Advertisers looking to reach a premium, engaged audience: It’s time to tune in to podcasts.
Podcasts provide advertisers with a media channel that skews younger and wealthier, is growing and expanding year over year and even has statistics to prove its audience actually listens.
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According to an Edison Research report released in April, 70% of podcast listeners say they listen while doing nothing else. Unlike more-traditional media channels such as radio and television, which can often become background noise – especially during the commercials – podcasts capture attention and the loyalty of their audiences.
And advertisers appear to have taken notice, because the podcast ad spend in 2018 was more than $479 million, up from $314 million in 2017. That number is expected to reach north of $1 billion by 2021 in the U.S. alone.
So if you aren’t talking to your customers through the voice of popular podcasters such as Joe Rogan or Bobby Bones, maybe you should be.
Carter Brokaw, president of digital revenue and strategy for global media and entertainment company iHeartMedia, said podcasting has been growing for the last decade — in fact, the number of programs has more than doubled in that time to more than 750,000 podcasts.
“Similar to broadcast radio, it is an extremely engaging medium that builds a loyal relationship with listeners,” Brokaw said. “Currently, 51 percent of Americans have listened to a podcast before, with 60% of them tuning in over the last month. Podcasts serve niche audiences of all kinds, providing very specialized content and going deep into topics that the audience is passionate about. Listeners become super committed and loyal.”
Several factors driving the popularity of podcasts, as well as their effectiveness for advertisers. For one thing, many listeners enjoy their favorite podcasts through headphones, which helps eliminate distractions and enhances their focus.
Also, in today’s technology-driven world, cars with Bluetooth connectivity and homes enabled with virtual assistants like Alexa make it even easier to listen on demand and often without even so much as touching a button.
Podcasts aren’t a new phenomenon — their origins date back to what was called “audioblogging” in the 1980s, while iTunes began streaming programs in 2005. But they are new enough to bring different ways to advertise, ways that bend the rules associated with traditional channels like television and radio.
In radio, for example, spots have to be exactly 15, 30 or 60 seconds and they must be pre-recorded, so there is little flexibility for last-minute changes or updates.
Not so in the podcast world. If an advertiser wants a host to elaborate on the advanced technology woven into a pair of athletic shoe for two minutes, then so be it. Better yet, send the host the sneakers and let them talk about them from first-hand experience. Then it becomes an endorsement.
“Because of the nature of the host talking about it, the commercial becomes a personal experience with the brand. That’s a big deal,” said Dave Newmark, CEO of Pod Search, a searchable index for podcasts, which also has an ad agency side that buys podcast advertising on behalf of its clients. “There’s a lot of credibility the host imparts in the message. The spots can be as long as they need to be to get the point across.”
A podcast host’s ability to deliver a first-person account of a product can change the more traditional advertising game significantly. Suddenly listeners are hearing an influencer recommendation instead of an ad.
“Podcast hosts have the freedom to do the spots themselves,” Newmark said. “In radio, that is somewhat restricted, but in the podcast space, hosts are really getting behind the brands and doing strong endorsements because, in many cases, they are the owners of the show and ownership is a strong motivator for the host to make advertisers happy. In radio, the host is basically a hired hand.”
Another difference between traditional media and podcasts is that advertisers (also referred to as sponsors) are often perceived by listeners as supporters of their favorite show rather than an intrusion to their experience. In television, the ad is what separates the viewer from the result of the pre-ad cliffhanger. So what do many people do nowadays? Fast forward right through it.
Brokaw added that 100 percent of the iHeart podcast ads are host-read, which provides intimacy and personalization around the creative. “Podcasts also allow for sequential storytelling of a product or brand throughout the podcast’s ad breaks,” he added. “And our podcasts typically have a low ad load and the ability for dynamic ad insertion, which allows advertisers to change creative based on timing, offers, etc.”
And like most advertising approaches where messages are delivered via multiple channels, podcasting is no different. Brokaw said iHeart has an initiative called “Podcast, Meet Broadcast” which creates audio advertising campaigns that utilize the benefits of radio and the unique characteristics of podcasts.
“Radio has the mass reach (radio reaches 9 out of 10 Americans) to drive listening back to a podcast and introduce podcasts to millions of listeners, many who may have never even heard a podcast before,” Brokaw said. “Podcasting is a natural extension to broadcast radio and there is a level of creative freedom that allows you to go even deeper into storytelling on topics and discussions with your audience than we could on radio.”
Worth the Cost?
Being able to deliver your message right to your target customer is every advertiser’s goal, but it comes at a hefty cost. Compared with other channels, podcast advertising can be twice the price.
Newmark said most radio advertising costs between $8 to $10 per thousand listeners. Podcast advertising, on the other hand, can range from $25 and $50.
“It’s more expensive, but you are getting the endorsement and attentive listeners,” he explained. “Some podcasts may only have 500 or 1,000 listeners total; but shows that reach millions of people are going to cost $30,000 for a single spot on a single episode.”
A show like “The Daily” from The New York Times, for instance, has 5 million unique listeners per month, and it reportedly costs $290,000 a month to be one of the podcast’s several sponsors.
Another challenge related to podcast advertising is its listener data — or lack thereof. To date, very little demographic information has been made available to advertisers, primarily because it isn’t captured at the podcast level, according to Newmark.
Apple, which is the No. 1 provider of mobile episode deliveries (most people access podcast content on mobile devices), keeps specific podcast demographic information private.
Spotify, though, is becoming a podcast heavyweight after spending nearly $400 million earlier this year to acquire podcast companies Parcast, Gimlet and Anchor. It now claims to be the second-most popular place to listen to podcasts.
To help producers and advertisers, Spotify recently announced Spotify for Podcasters, a dashboard designed to give podcasters — and their advertisers — a deeper knowledge of their audience habits, such as who your listeners are, which episodes they are streaming the most and even what music they are listening to.
While helpful and a step in the right direction, experts said there still isn’t a complete demographic report for a podcast across all delivery channels — yet.
“Podcasting doesn’t have what Nielsen does for the radio side,” Newmark said. “Nielsen measures quantity of people as well as detailed demographics at radio. They have started on a very small scale to do paneling for podcasting, but to date, there are only maybe 10% of podcasts participating, so it isn’t statistically significant yet.”
But there are other ways of measuring the success of placements, so lack of detailed demographic information isn’t necessarily a deal-breaker.
Newmark noted there are response-oriented advertisers and brand-oriented advertisers. The response-oriented ones consider a success when they have a low cost-per-customer acquisition. “They will do things like a promo code or a vanity URL,” he said.
Brand-oriented advertisers have other methods for assessing results. “It might be that an advertiser is trying to push people to a retail location,” Newmark added, “so they would then survey customers and ask what prompted their visit.”
Meanwhile, Brokaw said iHeart uses Nielsen “audience cohorts” to help shape recommendations for its advertisers. “We also utilize audience insights and podcast feed analytics based on each campaign need.”
Despite the current shortfall in listener demographics, podcasts continue to explode in popularity, and ad spends on those shows aren’t showing any signs of slowing down, either.
“If you are a brand and everybody you talk to is listening to a podcast, you can’t be sitting on the sidelines waiting for the experts in the industry to tell you every little data point,” Newmark said. “You have to just move. If you spend enough and you are on some of the bigger shows, you will start seeing results.”
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