WHAT TYPES OF ADVERTISING WORK WITH PODCASTS

The sudden explosion of podcast popularity has caught advertisers by surprise.

“Marketers are starting to realise there are a lot of people listening to podcasts, and thinking, ‘Let’s figure out how to best advertise in them,’” PwC Partner David Silverman told AdExchanger.

So, what’s working?

Branding is getting to be a bigger player on podcasts. Brand awareness ads made up 38% of all podcast campaigns last year, up from 29% in 2017, according to the Interactive Advertising Bureau and PwC’s Podcast Ad Revenue Study released in June 2019. Branded podcasts accounted for 10% of all campaigns in 2018, compared to 6.5% the year before.

The default approach to advertising on podcasts — direct response campaigns — are falling from favour, accounting for 51% of podcast ads in 2018, down from 64% in 2017 and 73% in 2016, according to the report. With the increasing focus on brand advertising, the primary pricing method is becoming CPM, with 86% of buyers using it versus the directresponse metric of cost per action, which has very quickly fallen out of favour.

“Podcasting had been so significantly used by direct response advertisers in the past,” Silverman said. “But being associated with a particular podcast or host is good branding, so it offers a lot of good attributes for companies promoting a product.”

The report also found that pre-produced, dynamically inserted ads gained share. Almost half of all podcast ads (49%) were dynamically inserted in 2018, up from 42% in 2017. Still, more than half of all podcast ads (51%) remain static and baked-in, down from 58% in 2017.

The host-read ad is the Holy Grail because it allows the advertiser to take advantage of the host’s trusted status and relationship with their audience. That said, while host-read ads made up 63% of podcast ads delivered in 2018, that number is down from 67% in 2017 while cheaper and more scaleable pre-produced ads grew from 33% to 35% of all podcast ads last year.

BEING ASSOCIATED WITH A PARTICULAR PODCAST OR HOST IS GOOD BRANDING, SO IT OFFERS A LOT OF GOOD ATTRIBUTES FOR COMPANIES PROMOTING A PRODUCT.

Some observers believe that as a result of podcasting's explosive growth, we've already hit Podcast Saturation or are close to it.

Yes, the existence of hundreds of thousands of podcasts would seem to be overwhelming and a daunting environment for newcomers looking to be discovered.

But consider the fact that there are more than 35 million YouTube channels. In that context, we are a long way from Podcast Saturation.

Given this appealing opportunity to gain revenue and listeners, media companies and individuals are launching new podcasts at a torrid pace. In 2018, an average of 575 podcasts were started every day — that's about one new podcast every three minutes, according to the Edison report.

In June 2019, there were 750,000 podcasts in the Apple Podcasts directory alone, up from 550,000 in June 2018, according to Podcast Insights. Of those 750,000, almost one-third or more than 210,000 of them published their first episode in 2018. Google has reported that it is tracking 2 million podcasts. So a lot of folks still see an opportunity.

Since 2014, the share of time spent listening to spoken word audio has increased 20%, while time spent listening to music decreased 5%, according to Edison Research.

Another driver of podcast growth is mobile technology: 22% of listening to spoken word audio in 2019 is now on a mobile device, compared to 9% five years ago, according to the Edison report. While a majority of podcasts are still listened to at home, the advent of Bluetooth and other connections in the car have made podcasts a key listening tool for end users while they commute. In fact, Edison's report said that 58% of podcast users claim that they have listened to a podcast in the car.

The market outlook gets better: The average age of the podcast listener is 39 years old and, perhaps more importantly for advertisers, the average salary of the average podcast listener is $87,000, according to a new study from Nielsen. Apple remains the dominant podcast listening app. Here are the top five:

• Apple Podcasts (and iTunes): 57.9%

• Spotify: 13.1%

• Overcast: 2.8

• Castbox: 2.7%

• Stitcher: 2.3%

• Google Podcast: 1.8%

Aside from rapidly improving technology, what's driving the attraction to podcasts?

For the listener, podcasts are entertaining, provocative, educational, and fill previously uninspiring times of the day (the twice-daily commutes, daily chores, long walks, grocery shopping, etc). Podcasts also become an almost personal relationship. “There's something very intimate about podcasts — you're literally letting an individual into your personal space for 30 minutes,” Grazia magazine Editor Hattie Brett told us.

“As such, you develop a relationship with the person who is hosting the podcast and, over time, really come to trust them,” Brett said. “So for media brands, that have been built on developing trust with their readers, it's a natural extension; a way to show a more intimate side of your team to your audience.”

For the media company, it's a relatively cheaply produced revenue-producer and subscriber attraction asset that cannot be poached.

“Podcasts are not like a text story, where a free title [or site] can come along and basically republish it, diluting the value of your paid offering,” Enders Analysis Senior Analyst Joseph Evans told Digiday. “If you want a particular podcast, you have to go to the source. And they're a lot cheaper to put together than video, particularly the kind of editorial podcasts that news sites are looking into.”

“THERE HAS BEEN SO MUCH DEMAND FOR SPONSORSHIP THAT IT MORE THAN PAYS FOR ITSELF”

Tom Standage The Economist Head of Digital Strategy

REVENUE IS FINALLY CATCHING UP TO VIEWING

The podcast ad market is ascendant. Roughly $479 million was spent on podcast ads in the

US in 2018, which was a 53% increase from $314 million in 2017, according to the IAB's 2019 Podcast Revenue Report. Looking ahead, podcast advertising revenue is projected to increase to $1 billion in 2021, according to the IAB.

For example, the Financial Times has nine open-access podcasts including “The FT News Briefing,” which gets more than 1 million monthly downloads, according to the FT. Their average listenthrough rate is 75% and 2019 audio ad revenue tripled over 2018, Head of Audio for Commercial Alastair Mackie told Digiday.

“There has been so much demand for sponsorship that it more than pays for itself,” Economist Head of Digital Strategy Tom Standage told the journalism think-tank Nieman Lab. “The big change is commercial, which is that we had advertisers who started to come to us last year and say, ‘We are only going to buy two kinds of ads next year: print and podcast. What have you got?'”

As impressive as that number is, the audio market in China (which is dominated by self-improvement audio products) was estimated to be worth around $7.3 billion in 2018, according to China's Administration of Press, Publication, Radio, Film and Television. What makes the figure even more impressive is that it is focused only on consumers paying directly for audio content online and does not include ad-driven podcasts.

Podcast advertising isn't threatening conventional radio ad spending… yet. Podcast advertising is on double-digit growth trajectory while radio ad growth will begin contracting next year and continue