This is an automatically generated transcript of the PodPod episode ‘Ross Adams: What the US podcast advertising market can learn from Europe’. We apologise for any errors in spelling and grammar.
Rhianna Dhillon
Hello, and welcome to PodPod. My name is Rhianna Dhillon. And this is a podcast all about podcasting for all you wonderful podcasters out there. Now coming up, we have a really interesting conversation with Ross Adams, the CEO of Acast, pretty big deal. He's gonna be talking all about advertising. We're going to be talking a lot about the US and the UK markets. So if you're interested at all in financing your podcast, it's a really good one to listen to. Joining me now we have Adam Shepherd, editor of PodPod. And Matt Hill, who runs Rethink Audio and is the co-founder of the British Podcast Awards. Hello, how are you doing?
Adam Shepherd
Hello!
Matt Hill
Yeah, very well. Thank you, Rhianna.
Rhianna
Good. It's been a while; I've been away. I haven't seen you. It's nice to be back.
Matt
In podcast terms, it's been a week, hasn't it? So you've got to factor in the bulk record we did before Christmas,
Adam
Rhianna, you're shattering the illusion.
Rhianna
We did flag that that was a bulk record.
Matt
I know, we've broken that wall. We can't rebuild it.
Rhianna
So I've been listening to a new podcast, which is all about Harry Potter. It's an old podcast, actually. But I was at the pub with somebody and we were lamenting the lack of decent Harry Potter podcasts. So I've been searching a lot for those. And it's been really nice to kind of, this is very much bedroom podcasting. And it's been quite nice to go back and listen to people who aren't super, super slick, who have never been podcasting before. Especially with having done this podcast, having done PodPod, it's been really interesting to kind of pick up on all those little bits that make a podcast so authentic and fun and creative. Adam, what have you been listening to this week?
Adam
So I have been listening to the newest podcast from The Rest Is Politics team. They have just launched a spin off podcast called Leading, which is, as you may have guessed, all about leadership, the philosophy of leadership, how different people approach it. And it's basically an interview show where they'll be having on key figures from the worlds of politics and business and sports. The first guest that they had on was Lord Heseltine, who is the owner of Haymarket, as well as a conservative peer. And yeah, it's a really interesting sort of evolution of the whole Rest Is Politics brand, I do wonder if it will help them pull in an even broader audience than they've got, at the moment, potentially more of an international audience as well.
Rhianna
Interesting.
Matt
I have to confess this probably completely proves me wrong. I thought they had probably another six months in them before they burnt out, no, they've doubled down. Honestly, I did think they're both very busy people with other interests, that they will get bored of podcasting after a while, so for them to then have branched out to a second podcast, which is I mean, it's canny to do one which is more evergreen that they can dip into at your leisure, and it will be relevant for years to come. It may be more of a life raft. You know, if I'm going to try and hold on to any semblance of my initial prediction, it would be that maybe that was a bit more of a sustainable format. And they get to meet lots of people that they may not have otherwise met in their lives actually even for two seasoned politicians, and wonks as they are. But yeah, I'm surprised that they've doubled down.
Rhianna
That's, I mean, that's a very kind of fair and honest assessment. So we've promised advertising, and Ross Adams is someone who started in radio advertising before moving over to Spotify in 2008. So he was there for the really early days, I think he talks about, they had perhaps 200 followers at the stage that he joined, which is insane to think about, I guess everyone starts somewhere. He led the company's international expansion in Europe. And then he moved to Acast in 2014. And he's been the CEO there since 2017. So he moved to New York, I think in August, and he's attempting to grow Acast's US market share. So a really interesting person to talk to, I have to admit, I was slightly outside of my comfort zone with this one, because there's a lot of jargon in advertising that I don't understand. So I ask where I can, What the hell does that mean? One thing I didn't quite manage to ask, so I'm gonna flag it here is, Ross talks a lot about programmatic. So can you guys tell me what is programmatic?
Adam
So essentially, what programmatic is on a fundamental level, is it's a way of inserting a specific ad into a specific place based on a number of factors. So if I am a mattress brand, for example, and I go right, I want to serve my pre cut 30 second audio ad to 200,000 people in the southeast of the UK, who are between a certain age range and are interested in cars, films, and gardening, I can put all of those criteria into a programmatic ad engine. And it will automatically crunch the numbers based on what people are listening to and where they are and a bunch of other kinds of, you know, back end data flags, and will automatically inject that ad into the kind of podcasts feeds and their podcast kind of files until it hits that kind of preset cap. It basically just means that podcasters don't have to bake the ads in themselves for every episode.
Matt
Yeah. Or they don't have to do a host read for every episode. And yes, it could be like a marketplace selling things in advance, basically, yes. You know, when you're halfway through a really good podcast, and then for some reason just cuts it in the middle of a word with adverts? That is badly done programmatically by the person making the podcast. So basically, it's that kind of people being, an agency being able to choose like, oh, I want to put my pre-programmed advert into lots of different shows.
Rhianna
Is that better? Because the adverts are then targeted towards more specific listeners than if you have a baked in one that is, you know, it's completely irrelevant to you, then you just switch off right? Is that actually a better option because the host-reads always sounds like a better option because there's so much more personable and all the rest of it but benefits and cons?
Matt
Programmatic is a good thing for lots of podcasters. But it is not the solution for every podcast. If you imagine you've gotten a sleep podcast; my kids listen to one called Koko Sleep. I may have mentioned it on the show before they've started putting programmatic in and it's adverts for Tesco, which is the last thing you want. Because those adverts were made, you know sort of for a kind of like daytime audience like it's really Pacey 30 seconds really bright, breezy voiceover not what you want to hear you hit plays, you're going to sleep so. So it doesn't work in every situation. And some podcasters will find it a more seamless experience to use host read only and baked in to have that seamless experience and really take care of your listener. The disadvantage is that you are going to sell less ad spots because of it. But you may get a more authentic audience that you can sell higher with. So what it's done is programmatic has allowed a wider number of podcasts to find some advertising. And that has in turn made cost a real popular destination for monetizing podcasts.
