What is programmatic advertising?

Programmatic advertising is big business on the web, but it’s early doors in the world of podcasting

Podcasts have gone from labours of love with little commercial success to being big business. In 2021, US podcasting advertising revenue broke the $1bn mark for the first time, and it’s projected to hit $4bn by 2024

But the way podcast adverts are bought and sold hasn’t really kept up with the transformation. It’s time-consuming, inefficient and poorly targeted at the millions of listeners around the world. Programmatic ads – a long-time staple of online advertising – have the potential to transform the industry and make its revenues eclipse the most ambitious forecasts.

So what exactly is programmatic advertising, how does it work for podcasts, and how is it better than what we already have? Read on to find out.

What is programmatic advertising?

In the old days of digital advertising, if you wanted to buy an advert on a website, you would contact the webmaster or publisher and arrange a deal for the right price. The advert would then appear to every visitor of the website, regardless of their personal characteristics, until a set number of page views had been reached.

As the web has evolved, programmatic advertising has largely replaced this as an easier, more efficient and more targeted way for advertisers to reach their audience.

In short, programmatic advertising automates the process via algorithmic software, allowing advertisers to target specific audiences based on things like age, location and even interests, rather than just targeting visitors to specific websites. Programmatic advertising models also typically utilise real-time bidding (RTB), in which an ad slot is auctioned off to the highest bidder by automatic programs with set guidelines, such as the maximum amount an advertiser is willing to spend per slot.

If you’ve used eBay’s automatic bidding feature, you’ll have a basic idea of how this works in practice. This not only saves everybody time, but leads to a more impactful experience, with advertisers bidding on ad impressions for the users they want to target.

The video from the Interactive Advertising Bureau (IAB) below gives a little more information about traditional programmatic advertising, before we get onto how it relates to podcasts.

How does programmatic advertising work for podcasts?

Programmatic advertising for podcasts is similar to web-based programmatic, but with differences due to the type of media.

Traditional podcast advertising is similar to advertising from the early days of the web. An advertiser approaches a podcast or platform and either gets their ad played in breaks, or pays for the host to give a personal endorsement of some kind. Booking through hosting platforms also allows advertisers to book campaigns on multiple shows based on category or demographic.

While it’s possible to buy ads across multiple shows or categories in a traditional, non-dynamic manner, programmatic technology has found an increasing home in podcasting. Like the web version, podcast programmatic advertising automates the process of selling ad slots in a podcast based on the kind of listener advertisers want to reach. The adverts are then dynamically inserted into designated advertising slots, meaning that – theoretically – the advertiser reaches the audience they want, and the listener only hears adverts that are relevant to them.

Programmatic technology commonly uses both ‘demand-side platforms’ (DSPs) and ‘supply-side platforms’ (SSPs). Both use technology to automate the ad-buying process in real time; DSPs allow advertisers to bid on ad inventory across a number of different publishers, while SSPs allow publishers to auction off ad space to multiple advertisers. Audio DSPs and SSPs are becoming an increasingly common tool in the arsenal of podcast advertising professionals, and they represent two sides of the same coin.

What are the advantages of podcast programmatic advertising?

The main benefits of programmatic advertising for podcasts comes down to three things: efficiency, targeting and flexibility. 

Let’s tackle efficiency first. Advertisers using programmatic advertising don’t have to research the podcasts with the right audiences for them, they just select the characteristics that they want in a listener and then buy the impressions across multiple podcasts at the right price.

And that leads to the second point: targeting. These adverts will play to exactly the right people at the right time. There is less risk of wasted adverts, where ads are played to listeners of the wrong age, wrong country or wrong spending power. Platforms such as Acast and Libsyn are even introducing contextual targeting, which uses speech-to-text transcription to help advertisers find not only the right genre of podcasts but the right episodes too. In other words, if the episode has a section about crisps, and you happen to sell a delicious brand of crisps, you’ll be able to get a prime advertising spot.

With programmatic podcast adverts, if you like, you could specifically target men aged 20 to 30 in the UK with Android devices. And if you’re targeting the right person, they are more likely to be open to your message. You could even take this approach further, with specific coupon codes played to different audiences at different times, letting you figure out exactly which demographics are responding to your ads.

Think of traditional podcast ad spots as the scattergun approach of local radio, which play their ads to whoever is listening regardless of their age, interests or gender. Programmatic podcast adverts are more like Instagram or Facebook ads which are shown only to people who are likely to be interested. A little creepy, perhaps, but significantly more effective.

And the disadvantages?

At the moment, the main disadvantage of programmatic advertising in the podcast space is that it’s mostly not fully programmatic. As Marketing Brew explains, many buyers argue that only parts of the process are currently fully automated, leaving it in an awkward middle ground between full automation and human salespeople. On top of this, most programmatic podcast spots are sold on private marketplaces that only certain buyers have access to, rather than open exchanges.

However, this is a shift that will happen naturally if programmatic advertising becomes the favoured medium. A more insurmountable problem with automation is that it takes away the personal touch. 

Many brands swear by the effectiveness of a host-read advert, which not only maintains the flow of the podcast by not changing voices in a jarring manner but feels more trustworthy because of the relationship the listener has with the presenter. It also allows a lot more personality, as you’re effectively hiring the host to put their own spin on a product or service.

Because of their automated nature, programmatic podcast adverts can’t offer this personal touch, and as a result, some hosts and advertisers prefer to stick to the tried-and-tested methods of reaching listeners with tailored ad reads. Larger-scale ad buys and more customised ad formats are also typically not offered through programmatic channels.

There are also some challenges around analytics and post-run reporting for programmatic campaigns, which tend not to be as robust or detailed as reports from campaigns that are bought directly from a platform, network or publisher.

How to run your first programmatic podcast ad campaign

If you’re interested in dipping your toe in the programmatic podcast ad market, it’s relatively easy to do so; the first thing you’ll need to do is script and record an ad spot, if you don’t already have one. These should be 30-60 seconds long, with a clear call to action in order to drive the best results. 

Once you’ve got your ad, platforms like Spotify and Acast offer self-service tools that allow you to set up programmatic podcast campaigns in a similar way to platforms like Facebook, with a budget of as little as $250 for Acast, or $500 for Spotify. Once you’ve registered for an account with your company details, you can start running ads against your target audience, with set goals for impressions.

These platforms make it easier for smaller advertisers to access programmatic channels, as well as for larger organisations that perhaps haven’t yet invested in podcast advertising to launch small-scale pilot projects and assess the performance.  

What does the future hold for programmatic advertising with podcasts?

In the short term, the aim is simply for programmatic advertising to get a bigger foothold in the world of podcasting. It remains a small part of the industry, accounting for just 1.7% of total US revenues in 2021, according to the IAB.

This kind of fine-grain relevance could help programmatic advertising in podcasts reach the same ubiquity as the likes of Google AdX – but we’re a long way from that just yet.