The US podcast industry is “incredibly immature” when it comes to investing in digital podcast advertising, according to Acast CEO Ross Adams, and is also behind the UK in its use of advertising creative.
Interviewed as part of today’s episode of PodPod, Adams spoke about how although the US podcast advertising industry’s 17-year head start has put it ahead when it comes to monetisation strategies, it is lacking compared to the European market in certain areas.
“The US is mature in the fact that it delivers a huge amount of revenue from brands into podcasting so it's a thriving ecosystem,” said Adams. “UK and Europe's [podcast market] is equally as thriving, but it's even more mature when it comes to the mainstream agencies.”
“So if you look at the big holding companies, the Publicises, the WPPs of this world, they spend a huge amount on podcasting. And if you look at the podcast market in the UK and Europe, the big chunk of the spend, the majority chunk, comes through the major agency groups. You look at the US, and that's the exact opposite.”
Adams goes on to explain that Europe’s podcast advertising spending is majorly focused on “dynamic digital first” and invested by major agencies that are looking at accessing an audience over a longer period of time. This is compared to the US market which is more likely to be based on direct response advertisers that calculate their budget based on cost per acquisition and are looking for immediate conversions.
According to advertising analytics platform Magellan AI’s latest monthly top advertisers stats, direct response advertisers such as BetterHelp, Amazon, and Shopify continued to rank as the top podcast advertisers in the US since October 2022.
“They are starting to evolve and change to more of a European model, but it'll be more of a mix on DR still, I think, in the US,” Adams added.
Host-read and baked-in ads - as opposed to dynamically inserted spots - have also been a part of the US’ podcast monetisation strategy for a long time, according to Adams, due to direct response advertisers wanting to buy into the hosts’ personality to endorse their products - following a similar model to the one commercial radio programs in the US have been using for years.
The large pre-existing radio audience meant that podcasting took a long time to be considered a serious investment opportunity for US agencies, he said, adding that it was also historically harder to track ad campaigns and calculate reach. Adams believes this is the reason why the US market can be considered “incredibly immature” when it comes to digital advertising and that it can learn a lot from Europe.
“We were laughed out of the room five years ago when we launched programmatic [advertising], and with big headlines saying that programmatic is gonna kill podcasting,” said Adams. “...I think a trend in the US is that they understand how to monetise podcasts from a direct response perspective… whereas when it comes to brand advertising, they're still fairly nascent when it comes to ad technology within podcasting and targeting… so I think there's lessons from both sides that are starting to come together.”
“There's a lot of interesting learnings we are gaining here that we can bring to Europe, but there's a huge amount of technology in the digital front and ad tech world that we can bring from Europe to here that will benefit both worlds.”
Adams adds that in terms of Acast’s future, he believes that programmatic advertising will be a big part of the podcast business moving forward and that audience targeting will become a key part of the states’ podcast advertising strategy.
“That, for me, I see as a huge opportunity for Acast and the industry as a whole in 2023.”