Adam
But there's benefits and drawbacks for both podcasters and advertisers. And I think most kinds of big organisations, whether you're a podcast network or a brand advertiser are probably going to use a mix of both types for different things.
Rhianna
Okay, that makes sense, in the conversation that we're about to hear it comes up a lot. So I thought it was worth bringing up. Now there must be people listening to this who like me have no idea about advertising. So thank you both. That was really helpful. So here he is Ross Adams.
Welcome to PodPod. Thanks so much for joining us.
Ross Adams
Thank you for the invite. Great to meet you all.
Rhianna
It is such an exciting interview for us because you have been across two of the biggest podcast platforms. I can think of Spotify and Acast. So tell us a little bit about your journey. How did you get into podcasting in the first place? You've kind of been there for the early days. That's always exciting.
Ross
Yeah, I've been an audio for awhile kind of shows my age over 20 years now. My career started what was called Capsule Radio Group back in the day in 99. I learned how to effectively cut my teeth on selling air time with those guys through it for almost 10 years which was fantastic. I really enjoyed those days, saw the merger with GE cap and then saw a week of when it turned into global radio. And then one of my team had already jumped ship and joined Spotify or company called Spotify at the time, which no one really knew anything about joined in launch year I was a first study in the company and there were three of us in the UK to effectively launch the UK business and focus on commercialising the free version. They wanted people that have experience with selling airtime. So I joined when we had 200 users or something stupid on that. And then I saw that journey obviously successfully grow and I was there for almost seven years, helping them expand across the globe helping launch the UK business and establish effectively what digital audio buying was because digital audio buying didn't really exist when we launched that business. And that was a, you know, brilliant Swedish business. Daniel Ek, obviously the founder, a very inspiring chap. And that got me connected with a lot of other Swedish businesses at the time. And some of my team had left and joined a company called Acast. And so I met the founder of Acast, a chap called Johan Billgren. And he sold the concept to me, and it really excited me about what the possibility could be, with podcasting, a different medium. And yet another switch business has been there for, you know, approaching nine years now. So long time, five years or see,
Rhianna
Why do you think Sweden kind of had the jump on podcasting? That's quite an incredible start.
Ross
Yes, a good question. Love people ask this because Sweden in general has the jump on many things. You know, if you look at the technology sector, within, you know, the globe and Europe, they are massively overweight in successes. They're, you know, a bunch of early adopters over in Sweden, I remember asking Daniel, like this question about why is it that Swedish businesses are churning out all these amazing companies? And lo and behold, I think one of his reasons was they sorted out the infrastructure for the likes of broadband. So in simplistic terms, you know, everyone had good internet access, freezing cold weather through you inside, and they had coding as part of their upbringing in their learning. So, you know, what do they do? They code and build things. Plus, the government helps you if you, you know, launch businesses, and they have a lot of local programmes where, you know, really, they support failures, as well as wins. And therefore you don't get afraid to try out things. And so it's a lot of entrepreneurs and tech is their biggest industry. But yeah, if you see a trend in Sweden, you're more likely to know that it's going to be, you know, happening there a year or two first, and then Europe will catch up.
Rhianna
It's very tempting to do a whole podcast about comparing the Swedish and the UK market, but Well, that's not what we're here to do. We're comparing the US market versus the UK market in terms of podcasting. So, you'd like to say you've moved over there your How long have you been a cost in the US?
Ross
So Acast US since August, so it's very new, wow. Okay,
Rhianna
Ao we're really going to be testing you for your knowledge over the past few months.
Ross
Being international, I've been here so many times, I'm here a lot anyway. But it made sense this time to move on and properly focus my efforts on us helping the team out.
Rhianna
So tell us a little bit about how, I guess the US market compared to the UK market and podcasting in a broad strokes, the way that you just did with Sweden,
Ross
Leading on from that conversation around Sweden being the hub of a kind of European Technology, or you know, an overweight hub where a lot of stuff comes from, there's not a huge amount of cases of European businesses going to America and being successful there. Spotify has been one of those businesses, of course, a lot of US businesses, you know, launch and then come to Europe. And that's kind of where the success is, you know, Google, Facebook, etc. But us as a market from a podcasting point of view, it's incredibly different, you know, when we launched back in 2014, in Europe, and in the UK, in Sweden, nobody was buying podcasts. So there was no proper measurement system, we're effectively turning an analogue medium into a digital one by applying digital metrics, the ability to track, you know, by pixel tracking, you know, for campaigns, so no ads, we're buying that medium. So we then could set the terms and how you buy it, in terms of what the marketplace looks like, what is attractive to advertise, etc, etc. Whereas in America, like there's the podcast market, from a monetization point of view has existed for, you know, probably about 17 years really, and host read and being baked in has been a thing, direct response agencies like Veritone, for example, they were buying podcasts back in, I think it was 2006, or something. So they're just basically buying into influences buying into the host. And the host is talking about a brand live within the show, because radio is such a big thing in the US compared to the likes of UK and Europe. Yes, they kind of followed that model of buying into the host and the endorsement side of things. And that's kind of how I evolved. So when we arrived with this technology, which suddenly had dynamic ad insertion, which we invented within podcasting, we had the ways to track and measure campaigns buying via impression level, that just didn't exist. So it was a very hard journey for us to actually sell this concept to us because, you know, it was already monetizing podcasts well, but from a DR and baked in perspective, a very basic approach, but it was working. And it still works today to a certain extent. So it's very different.
