There’s no doubt that podcasts are a growing business, as measured by audience and ad dollars flowing into the space. U.S. advertisers spent $479.1 million on podcast advertising in 2018, up 53% from $313.9 million a year earlier, according to a report released earlier this month by the Interactive Advertising Bureau and PricewaterhouseCoopers.
Those who have advertised on podcasts are often pleased. “Podcasts are a phenomenal opportunity for brands,” said Michael Duda, managing partner at Bullish, a creative agency and consumer investment firm. “We’ve seen tremendous results for our early-stage brands who conduct marketing programs that are synergetic to their target profiles.”
But many advertisers—particularly large, established ones—still feel they need more solid metrics to justify their spending. Groups like the IAB work to address these concerns through initiatives like the compliance program it launched in December, which certifies that companies are adhering to its technical guidelines.
According to the IAB announcement, podcast advertising lacks uniformity in measurement systems and metrics. Their statement also notes that “meaningful measurement has been thwarted by an inability to connect, track, and analyze user requests; measurement products that use dissimilar, proprietary algorithms; and a lack of an agreed-upon set of metrics and their meanings.”
Though standards exist, marketers say podcast advertising generally performs better for burgeoning direct-to-consumer brands and other early-and mid-stage advertisers versus the multinational, established stalwarts. “The early and mid-stage brands do better with podcast advertising because they can measure it more effectively,” said Steve Shanks, partner at Ad Results Media, an ad agency specializing in audio and podcast advertising.
The top five business categories of audio and podcast advertisers were direct-to-consumer brands, followed by financial services, business-to-business, entertainment, and telecommunications brands, according to the IAB report.
But larger, more established consumer brands need additional reassurance from a metrics perspective if they are going to invest more heavily in podcast advertising. “The reason some larger brands don’t get into it is because with their media mix models they don’t know how to effectively buy this medium, and therefore the direct-to-consumer brands are smarter in the way they approach it and take advantage of the channel,” said Shanks.
“What the industry needs is one common currency of how we count downloads and making sure that all networks and shows are abiding by it,” he said. He added that the best standard now is IAB’s, “but not every network or show is abiding by those standards. If a download means something different depending on who you’re speaking with, it’s going to be hard for some of the larger brands to trust this space.”
Although some podcast networks may not adhere to these standards, Shanks said he’s noted that several of them “are making the effort to switch over.”
Hurdles to accurately provide universal metrics standards are numerous. The IAB’s standards note that “the ability to track podcast content and ad playback largely depends on the player requesting the file” and that only a sliver of “the market share enables client-side tracking as it exists in other forms of digital advertising.” The IAB also said that the Apple Podcasts app, for instance, commanded about 50% market share for podcast players, and yet prevented any client-side tracking or even the ability to count a “play.”
Marketers also have a need to better target their desired audiences on audio platforms. Spotify wants to prioritize advertising around podcasts, and we’re beginning to see what that looks like. This week the company announced that advertisers can now target ads based on the podcasts people are listening to, according to the Verge.
Though these ads won’t be inserted in the shows themselves (they will run in between songs on its free service), advertisers can now “target based on the category of podcast they consume, which is likely going to be much more specific and fruitful for the advertisers.”
Test marketers for the new targeting service were Samsung and 3M. With this new ability, Samsung can, for example, target people who listen to tech and business shows, versus the previous targeting which was by age, gender, and music genre.
Still, podcasts represent the opportunity for brands of all types to reach a growing audience. The IAB/PwC report projects that podcast ad revenue in the U.S. will generate $1 billion by 2021.
The preferred ad type for podcasts remains host-read ads, representing about 63% of U.S. podcast ads in 2018. Just over half of U.S. podcast ads are still direct-response ads, though that has decreased since 2016 from 73% as brand awareness ads grow in popularity.
Dynamically inserted ads continue to grow as well. In 2018, they accounted for about 49% of ads, up from 41.7% in 2017. Host-read ads, whether baked-in or programmatically inserted, tend to perform more efficiently than produced ads, said Shanks. He said this can be looked at like ads on influencer channels. When executed well, these provide much more value for listeners and advertisers, assuming pricing is the same.
In addition to Spotify’s efforts, we’ll continue to see more companies develop solutions to bring hefty ad spend to podcasting. This week in Cannes, audio platforms, media companies and agency networks are touting new audio and podcasting services to take advantage of the rise of streaming audio and bring more advertisers into the fold.
WPP and iHeartMedia announced a new venture called Project Listen, which will offer “creative consulting and media planning covering multiple platforms, including broadcast radio, digital streaming, podcasts, smart speakers and live events,” according to Ad Age.
“Project Listen is about tapping into the scale of audio and moving from the traditionally transactional radio business to the future of audio advertising where insights and ideas lead the way to growth for brands,” iHeartMedia CEO Bob Pittman said in a statement.
Pandora is planning to promote Studio Resonate, “a consulting arm that aims to help brands navigate tasks like creating a ‘sonic logo,’ which is a tune or sound that listeners associate with any given brand,” according to Ad Age.
So, while established brands may only be cautiously wading into the shallow end of the audio advertising pool, a slew of players are testing the format. And new solutions are being developed from all sides of the ecosystem so that the marketing and advertising opportunities sound as good as the podcasts themselves.
Republished with kind permission of Digital Content Next, advancing the future of trusted content