Jul 20, 2017in News
Pod Save The Ad-Spend
By Lyla Wilton
This June, Apple quietly announced a big change coming to podcasting: A new version of their podcasting app, which owns half of the podcast player market share, will provide basic analytics to publishers and finally enable them to see when and for how long individual episodes are listened to.
For a seemingly small technical change, access to this listening behavior data has the ability to transform the industry for agencies, advertisers and content creators alike. Precision’s digital advertising team relies on data to measure the success of everything that we do for our clients, and to date has been hesitant to utilize podcast advertising given its limited reporting capabilities. Advertisers like Squarespace, who throw down an estimated 3x more to advertise on podcasts than on traditional radio, can finally answer the question: how many people actually listen to this?
To grasp the significance of this change, it’s necessary to understand the recent growth of the podcast medium: 24% of Americans identify as monthly podcast listeners, up 40% over the last two years. Young publishing powerhouses like Gimlet Media have joined stalwarts such as NPR to compete for this burgeoning new audience of podcast listeners. The industry has become increasingly “professionalized,” with figures like Katie Couric and legacy publishers like The New York Times contributing their own podcasts.
Podcasting technology is not new, so why this rapid growth now? It’s tempting to divide the evolution of podcasting into two eras: B.S. and A.S. Before Serial and After Serial, NPR’s hit true crime podcast, which was the first “hit” podcast — though, of course, without access to the kind of listening data we have now, the only real evidence we have is the cultural phenomenon, which even warranted its own SNL sketch.
But compelling content alone isn’t at the root of this rapid expansion. Content subscription services like Netflix have primed a generation for “on-demand listening,” while the Internet-connected home, car, and phone have increased listening time and accessibility.
As the podcast industry has grown, so has podcast advertising. 2016 saw podcast advertising expand at a rate of 48% and a total revenue spend of $119 million, and is predicted to grow 85% in 2017. This increase is largely due to the high desirability of the podcast listener audience. The average monthly podcast listener is roughly 30 years old, has at least an undergraduate college education, and makes more than $75,000 per year. If that’s not enough, consider that 54% of listeners have made purchases from podcast ads. Listeners are drawn to podcasts for the personalities behind them, voices that they come to trust, not only for content, but for their product recommendations, too.
Despite this growth, the podcasting business continues to face a significant problem: analytics. Currently, the primary metric used in podcasting is unique downloads. The majority of podcast listeners download content to a device that is almost always unable to send data about its consumption, much less the ads within it. Unlike true streaming content, like a Spotify song, podcasts that are “streamed” are logged the same way as a downloaded file, making them similarly useless for data collection.
The fix? 80% of advertisers use unique offer codes to track purchases driven from a podcast ad. This only works for companies whose goal is online sales, and even this method is far from perfect. Not all users that purchase an advertised product use a code, and not all consumers who use a code got it from the podcast, thanks to sites like Coupons.com. How do you know if a podcast download results in a podcast listen? Even podcast advertising tools like Midroll admit to the challenge of answering that simple question. Their answer — “Truth be told, we don’t know 100% for sure. And we would be skeptical of anyone who says otherwise.”
But now, things are changing. Even before Apple’s announcement, changes to podcasting have long been in the pipeline. Streaming giant Spotify announced it would begin running original audio programming this year and podcasts like Mogul and 2 Dope Queens jumped on board, releasing exclusive early content on the platform. Spotify offers a significantly more comprehensive dashboard of listener behavior data, a huge draw to the platform.
Podcasting is a rapidly evolving medium that will likely see many of the same advances and related challenges as digital media, albeit a few years behind. Increased reporting capabilities will make podcasting undeniably more attractive to advertisers, and more profitable as a result.
In an age where we are inundated with images, sound, video and text from our computer screens, cell phones, and smartwatches, podcasts provide the authenticity and human connection people crave and that’s become increasingly harder to transmit through other mediums. Podcast listeners are looking for more than a soundbyte — they’re settling in for upwards of an hour of entertainment.
As an agency, we help our clients succeed using innovative ad buys on a diverse range of platforms. However, the ability to measure that success quantitatively is a fundamental part of our strategy, only now is podcasting able to provide the data necessary to do so. With this long-awaited shift, podcast advertising could offer an increasingly powerful way to validate brands and reach new and engaged audiences.