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Podcasts are rapidly growing in popularity, but how attractive are they to advertisers?
Podcasts are having their day in the sun. The medium dates back to at least 2004 (when, with a certain lack of prescience, it was named as a portmanteau of ‘broadcast’ and ‘iPod’), but it’s only in recent years that interest has really started to spike. Thanks to the runaway success of series like Serial and S-Town, even people who had been avoiding podcasts for years were suddenly engaging with this ‘exciting new medium’. And with this newfound popularity, podcasts are becoming increasingly attractive to advertisers.
The Interactive Advertising Bureau (IAB) reports that marketers spent $479 million on podcast advertising in the US in 2018, a 53% increase from 2017’s $314 million. It predicts that revenues will exceed $1 billion in 2021. An estimated 144 million Americans (51% of the population) have listened to a podcast, and 90 million (32%) listen every month. But what is it about podcasts that have sent them rocketing so quickly into the big leagues?
Scott Klass is SVP marketing at audio effectiveness company Veritonic, which collaborates with Advertising Week on The Sonic Truth podcast, exploring how brands and other businesses are adapting to developments in the audio space. “Podcasting is also very much ‘of its time,’ if not actually helping to create that time,” he says. “The audio renaissance, if you’ll forgive the expression, is real. TV’s are on and ads are playing but people aren’t looking at them 61% of the time. NBCUniversal is offering a no-visual audio lead-in to TV ads. Everyone’s wearing headphones. Innovations like smart speakers are focusing on sound. So although podcasts have been around for a while, it’s the right cultural climate for them (and in turn, advertisers) to flourish.”
Podcasters are able to serve as brand ambassadors with a high level of personal connection to their respective audiences. Fans frequently spend up to a few hours each week with their favorite podcaster talking directly into their ears as they go about their day. Rather than simply narrating a script, many podcasters share their own experiences of the products and services they are advertising, allowing brands to leverage that trust and intimacy with these self-selecting audiences. Authenticity and enthusiasm are valuable and extremely hard to fake. What’s more, Edison Research reports that 54% of listeners say that they are more likely to consider the brands they hear advertised on their podcasts.
Matthew Billy, the creator of the award-winning Between the Liner Notes and the new podcast Bleeped, believes that part of the appeal for advertisers is that podcast listeners are, by their very nature, more engaged than the average consumer.
“Compared to other entertainment mediums, the percentage of podcast listeners who’ve graduated from college or have advanced degrees is very high,” he says. “They are an informed audience that enjoys entertainment that is not only exciting to listen to but also teaches them something. This same intellectual curiosity applies to podcast ads. Many television and radio ads attempt to sell products by trying to convince people the product enhances a person’s lifestyle image and makes them ‘cooler’. Podcast listeners don’t want that. They prefer learning the details about a new product, what makes it different, and then making an educated buying decision.”
There are widely reported to be over half a million active podcasts out in the world today.
The targeting opportunities in podcast advertising are almost unparalleled. There are widely reported to be over half a million active podcasts out in the world today, and thanks to the broad scope of subjects covering any interest and fandom you could care to mention (from the audio-design deep dives in Reasonably Sound to the pencil enthusiasts of Erasable) and the increased use of audience surveys allow advertisers to target demographics with incredible accuracy and specificity.
As more and more advertisers recognize the value of the medium, the need for a standardized metrics system to measure a podcast’s reach is becoming increasingly pronounced. In December 2017, the IAB launched its Podcast Measurement Technical Guidelines, taking a huge step forward in standardizing how the podcasting industry reports download numbers, listening behavior and ad deliveries—and offering certifications to show that podcasts are adhering to these guidelines.
“Over the past three years, podcast advertising has evolved from being the Wild West of advertising to being organized and standardized,” says Billy. “Not long ago, when a company paid to have their ad inserted into 100,000 downloads, they had no idea if they were getting what they paid for. Even what counted as a download was inconsistent. [The IAB’s] standardization gives companies the security of knowing what their money is buying. I believe this is a major reason why podcast ad buying has been increasing at 24% per year.”
Still, the IAB’s move toward industry-wide standardization isn’t a fait accompli, as other organizations have been experimenting with their own measurements systems. Podcasting giant NPR has instituted the Remote Audio Data (RAD) system to measure listener activity, including how far its audience gets through its podcasts and whether they listen to ads or skip them. Apple and Spotify have also been developing their own analytics platforms.
“Having standards that everyone has to adhere to is clearly critical to levelling the playing field and advancing the space, and there are some growing pains that everyone has to go through to get there,” says Klass. “As with anything like this (e.g. viewability in display advertising), part of the question is which companies are going to go above and beyond the baseline requirement and give their buyers as much data as possible to make truly informed decisions. It’s about transparency and effort, and the businesses that make it will ultimately be happy they did.”
Whatever the future of podcasting analytics, there’s no doubt that the future will—and must—bring us ever deeper insights into who is listening and how. “Outside of the requisite expansion of ad products and capabilities—dynamic creative, improvements to bidding features in the marketplaces, more cross-pollination of content on the streaming platforms, etc.—the real thing to watch will be the deeper dive into analytics,” says Klass. “That’s obviously more scrutiny around listenership, downloads and the like (driven in part by the aforementioned IAB standard), but also creative analysis, which is especially interesting in a space where ad creative is clearing some new paths.”
The medium may be celebrating its 15th birthday, but the unparalleled relationships between podcasters and their listeners are just beginning to be appreciated. With better analytics easing it out of its advertising adolescence, the rise of podcasts is only just beginning.