Rhianna
You talked about direct response, what is direct response?
Ross
So this is where you have, you know, brands direct the likes of Squarespace or double BetterHelp who are literally trying to shift acquisition versus acquisition budgets, essentially. So they have their cost per acquisition, and they will try out different podcasts and if they work and they audience converse a certain amount for the price it works, they keep an eye stay on and that's The kind of host read host reads are, you know, the beauty of broadcast advertising, that is the stuff that is perfect for customer acquisition, and direct response and does incredibly well
Adam
is interesting, you mentioned about the commercial radio history that the US has, because obviously, commercial radio is enormous in the States, compared to Europe and in the UK, how much of the success of podcasting as a medium in the US is built on that backbone of commercial radio,
Ross
you know, you look at commercial radio and how far Ford is here, you know, you look at the likes of Sirius and subscription radio, you know, that doesn't exist, and never has really existed to a certain extent in, in the UK or Europe and the natural evolution of podcasting, you know, you have a huge population here. And I think podcasting is a medium and the limited restrictions on what you can say and talk about, and you can have freedom of speech a lot more, it seemed to really take off, and you can really get into the niches but I think it has definitely followed that radio medium, you know, it's a big country, people are in their cars a lot. And so it's a medium that really kind of supports the infrastructure of how they're kind of us and the population act, I think radio massively influenced podcasting here, you know, you just listen to the hosts and how a lot of the hosts from radio converted, NPR being that massive, huge radio brand here in the US, you know, you look at shows like cereal, of course, and S town, you know, these, the ones that blew up the podcast industry, they came from radio hosts, and radio producers, moving into the podcast medium, and a podcast medium as a whole allows you to be a bit more in depth, a bit more creative, a bit more freedom. And so naturally, that's how it evolved.
Rhianna
That is interesting. That's something I wanted to ask you about. Because we've talked on PodPod before about how UK broadcast talent is being tempted away from these traditional platforms, towards podcasts, you know, for example, the news agents, they're able to speak, as you say, more freely. So that is a trend that's also happening in the US. I mean, you mentioned cereal, and as Tom knows, already, you know, they've been around for a very long time. Now, is that a trend that's continued to happen since then,
Ross
you've seen a lot of I mean, even TV stars, you know, move across into podcasting. So it's a very attractive medium. But I think, moving forward, you know, podcasting is just going to be part of people's media output. You know, I think you do get those podcasts as first kind of like, you get YouTube as first but then obviously, they distribute content, different forms on Tik Tok and other platforms, right. But podcasting is gonna be one of those mediums that you have to be on as part of your media output. So I think anyone getting into that kind of broadcast arena isn't just one medium anymore, they're multiple mediums, and podcasting now becomes a staple part of that, I don't think you're necessarily going to see a trend of people dropping off ready to become pure play podcasters, I think podcasting will be part of that when they jump from one medium, to kind of own their own IP. And I think these days as well, talent understands the value of IP, so much greater than they did, you know, 10 years ago, with the understanding of that, and with the understanding of talent, and, you know, social arena and how you can gain audiences. It's a great Canvas for anyone who wants to build their own brand and our own business.
Rhianna
I know that you're a big advocate for people who do podcasting in their bedroom as much as people who have come from already having huge fan bases. But from your experience, are audiences in the US more likely to listen to podcasts if they are already aware of the host?
Ross
I don't think so. I mean, I think you're gonna have naturally, you know, big names across TV or radio that do jump to podcasting, and naturally will have that following. But I think if you look at some of the popular shows, I mean, Joe Rogan, yeah, he was on TV. And so he was kind of a known personality before that, but his podcast is the biggest part of his medium that he pushes out. And so his audience wasn't naturally there. You know, he gained it from the honest conversations that he could have. And so I don't think that it's a prerequisite, you know, you look at some of the shows we've launched in the UK, or help launch. You know, My Dad Wrote A Porno is a great example of that, you know, that's kind of actually just stopped now after its massive long, you know, eight year cycle. Yeah, we've just had them on, actually did you great, great and brilliant. And I think if you look at what they did, you know, James and Jamie especially, were relatively unknown. And even Alice to a certain extent, you know, she had a radio following, but wasn't kind of mainstream radio, then she kind of is now and she's TV too. But they launched a proposition. Now, that proposition wouldn't have worked in any format. But in podcasting first, and it evolved into other formats, but again, they weren't known stars and that became the biggest podcasts in the UK. Look at some of the big ones in UK it's a mix you know, you have happy place which has obviously you know, been caught on she's been on TV for a long time and then a BBC and then moved of course, to podcasting but there are a lot Have hits out there where there are complete unknowns. So no, I don't think you have to have a following or be famous to have a successful podcast, it just depends on the concept. And that's the beauty of podcasting, getting the concept right, and an interesting new concept as the stuff that kind of kicks off and becomes this huge thing.
Adam
So on the subject of success, then looking at the numbers side of it, how do audience figures and also advertising spend across podcasts compare in the US versus the UK? I mean, it's a much more mature market in the US, as you highlighted, and it's just a lot wider as well. Does that translate to the audience and the financial side of things?
Ross
Yeah. So I think if you look at the US, you can talk about the US and Europe being immature and mature in both aspects, right? So 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, UK and Europe are equally thriving. But it's even more mature when it comes to the mainstream agencies. So if you look at the big holding codes, the publicist, the WPP, is of this world, they spend a huge amount in podcasting. And, you know, if you look at the podcast market in the UK, in Europe, a big chunk of the spend, the majority chunk comes through the major agency groups, you look at us. And as the exact opposite, direct response, advertisers are the ones that are running the show in the US. So it's very immature when it comes to the mainstream advertisers advertising. It's a more direct response held in the US. Whereas in Europe, it's more dynamic digital first major agency spending. So it's a completely different landscape than Europe, but they are starting to evolve and change to more the European model, but it will be more of a mix on Dr. Still, I think in the US.
