podcasting as an extension of radio,” he said. “We’re in the business of creating engaged consumer relationships. The engagement with the podcast is about as good as it gets.”
That relationship is why advertisers are willing to pay “premium” CPMs for podcasts, according to Pittman. “We’ll get the kind of CPMs that you’d get for online video for podcasts,” he said.
During the wide-ranging conversation, Pittman said iHeart’s $55 million acquisition last year of Stuff Media has been among the drivers of that growth, calling it classic “1+1=3” situation. The deal gave iHeartRadio a sizable catalog of podcasts and Pittman said catalog content is the beneficiary of binge listening. Listeners also return to older shows when they discover a podcast. “We’re in the second season of The Ron Burgundy Podcast and there’s quite a bit of listening to season one as a result of season two,” he said.
Pittman sees his hand filled with about 850 ace cards in the form of local radio stations to promote the podcasts iHeartRadio is offering. That includes the recently-launched Sunday Night Podcasts show that involves hundreds of local programmers selecting from a list of podcasts to match to their station’s format for AM/FM listeners. “We are deliberately introducing podcasting to the radio listener,” said Pittman. “We promote everybody and everything so promoting our podcasts is a very good use of that power of our influences and the power of radio.”
For anyone concerned about a cannibalization of the on-air product, Pittman said it will have the exact opposite impact. “It’s bringing advertisers to the audio medium,” he explained. “The challenge of audio is to get our fair share. Audio gets about half of the share it gets in actual media usage—radio just hasn’t told its story very well.”
Pittman thinks most of the ad dollars getting pulled over to podcasts are coming out of digital video budgets. And that shouldn’t be all that surprising considering media trends. “The consumer has sort of run out of time for their eyes,” said Pittman, telling investors, “Video is very crowded. Audio is not.” He pointed to research showing that 85% of television viewers are doing some other form of electronic activity while watching TV, most often on their phone. And while a majority of radio listeners are multitasking, it’s with non-media activities like cooking, driving, or walking down the street. “If you think about what business that we are in, we are in the companionship business,” he said. “Podcasting is that as well. It’s very host-driven. So it plays exactly to the strengths of radio and that relationship.”
Fellow Evangelists, Not Competitors
Radio companies have been investing more time and money in podcasting during the recent years, with some of the most aggressive moves this year coming from Entercom. Last month the company bought the podcast studio Pineapple Street Media for $18 million and the 55% of Cadence 13 it didn’t already own while also announcing its Radio.com portal was launching a new podcast-powered digital sports network.
Pittman said Entercom’s podcast listening numbers may not be as big as iHeartRadio’s but he thinks it will help everyone in the medium. “I think they’re doing a good job with the assets they have. I think they should get into podcasting because everyone in radio has a great relationship with the consumer and the broader the relationship the better,” he said. “For us, rather than think about what Entercom is doing as competitive, we think about it as good for us. The number one challenge we have is to get advertisers to audio. So anybody who is doing more in audio and bringing people to audio is good for us.” Pittman also said the efforts that Cumulus Media’s Westwood One, Spotify and Pandora have done to preach the gospel of audio is also valuable for the sector overall.