Squarespace, Blue Apron, Casper - if, like me, you’re a podcast devotee, the omnipresence of these brands on the airwaves will have scorched their names irrevocably onto your eardrums. The voices of my favourite podcasters accompany me on the commute to work, alleviate boredom on the treadmill and lull me to sleep. And along with their voices, the brand names they ‘endorse’ - repeated with such frequency that I can mentally match each tone and inflection word for word.
And it works. Far from finding them annoying - as I’m sure I would if a TV programme was repeatedly interrupted by the same advertiser - I find myself developing positive feelings towards them. I associate them with the podcasters themselves and, as it’s very often young, modern, direct-to-consumer companies who are using this ad space, I associate new brand names I hear with the same cohort. Admittedly, I don’t think this has resulted in me parting with cash just yet (partly because many of them are US based), but recently, when advising someone on building a website, 'Squarespace' is a name that quickly floated to the top of my mind.
And I’m not the only one. Podcast listeners are a burgeoning demographic that might come to represent one of the most lucrative channels available to advertisers. Between 2015 and 2016, the number of Brits tuning into podcasts grew 27 percent to 4.7 million, while across the pond, almost 40 percent of Americans listen to podcasts, while 24 percent tune in monthly, representing the captive ears of 60 million potential consumers.
The growth and evolution of podcasting as popular media has enlarged the pool of listeners. “When it was only nerds who were listening to podcasts, [advertising] was all app developers and web-hosting companies,” said Lex Friedman, chief revenue officer at Midroll, the podcast advertising platform which has been selling ad slots since 2011. “As nerd culture has gone from niche to increasingly mainstream, that’s benefited us too.”
But while the value of podcast advertising soared to $220 million in 2017, this was largely in the absence of good data about the reach of these ads. Concrete numbers for how many listeners were using the skip button to bypass ads, or even how many people were listening at all were practically non-existent. Although still a fraction of the $17 billion spent on radio advertising, it’s a lot of money to drop without the analytics to back it up. “I think some people had an apocalyptic fear that, ‘Oh my God, we're going to get this data and see no one’s listening,’” said Erik Diehn, CEO of Midroll.
However, in 2017, Apple released podcast data for the first time and the whole podcasting world was able to gasp a collective sigh of relief. The data was conclusive - people were on average listening to 90 percent of their favourite podcasts, and relatively few were bothering to skip ads. The same is true for other podcast platforms including Panoply and Headgum.
“People are really listening and want to consume all of the content that is there and available,” said Jason Cox, CTO of Panoply. “There’s a level of dedication that comes from podcast listeners that you otherwise don’t find.”
But what might prove even more interesting to advertisers is the demographics of podcast listeners. Different studies indicate that they are some of the wealthiest and most well-educated professionals in the US. And at a time when advertising to the millennial generation - who are second-screeners, faithful users of adblock and tune into Netflix or catch-up instead of live TV - is harder than ever, podcast advertising could provide hope. Twenty-seven percent of monthly listeners in the US are aged between 12-24.
In the squeezed attention economy, where ads are fighting for a few seconds of exposure before being skipped or muted, podcast ads represent a surprising gear shift. “This is not a three-second Facebook video—this is a 35- to 45-minute podcast, a nice 60-second midroll [ad] and those work,” said Jason Hoch, chief content officer at podcast creator HowStuffWorks. “With the growth of the industry, this kind of longer-form experience and the technology backbone behind it, you need all of those to get the big brands over.”
Just as scoring a shoutout from a micro influencer - rather than the likes of Kylie Jenner - on Instagram allows you to connect with a hyper-localised and engaged target audience, podcast advertising could help you to connect with the similarly niche audiences.
But what kind of ads work best? In podcasting, there are two options: dynamically inserted, pre-recorded ads, and ‘baked-in’ ads, read aloud and personalised by podcasters. For example, on Call Your Girlfriend, a popular US podcast, ads for Squarespace are delivered around the hosts jokily persuading their producer to set up a website on the host platform.
While baked-in ads have been popular in podcasting so far - in 2017, 95 percent of Midroll's ads were read by hosts - we may soon see an surge in the pre-recorded variety. “There’s a tension about the sincerity of an endorsement,” said Cynthia Meyers, associate professor of communication at the College of Mount Saint Vincent. “The danger of integrating ads is that the audience gets cynical, and stops believing it.”
A move in the direction of dynamically inserted ads would reflect a similar evolution that took place in radio advertising, which initially adopted a ‘baked-in’ approach before transitioning to pre-recorded ads. One example of this is the recent deal signed by HowStuffWorks - creators of 12 podcasts reaching 3.4 million US listeners each month - and ad company, AdsWizz, to automatically insert ads into their 6,000 podcast episodes. Until now, inserting ads into each audio file has been a manual process.
But fears of growing cynicism towards baked in ads may be misplaced at the moment. A study by IAB (the Interactive Advertising Bureau) found that baked in ads were 3.5 times more efficient than dynamically inserted in terms of cost per acquisition (CPA, an ad model where the advertiser pays for a certain metric e.g. clicks or purchases). However, podcast advertising can be pricey - with a slot on the top 50 podcasts in the US costing between $25-$100 (CPM - the cost per 1000 impressions). No wonder then that podcast advertising is forecast to be worth $500 million by 2020.
And although it might be costly, the money may be worth it. Data on how listeners act on sponsored messages reveals that 80 percent were able to name at least one brand name mentioned in the episode and that 51 percent were somewhat or much more likely to buy from the brand. Meanwhile, NPR found that 75 percent of listeners took action on a sponsored message.
And baked-in or prerecorded don’t offer the only options for brands. Companies also have the option of underwriting content for a favourite show - in effect acting as investors. A hugely successful example is marketing platform, Mailchimp, sponsoring the most popular and iconic podcast to date, Serial.
Right now, more and more brands are simply creating their own high-quality, branded podcasts. Tinder has promotional podcast 'DTR' (define the relationship) which examines various aspects of modern dating; Mastercard produces 'Fortune Favours the Bold', exploring the future of money; and even McDonald’s has a satirical podcast series, 'The Sauce'.
Again this approach can end up being pricey, but is still competitively priced compared with national media campaigns. “If you want to make a show that sounds like This American Life that’s fully produced with interview tapes and you’re traveling all over and there are sound beds and music transitions, that’s an expensive show to make for anybody,” said Lex Friedman, chief revenue officer at Midroll. “That can cost more than if it’s a chattier show with a single voice on a microphone.”
But the highly targeted, intimate nature of this advertising is sure to make it a permanent aspect of the ad landscape.