Adam
Why is that then why have the major agencies in the US been kind of comparatively slow to jump on podcasting. Considering that podcast advertising is so much more established over there.
Ross
The ability to buy audiences and scale has been a hindrance for those major agencies. And I think, you know, they represent huge brands who need huge scale. And podcasting hasn't necessarily delivered that huge scale here in the US, you know, you've got a population of what is it 360 million plus yet podcasting and maybe reaches over 100 million uniques on a monthly basis, right. So I still have a long way to go to be considered a, you know, mass media with high penetration from a reach perspective. But likewise, it's a medium that was untapped for advertisers, which, you know, brand advertisers or Dr. Advertisers saw as an opportunity in America and hence investing since 2006, podcasting really didn't become a part of the conversation, I think, when I was in radio, back in UK, I remember podcasting launching with the iPod, and that becoming, you know, a thing, but actually, radio gave it away as a free part of a radio campaign, it was never considered a premium environment, because mainly you couldn't measure the success of it. And you couldn't measure the audience properly, couldn't measure the uniques, you just literally had download numbers, you didn't know where they were listening. You couldn't dynamically insert and digitally track anything. So it just became a medium that grew in audience quietly, and everyone ignored it, Dr. were hooked on to that quickly in the US. And invested big agencies obviously have not necessarily been part of that conversation until it's got to a reach and scale size like now where it becomes very interesting. So be interesting to see, in 2023, how that dynamic changes or if it swings more towards the agency landscape, which I genuinely think it's going to, if you look at just pure ad, so I'm talking about the 15 to 32nd spots that we hear on radio, we focus in the UK and Europe on decent creative. And we have like, what, 12 minutes of ads an hour in commercial radio 12 to 15. Radio in America, you have up to 25 minutes an hour or so. You have a lot of ads, a lot of brands and to stand out, you have to be quite loud and shouting in your creative so you get crappy ads. So therefore, I think that's put the industry off looking at ads just because of what radios done. Whereas actually creative and podcasting, we really focus on and we focus on educating that creative industry on how you should be using that format. And we've done that in the UK, we don't just repurpose a radio ad. We don't just repurpose a Spotify ad it's a different listening environment, you've really got to focus on that environment. You don't need music to stand out, you know, most ads are soulless, they're on the road next to a host-read sponsorship so you don't get seven ads in a row. So you don't need to be loud to stand out, you have you know the intent to lean forward medium, you know, like radios backgrounds, streaming music is background. Therefore ads are going to be background. You are seeking out content on podcasting, to push play on demand to listen intently to that content. So therefore an ad mass is going to cut through that much greater and we've got research that says it's SEVEN TIMES as effective and radio. Therefore higher CPM. If you can track it in a digital way, it becomes super interesting. The Americas have not yet turned into what they are now. And now the audiences are there, they're starting to think about audiences buying a scale, which is the specialism of the branding, media agencies like the likes of WPP, publicists, etc.
Rhianna
Have you any examples of where that has been really effective in a podcast or I suppose a host read one in particular, you know, who is particularly good at doing that, that we could go away and listen to, I mean, the UK,
Ross
especially if you listen to Adam Buxton, he's the goat, as you'd say, of podcasting, creativity. You know, he treats his ads, like a piece of content, which is such a beautiful way to approach it, you know, if you are having a brand investing in you, and you want them to come back and invest again, you need to treat that creative, not just like a crappy read, you've got to genuinely believe in it. You know, podcasting is such a transparent and honest format, you know, you feel closer to the host than you do in any other format. And I think that if your host is talking about a brand I don't believe in you're going to get that and you're not going to convert right. So that is something interesting with that creativity beyond just saying I use it as great as I can. And so he will write a song or do some kind of skip for each one. And I think we first started with Adam, back when we launched in late 2014. In the UK, he joined us in 2015, where we were just trying to sell the commercial idea to the agencies. And he'd created a fake Squarespace ad because Squarespace was synonymous with, you know, podcasting because they pretty much owned every big show out there from a host read perspective as they still are to this day as they are to this day, right. And now you've got BetterHelp, who I think have overtaken that and other brands like Audible too. But you know, you've got Adam who creates a fake Squarespace ad. And then we have Squarespace getting in touch with us saying that we've had so many people trying to use the Adam Buxton fake offer code that he created. It's amazing to be part of our show, and I think they've renewed their sponsorship with him, you know, for years and years now. So it's still work. So it's not just a one time sponsor. You know, once you've converted a pod audience, you don't come back. So podcasts are always on for advertisers. And it might be week on week off. But they're always on and it will sponsor for an entire year because it converts and it converts every single week. So it's a really interesting format, the host-read sponsorship.
Rhianna
People like Adam Buxton who are so huge and successful here are they the kinds of people who can cut through in the US,
Ross
The British kind of humour does translate well in the US but it is very hard to break the US on a mass market perspective and only the rare few have actually managed to become a success. I think My Dad Wrote A Porno's one of those that actually was a big success here in the US. But it's funny because if you look at other countries, too, you know, Australian content, it does incredibly well in Australia. But if you look at the reach of a show, probably 85-90% of their reach is going to be Australia. 10% of the listeners travel. Whereas if you look at US content, again, it might be 40-70%
In the US, but it travels incredibly well. UK being the next biggest market in Australia, the UK content travels very well to Australia and pretty well to America. But it's not you know, American content is the one that travels the best. UK content travels well across Europe and Australia and us but not you don't get the big hits. Or it's rare to get a very big UK hit in America.
