Update: Gimlet Media has just raised $6million in funding, valuing the company at $30 millio, effectively valuing the company at 15 times its revenue. This article from the Financial Times has more details, including that the funding will be used to triple its number of podcasts and develop its branded content strategy.
Though we tend to talk about podcasting having a renaissance, it would probably be more accurate to say that the steady growth of podcasting audiences finally reached the point at which publishers could potentially make money from them.
Audiences have been growing healthily for the medium for the past decade – Pew Research Centre points out that the number of Americans who’ve listened to a podcast in the last month has doubled since 2008 – and there’s no reason to suggest that trend is going to slow any time soon.
In fact, I’m convinced that the global audience for podcasting is going to grow faster in the coming years, and for one very good reason.
Research published by Statista demonstrates that the mobile phone is the primary device on which people consume podcasts. That’s not exactly unexpected; like radio, podcasting currently has a ‘protected’ environment for consumption, in that podcasts tend to be consumed on the go while the user can’t focus on or has no adequate to data required for video content.
Image via Statista
And mobile is going to be the device on which people in the emerging markets get online. That’s around 2 billion people who are coming online between 2012 and 2016 who have the primary delivery platform for podcast consumption as their default.
And even in the developed markets podcast consumption is set to increase still further. In 2015 Statista found that 33 percent of US audiences listened to podcasts in 2015.
Image via Statista.
Additionally there are indications that podcasting – and audio consumption on digital devices more widely – are about to disrupt the heretofore remarkably stable radio advertising ecosystem.
The commercial director for Bauer Media Simon Kilby told TheMediaBriefing in August that the time for the digital disruption of radio has arrived:
“If you look at any media, TV, newspapers… digital, the entry of digital into the market had disrupted distribution massively, and you’ll start to see it happen now in radio significantly. Radio used to be very staid – the FM and AM licenses, it was quite difficult to change that.
“Now, because of two things – the rise of DAB and digital connected devices – things will significantly disrupt distribution over the next few years.”
And that’s reflected in the increasing ad spend that’s set to go on podcasts as a result of that audience growth. We’ve previously written about the huge potential for publishers to get ahead of the mobile ad spend, but pointed out that that’s reliant on their playing ball with third parties like Facebook. But (as yet) Facebook is barely dipping its toe in the podcasting game, so that same restriction isn’t currently in place.
So who are the groups currently making money from podcasts, and how are they doing so?
Ads on podcast networks
The medium, despite being over a decade old, is still relatively nascent. As such there is no predetermined template for what a podcast network should look like. As a result, there is a huge variety in the size and aims of the podcasting networks like Panoply, Midroll Media, Gimlet Media. Despite that, there is a recognition that the CPMs for adverts on podcasting networks is much higher on average than on other mediums.
Average Advertising Rates: Podcast CPM: $20 to $45 Radio CPM: $1 to $18 Network TV CPM: $5 to $20 Web CPM: $1 to $20 http://t.co/koNBqJlpX7
— Geoff Golberg (@geoffgolberg) November 2, 2014
And according to Midroll that’s because of an especially high conversion rate from podcast ads – 63 percent of Midroll’s audience have bought a product as a result of its ads. That’s often ascribed to both the highly personalised nature of the ads, which hosts often tailor each podcast, and the fact that mid-roll podcast ads are just harder to skip than ads on other mediums.
Brendan Monaghan, CEO of Panoply, argues it’s the former which is the more important reason for the high CPMs:
“We have some guidelines, one of which is to not ever confuse the listener as to what is content versus what’s advertising. Still, ads are spoken by the hosts of these shows themselves, and they get to have a fun or creative take on an ad, which has driven up the CPMs. Advertisers are seeing direct-response driven performance — people are consuming goods that were recommended by the hosts, which makes for a compelling return on investment.”
Despite that, advertising on the larger networks has largely been reserved for a handful of especially digitally-savvy brands, as this anecdote from a Nieman Lab interview with Slate’s executive podcast producer Dave Bowers demonstrates:
“Because the ads are often read out by the hosts themselves, often in a creative way, listeners don’t feel the urge to skip ahead. “During one of our earliest live shows that had been sponsored by Audible.com, David Plotz was doing the Audible ad in front of the audience,” said Bowers. “He said, ‘Political Gabfest is sponsored by…well, you know who it’s sponsored by,’ and the whole audience yelled ‘Audible.com!’ When that happened I was like, OK, that’s pretty effective advertising.”
Squarespace, Audible.com, Mailchimp and Lootcrate are among those brands who’ve recognised the value of the engaged audiences for podcasts, but as audiences continue to grow it’s likely we’ll see more brands jumping on board. And the big podcasting networks who sell ads across swathes of their shows will be the ones to benefit.
But there is a growing opportunity for brands to co-publish their own podcasts, essentially doing brand marketing on their own behalf, as is the case with the GE-produced sci-fi podcast The Message. From Nieman Lab:
“If sponsored content is now considered old news in the world of text-based online media, it’s still a fairly new prospect when it comes to big brands funding podcasts.
“But it’s likely that this model will come to coexist alongside other podcast business models, like host-read advertisements, programmatic advertising, and reader donations or paywalls.”
And, as if to demonstrate exactly that, Gimlet has also recently launched its own branded content division for its podcasts, and is acknowledging that as much care must be taken with delineating editorial and sponsored content as in any other medium.
So as the total audience for podcasts continues to grow, with no signs of stopping, it’s likely that we’ll see an influx of brands into a space that has heretofore been dominated by only a few – and that the larger podcasting networks will be the main beneficiaries.
Hear from Panoply at Digital Media Strategies 2016. For more information click here