This week I’ve spent a large portion of my time speaking to various people within the advertising industry, talking about their views on the podcast market, the attitudes of clients to podcasting, and the proportion of media budgets which is given over to audio content.
The answer, unsurprisingly, is that for most large agencies I spoke to, podcast advertising is still largely a single-digit percentage of overall media spending. Indeed, it’s frequently lumped in with all audio activity, including ads on music streaming services or radio stations, which itself is usually one of the smallest pieces of the pie.
Some context may be necessary here for those podcasters who aren’t familiar with the intricacies of the media and advertising ecosystem. Generally speaking, large companies will outsource the majority of their marketing and advertising activities to an agency, who will plan campaigns for them to accomplish specific goals through use of multiple different channels. This can include TV adverts, sponsorship of live events, social media ads and more.
The total budget for that campaign or period will be divided between these channels, and the company’s goals will often dictate how that split is decided. In most cases, the goal is to reach as many people within their target market as possible, which is why online programmatic channels like streaming video and social media still command the majority of spend in most cases. It’s also why, when they do utilise podcast advertising, most agencies still tend to favour ‘audience buys’ through spot ads on larger networks: running pre-rolled advertisements across multiple podcasts through a service like Acast.
These ads are charged on a CPM (cost per mille) basis, which means that advertisers pay out a certain amount for every thousand listens an ad gets, and the amount that filters back to the podcaster is often less than £10 per thousand. This allows advertisers to cost-effectively reach the maximum audience within their chosen category with a minimum of hassle, but smaller podcasters can be left out in the cold by this strategy.
Let’s say a podcaster has negotiated an advertising deal where they receive a £5 CPM for spot ads on their weekly podcast. Even if that show was pulling in 100,000 downloads every week, it would still make less than £25,000 per year – and that’s before any costs are taken out. Small wonder, then, that it’s the higher-value host-read subscriptions that podcasters aim for if they want to make a living out of their show, but this is another area where agencies tend to prioritise podcasts with large audiences. Each partnership takes time to manage, so it’s easier to partner with a couple of big shows than with a dozen mid-level podcasts.
However, while audience buys are undeniably straightforward compared to working with individual podcasts – and offers better targeting and tracking data – it misses out on one of the biggest advantages of podcasting as a medium: audience engagement. The parasocial relationship that podcast listeners have with the hosts of their favourite shows make them ideal brand ambassadors, and podcasters can be a trusted voice advocating on behalf of brands.
It’s a powerful relationship and one that should not be taken lightly, as noted by Mars UK media and content director Richard Mashiter, and Lloyds Banking Group brand communications and media lead Vicky Handley, at PodPod and Campaign’s recent Radio and Audio Advertising Summit. They said that for brands who select a podcaster that can represent them in a trusted and authentic way, hosts can act as key influencers on behalf of advertisers.
With this in mind, podcasters who want to commercialise their efforts need to be far more proactive in approaching advertisers. Reaching out directly to organisations with a well-crafted pitch can pay dividends and put you on potential sponsors’ radars. This is where depth of engagement comes in, as even with a small audience, podcasters can craft a campaign that goes beyond the usual host-read model, incorporating elements like fully bespoke custom episodes, live events and social tie-ins which allow advertisers to fully tap into the community around the show.
This is particularly true of those with comparatively lower audience numbers, who may not be able to bring in a sustainable revenue stream from spot ads. Rather than waiting for partnership and host-read offers to drop into their lap, podcasters would be well-advised to create a shortlist of brands that they actively want to work with – those that resonate with their content, and that they actively support – and reach out to them directly to start a conversation about potential partnerships.
This is, of course, easier said than done. There’s a good chance that larger brands simply won’t give you the time of day, particularly if their strategy is based on the kind of mass-reach model detailed above. If they have an agency, they’ll probably direct potential media partners to them – which puts you back to square one if you don’t meet the mass-scale criteria discussed above.
It’s also time-consuming and not a little draining to be metaphorically knocking on doors all day (which is partly why salespeople are so well-compensated for it). But by cannily identifying potential partners who are at the right stage in their growth cycle and who are a good fit for your content, a little persistence could land you with a high-value sponsorship or branded content deal that allows you to build for future success.