Rhianna
So out of the kind of American ones that have cut through over here. Why do you think they have been so successful?
Ross
I mean, I think if you look at the likes of Serial S-Town like I mentioned earlier on, these are shows that have a really high production value and investment into them. And just the nature of the market here you know the top two or three Dr. Brands spend more than the entire UK market does on podcasting in America versus UK. So you know the money going into podcasting over here allows you to have that bigger in depth commercial investment into IP than it does in the likes of the UK. I'm not saying UK contents are not as good at all, it's just the US content does translate incredibly well. I guess kind of like us sports stars translate
Rhianna
cereal s town, I guess the UK podcast market was a lot less saturated then than it is now you know when those were huge successes. So now when we have so much homegrown content, is there anything specifically that has come out in the last year or so that has vanished to find a UK audience that you've been surprised about?
Ross
So good question, you know, off top my head nothing really stands out. You know, I don't think we've seen a massive UK hit based on US content. I think you know, Wondery do a good job on some of their shows that they release and they translate well to the likes of UK audiences. I think you know, news operations like the New York Times do have some great reach in the UK. So news travels incredibly well. And I think actually, British news and reporting is respected highly in the States. And that does very well. So we see the same for the Economist, Guardian, The FT that converts incredibly well here in the US. So you have a number nothing, you know, since the likes of, I guess, Serial S-Town, I'm sure there's other examples that I'm missing here. But nothing that has been a, you know, a top 10 here. I mean, Rogen still travels well. And some of those brands do, it's not as common now. Now, you've got a lot of UK talent really producing great content.
Adam
So just on that question of saturation, that's something that we hear debated a lot, particularly from the perspective of the UK market, that there are so many podcasts now. I mean, it seems like there's another handful every day from major production houses and producers, with the massive amount of podcasts that have been launched in the last couple of years. I mean, we have seen an 80% drop off between now and 2020, which, you know, some of that is bound to be the pandemic, but is it harder to launch a podcast now is it harder to, to stand out from the crowd and to find something new to talk about effectively?
Ross
It's interesting with podcasting, because you can do something on social media and it can blow up straightaway. You know, it's incredibly rare that your launch of one episode becomes a hit overnight, some of your social audiences will convert and translate but it's slow like podcasting takes time and investment. You look at some of the most popular podcasts today. It takes them two, three years to build up a really big sustainable audience, you know, my arrow, pornos, and they released in August 2015, or 2016, I think it was, they didn't hit 100,000 listens in a month until, you know, a year or so later. So then started to become a viral success poster. So it takes a lot of time to build that audience up. So I think, you know, people come into the space or come into the space and think I've got a million followers on Instagram or launch podcasts, it'll be the biggest thing. And suddenly, you realise actually, it's not, it's a different medium, it's a longer form meeting, you've got to really invest in it, you know, yes, we do see a lot of short form content becoming a trend now, which is great. But actually, you've really got to think about the content and you've got to commit to a series or commit to being always on commit to releasing at the right time every single week. So you have that habitual spot that your superfans will always listen to, then. And then really work hard and use your other social influence to promote it. But understanding is going to take you a good six months to a year to build up a sustainable audience. And then you can build it from there. overnight successes are rare.
Adam
Yeah, you've really got to earn that audience in podcasting, which I think is what a lot of people, you know, whether it's celebrities, or established brands, or whatever, don't really realise when they get into it, there's, I think, a lot of the time a misconception that you can translate an existing audience from another medium or property or whatever, over to podcasting. And it doesn't always work like that. You're right,
Ross
it doesn't. And I think that's the key, like imagine you start a new social handle and just release your first posts and then wait for that to become popular. If you've got no followers, and you've got you're not promoting it anywhere, or pushing it out or cross promoting it, it's going to take a long time to become a viral success, even in the world of social media where things happen quickly. So that's the same way as people need to approach podcasting. And understand you have zero listeners right now, when you release it, don't just release it and expect just because it's on Spotify, Apple, and all the platforms out there, that is going to be a success, you need to then start to use your other platforms, you need to promote it, use your guests, if you are doing an interview, lead podcast, use their social influence to stop promoting it, cut episodes down, put video formats into it, tick tock is a great way to suddenly start to go from short form to long form and dip into the audio YouTube. So there's lots of ways now and when we can teach but best practice for our podcast is with that. But it does take a lot more commitment than any other influencer medium out there.
Adam
So in terms of the ways in which the medium is changing, I just wanted to touch on some of the tech trends that have started coming up in the last couple of years, particularly on the advertising side and the monetization side. So subscriptions are becoming much more important as a tool for podcasters. But for advertisers, Acast has recently launched a self service programmatic portal to let smaller advertisers in particular, access that audience and run their first podcast campaigns a bit more easily. What do you think are some Some of the main kind of tech trends in that vein that are going to have the biggest impact and the biggest significance for the podcasting industry,
Ross
what we touched on earlier on about run advertising and ads and the audience buying, turning. Finally, from a US perspective, to podcasting, that's going to definitely be a trend. And then the technology we've created off the back of that. So we focused on building our programmatic offering out, you know, probably five years ago, we were, we were the first doing it, we were incredibly early, we're still incredibly further advanced than any other platform out there and how we focused on it. And that's through conversational targeting, which we think is going to be a key thing moving forward. Keyword targeting is going to be a really interesting technology this year as well. So what we do is we transcribe every episode that you release, so once you've gone to our CMS, as a creator, you upload your episode, you release it through that process, we will transcribe the audio into text. Okay, so we start to understand what's being spoken about, we then run that through natural language processing. And I start to understand not only what's being spoken about, what are the key topics, what are the key words? What is the intent? Are they talking positively about the subject? Are they talking negatively about the subject, and as those brands and as media agencies, those brand advertisers start turning towards this to buy audiences and bind to the environment at scale. These are the tools they're going to use. So dynamic advertising is something we've invented nine years ago, I mentioned earlier on. That's the format that's used through programmatic offering that in private marketplaces over marketplaces could be interesting. And then looking at conversational targeting and keyword targeting off the back of that in the same kind of marketplace programmatically is a trend that's going to happen. So when you think about all of the podcasts out there, when you first launch your podcast, you start to categorise it, it's comedy, or it's news, and you kind of have a couple of subcategories. But really, you're governed by those subcategories. So it might be a sports show. I almost said soccer now, but football..
Rhianna
Don't say soccer on PodPod
Ross
But actually, the hosts might each week, you know, talk about something they've cooked that week, as a really kind of right basic example. Now, through keyword targeting, and through conversational targeting, we start to understand the conversations that are happening within podcasts, this is a regular feature, foods coming up, cooking is coming up, all these keywords are being spoken about. So brands that are then you know, like a HelloFresh, I want to talk to, you know, within podcasters that are talking about cooking, you know, therefore, they would target a different sector, based on the category within that that sector, suddenly, you're starting to open up new pools of inventory, which is contextually relevant to that brand. But it's not tagged that way when it comes to category or IRB categories. And then actually, if your advertising can be as close to that key word we're talking about as possible. The relevancy should see a mass uplift in brand awareness and an attribution and convert more. So these are kind of relatively basic things. But you know, you're looking at what Google is doing now. And they're talking about, you know, as first party data becomes harder and harder to use, especially in Europe versus here. Contextual advertising is going to be the future of advertising in general. And we decided to jump, you know, four or five years back. And we've really evolved that since
Rhianna
That's so interesting. So are you expecting to see an uplift in podcasters, talking about how well they slept in hopes of getting at least a mattress.
Ross
But it could be right, you can start creating these trends. So you can almost force the conversation to happen, right? I think for us, it's a great way for advertisers to target not only towards content, but away from content. So when it comes to brand suitability and brand safety, you know, if you've got a brand that wants to be targeting news, but wants to be away from words like terrorism and COVID, for example, you can then make sure that the advertising hits their target audience in that target group. But away from those words and away from those and then using that conversational targeting, to start to look at, you know, deeper on brand safety and making sure that content is safe. The issue is, of course, that you have content where it's health and wellness, but they're talking about sexual health, but the word sex comes up and therefore some brands are incredibly brand safe and say, I don't want any, you know, content to be delivered around the word six. But you've got to really understand the context of that Westway context is so important. And we're starting to understand that as well. And then if you think about brands, giving a you know, brand score, based on pods they're advertising on that can be interesting. Yes, it flags up is not brand safe, because of these keywords but actually, the contents of what they're talking about is really safe and it works for brands who now trust it you know, so we're working along and stuff like that.
Adam
On that topic, then, in your quarter three financial results, you flagged a slowdown in the advertising market for podcasts. What is it that advertisers are looking for? From podcasts? Is it changing over recent months as the market grows and evolves? Yeah. So
Ross
Of course, you know, like, like we spoke about earlier on with direct response versus kind of brand advertising in a good mix, especially in Europe, of those wanting brand awareness and uplift for and you know, those who want to, you know, attribution. So we do see a mix there. But, you know, of course, the macro economic crisis, we saw that fairly early, you know, podcasting, albeit over a 20 year old medium is relatively new, when it comes to the commercialization of it, you know, we invented that in Europe. And so, you know, we've still seen brands trying for the first time, so it's not yet a mature medium. So instantly, when the macroeconomic crisis hits, you know, marketers look at their budgets and look at the stuff that they have tried and tested, tested for years. And that's where they kind of, you know, heavily invest in or divert their budgets towards that. But you know, attribution and direct response is still obviously a key thing for brands. And the great thing is that podcasting works better than any other medium for, you know, brand attribution and conversion there. So we actually see more brands investing in the area. And when it comes to a crisis, focusing more on podcasting, because it genuinely works. And they get brands to stand out, because it's a new medium that lots of brands haven't yet turned to. But we did feel the effects of the the economic crisis, especially in mature markets, like the UK, and Sweden and in Europe, and as well,
Adam
as the macroeconomic climate starts to have its effects. Do you think we're likely to see budgets being pulled out of what can be quite costly video campaigns and being diverted more to podcasting, which I think it's fair to say is, generally speaking, more affordable than video content? Is that a trend that you expect to see?
Ross
Yeah, it's good point, I genuinely think it will be a trend, I think podcasting is we looked at cycles before from COVID, you have that quarter where market is in a crisis, like this kind of pause, start thinking about where to invest it, and then either it stays on pause, we'll come back and invest again, you found, you know, certain countries, we found our new normal. So I don't expect things to massively change. You know, we're talking about a recession possibly hitting, I believe we're in a recession already. You know, no one's just just said it. And so I think, you know, there is that kind of balance that we see that those results early, but we will see brands look at medium, you know, the recent news around press being down again, I think if you look at investment in other mediums, they're gonna turn to mediums where they can stand out where they get guaranteed conversion, and the beauty is podcasting delivers that. So, video and CTV is, there's a huge amount of brands that spend there, it's a, it's a massive area. And so it's hard to stand out, and costly, as you say. So I do think that that could be a trend that people will start to divert and test more in podcasting, and then, you know, double down on investment when it works, which it does.
Rhianna
Do you think it's, I mean, it's always going to be a challenge, I think, but do you think it's more or less viable to make a living from being a podcaster? Alone? In the US versus the UK? Good question.
Ross
I think if you look at the US 44% of the budgets that are spent here in podcasting, in 2022, were spent on the top 500 podcasts. So, you know, it's kind of a fixed system, you know, in the top 500 podcasts a majority are represented by some of those larger brands from, you know, Amazon, Spotify, etc. And if you want to stand out, and if you look at those top 100 podcasts, they actually represent 10% of the reach of podcasting in the States. So there's a 90% of the audience that are untapped for advertisers, which they're not quite realising yet. So, you know, I do think there's an opportunity there. And I think if you look at podcasters, they need those brand advertisers to turn to it. Because when you're a small podcaster, you need the ads to start living your show to start earning money, because you might be too small to be considered for a host read sponsorship. And then as you get bigger, you'll start to gain that revenue stream as well. But I still think in the UK that again, if you can gain a good following and podcasting, I think you can build a sustainable revenue stream. But more people are turning to it now and are going to be focusing on multiple mediums. They're not just going to focus necessarily just on being a pure play podcaster. They'll focus on tick tock and other areas as well.
Adam
Yeah. So one of the questions that comes up fairly often, particularly with new podcasters or prospective podcasters is how many downloads they should be aiming for as a kind of minimum from an advertising perspective. And this may be a little bit how long is a piece of string? But what would you classify as the sort of minimum threshold that podcasts need to reach in terms of downloads before they're a viable prospect for advertising revenue in general?
Ross
It depends on the market, right? You know, different brands will have minimums on the show size they want to sponsor and, and a lot of that has to do with how they can track attribution and is a $500 investment or 500 pound investment worth it versus a five grand investment. That's the kind of basis and I think the self-serve platform we've launched is to introduce smaller budgets to smaller podcasts, and therefore start to spread the wealth throughout that kind of longtail investment. But I think in terms of downloads, I think as soon as you hit that 20,000 listens, or downloads a week mark that starts to consider you for the likes of house reads. And therefore, that's where the revenue opportunity or a big part of the revenue opportunity sits. But really, if you're delivering 50,000 200,000, you can make a very sustainable living our podcasting alone, but I think it's really thinking about, you know, brands now we're seeing as a trend, then wanting to not only invest in the podcast, but investing in that influencer and the relationship with that influencer, regardless of where their audiences. So even if the majority or a section might be podcasting, they're interested in hearing your story outside of podcasting on tick tock on Instagram and following your audiences there. So there's opportunities now, for even if you've got a relatively small show, as long as your following is big on other mediums, there's opportunities to build a sustainable career out of being an influencer through that
Rhianna
and by influencer, you don't necessarily mean the way that influenza is used in terms of like, tick tock, you mean podcasters as well.
Ross
I mean, if you think about podcasters, they are an influencer. Podcasting is an influencer medium. It's just that we call it podcasting. And it's been associated with radio. These are individual talents, normally, who are making a living from social media, there's on demand like social hits. So I genuinely think that the narrative does need to change to start talking about podcasting being an influencer medium, because that's where the budgets are coming from. They're being spent from influence spots, as well as radio converting, you know, radio money being converted to podcasting, and digital and VOD money being converted. A huge part of it is influencer budgets being spent. So it is an influential medium.
Adam
So, Ross, you are now based full time in the US after starting your career. In the UK, obviously, as you mentioned, helped launch Spotify internationally. What kind of insights have you gained from being there at the really early days of streaming audio and podcasting, both Spotify and Acast that have been really useful in expanding a costs business in territories like the UK and the US? And is there anything that particularly surprised you about that process?
Ross
I mentioned some of this earlier on, but I think the US is mature in so many ways in terms of podcasting, you know, especially from the advertising perspective, from direct response, advertising and attribution. But when it comes to digital advertising within podcasting, and digital budgets being spent, it's incredibly immature, you know, like programmatic. We were laughed out of the room five years ago, when we launched programmatic and you know, the big headlines, that programmatic is going to kill podcasting. But actually, if you think about the longtail of podcasters that are launching and the amount of podcasters still launching podcasts today, programmatic is a fantastic way of monetizing the longtail and programmatic doesn't mean crap. CPMs are crap ads. You know, we've been focusing on great ads and high CPMs because the targeting can be so micro. So I think a trend in the US is, you know, they understand how to monetize podcasts from a direct response perspective, they've got that look, that's done. Whereas when it comes to brand advertising, they're still fairly nascent. When it comes to ad technology within podcasting, and targeting, they're still fairly nascent. So I think there's lessons from both sides that are starting to come together. But I think, you know, it's very hard to understand the US market until you're here. The sheer size here is just immense. You know, when you've got a test budget in the UK, being five grand and a test budget being 100 grand and us, you start to understand how, you know, the money that exists here, I think the radio market is about $15 billion. And I think, you know, you look at the UK and it's about five 600 million, so why comparatively, even in terms of like, you know, your audience being six, you know, seven times the population size you're seeing 10x 20x budgets And it's just amazing the amount of commercialization that happens here, not just in podcasting, but beyond podcasting, you know, sports, everything is it's not to harvest is broken into quarters. So they're gonna have ad breaks, they've got, you know, timeout, so they can have commercial breaks like they think about commercialization on a different level than the UK does and Europe does. So there's a huge amount of lessons to be learned there. There'll be a trend in podcasting. How do you monetize podcasting beyond just an ad format, or a host read format? That's something that will be a trend, you know, you have got branded content. But you know, what about product placement, all those kinds of things. There's a lot of interesting learnings we're 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. So learnings are fairly equal from both sides, but it's a bigger commercial market. That's for sure.
Rhianna
So in terms of the next thing for Acast, what is it? Is it those things you were just mentioning? Is that stuff that you're going to be looking at over the next few years? Or is it something new? What are you concentrating on?
Ross
There's lots of areas that we see as interesting. But I think, you know, programmatic advertising is a really growing part of our business and, you know, one of the fastest growing areas that's going to be interesting to see how that lays out this year with the likes of conversation and keywords. In terms of trends and other trends. I think audience targeting in podcasting in the States is going to become a huge thing this year, and major agencies are finally turning their guns to podcasts and investing heavily. That for me, I see as a huge opportunity for Acast and the industry as a whole in 2023.
Rhianna
Fantastic. Ross Adams, thank you so much for joining us. That has been really, really fascinating. I've learned a lot. And also I'm gonna have to ask Adam to explain some bits afterwards.
Wow, that was a great chat with Ross. I mean, I only understood 75% of it. I'm lying. It was about 50%. But I too feel like that was a really really interrogative way of looking at advertising. So one of the things that I thought was really interesting was the keyword targeting in terms of advertising, but something also that I realised that we've had an issue with on PodPod with the My Dad Wrote A Porno episode. So tell us what happened with that.
Adam
So this was kind of bleakly hilarious. When we were uploading the episode that we recorded with My Dad Wrote A Porno, which is a fantastic episode, which you should absolutely check out if you haven't already. We were uploading it and PodPod is hosted on Acast, as is My Dad Wrote A Porno. And we were uploading it onto the ecosystem. And it just would not let us which we quickly realised was because the automatic filtering was blocking us because it had porno in the title.
Rhianna
I mean, for one of the most successful podcasts, I mean, Ross talks about it so much in our chat, you think that they would have got rid of that issue.
Adam
We did manage to eventually get it sorted out after a couple of hours on the phone with Acast's support team who were, it has to be said, very helpful. And you know, got the issue sorted for us relatively promptly.
Rhianna
We talked a lot with Ross about the business side of advertising and about how that's evolved. But from a practical standpoint, how do you feel like advertising has evolved from a creator perspective?
Matt
Yeah, it's an ongoing conversation we have with our producers all the time, which is, you know, when you're devising a show, at what point do you factor the ads into the content, because we were trying to work out how to do this pre a cost and knowing that maybe in the future, we'd be able to insert advertising into the shows were making. So I think, definitely the first thing to always think about when when building a new format is, you know, where is the outbreak going to be even if you have no ads right now, how can you prime people for the fact that might be ads in the future, so have a little sting or jingle that plays in, and maybe just come up with that form of words that you'll use every week, that leaves you in and out of that. So we'll be back with more after this and all those kinds of things. So that when adverts suddenly appear, it doesn't feel completely out of place, or you're having to build a new format point just to be able to curtail the interview short and bring it back in later. You want to have all that really thought through from the very start plan for success, I would say. And then the other thing is to make sure that you really have an open honest conversation with your audience about what advertising is acceptable to them. We launched the retrospective on Acast during the Euro Championship a couple of years ago. And so there was a lot of gambling ads, but actually Acast make it really easy for you to specify what ads you want to take on their system even like seriously tick boxes you say what kind of things you want, and what you don't want. And then they filter that into their programmatic. So we had some early pushback about a lot of gambling ads, we then said, we didn't want any gambling ads. And then we didn't have any gambling ads. And they filled it with other things instead. So I think there's a bit of an ongoing conversation about all of these things with your audience, with your producers about what's right for your show. And of course, as soon as you have any elements of interactivity and programmatic it is very much that you're leaving it up to the marketplace to kind of decide what goes into the middle of your show. You just have to have the door open to have those conversations and react as quickly as you can so that you can fill those ad spaces so that you can make your best work without sort of really annoying your audience at the same time. He wants to have as much of a seamless experience as possible. And that takes time, it takes care.
Rhianna
That's a really interesting point. Adam, was there anything that really stood out for you as a takeaway from our conversation with Ross?
Adam
One of the really interesting things that I was actually very surprised at is, Ross mentioned that in the US, the vast vast majority of podcast advertising is done by direct response companies. So that is the kinds of ads where you have a promo code and are, you know, being specifically directed to, you know, buy a product or sign up for a service, you know, things like BetterHelp, any of the mattress companies, Squarespace, all of that kind of stable of advertising. But the big kind of advertising agencies and creative agencies in the US that do the more associative advertising campaigns and the sort of more in depth stuff that you might find on, you know, TV, for example, those agencies just don't really engage with podcasting at all, in the US, whereas in the UK, it's very much the opposite. And apparently, the big agencies are putting quite a lot of money into podcasting. And I was quite surprised at that, I thought it'd be much more balanced.
Matt
It's so interesting that the US market, you know, more widely is full of small and medium sized businesses that don't use agencies and advertise locally, and you've got this kind of local TV networks and ad campaigns or whatever. It's sort of like it's harder in a way for America to get behind a kind of programmatic system just more generally, than it might be in the UK where everything is more centralised, I would say. So I suppose that kind of accounts for some of it. But ultimately, you know, I think a healthy podcast economy will come from having a certain amount of programmatic, a certain amount of host-read and a certain amount of baked-in to fulfil all those different genres we talked about earlier. You know, the sleep podcasts, the morning podcasts, the daily podcasts, etcetera, you know, it needs all of those in order to make all those different formats thrive.
Rhianna
There's so much food for thought there, a lot to take away. I hope everyone listening got something out of that. If you have any questions, please do get in contact @podpodofficial on social and you can find out much more about Acast and advertising on PodPod.com. Sign up to our daily email bulletins to make sure that you never miss an episode. Thank you so much for listening and a massive thank you to Ross Adams and of course, to my lovely co-contributors Adam Shepherd and Matt Hill. Subscribe, rate, leave us a little review. That would be amazing. The podcast is produced by Emma Corsham for Haymarket Business Media, and I've been your host Rhianna Dhillon, and I will see you next week. Bye
