Dynamic ad insertion (DAI) leads ad revenue in the podcast industry by 84%, according to IAB figures. However, many have started wondering if it is the best route to evolve podcast advertising.
After all, incoming data protection and privacy (DPP) laws akin to Europe’s General Data Protection Regulation (GDPR) might limit DAI and programmatic advertising in the near future. These potential restrictions also question whether automated ads targeting individual—rather than content-related—interests are ethical and appropriate for listeners.
On the other hand, prioritising incessant ads for big streaming platforms to profit, with little return for creators, could jeopardise listenership and, therefore, the industry's continued growth. Giving podcasters freedom of choice on their ads is crucial to ensure audiences connect with their content.
Additionally, the rise of video podcasting also means one more ad revenue stream that podcasters can take advantage of in a YouTube-like way or, hopefully, in a more savvy manner.
Are DPP laws putting DAI at risk?
The California Consumer Privacy Act, which took full effect at the start of this year, states that users can delete any personal information sites and data brokers have gathered on them and limit usage of sensitive data.
Such state regulations open the conversation about approving bills like the American Data Privacy and Protection Act (ADPPA), which would enforce laws similar to California’s nationwide. If it gets approved, podcast advertisers in the US will have to ask for users’ consent before being able to provide targeted ads using personal data like location, gender, age, health, and marital status.
However, this bill still allows for contextual advertising, which targets users based on the context of the page they’re on—like showing Tupperware brands on a cooking website. This makes more sense for consumers, as it leaves no room for ads that might reveal their sensitive information.
For DAI, this means programmatic ads will be restricted to the context of the podcast rather than user preferences. This is ultimately an advantage, as according to a Harris Poll study from last year, consumers are 79% more comfortable with contextual ads than behavioral ones.
DAI’s automated nature makes it an affordable option that is easy to apply to podcast episodes. But should this be the norm? A large amount of ad revenue coming from DAI means marketers prioritise quantity over quality, which could hurt listenership in the long run. For example, listeners and podcasters have begun issuing complaints about the amount and value of ads they get per episode. Some aren’t keen on ad content changing with their location, some call the high amount of commercials a careless business decision, and others say podcasters are throwing their audience away with these practices.
From what I’ve experienced in the industry, many platforms’ biggest selling point is advertising and gathering user data - so it will be interesting to see how these laws are taken by big industry players, many of whom arguably prioritise revenue over podcasting itself. Will they welcome these data privacy laws, or resist them for as long as they can?
Giving creators ownership of their ad content and rewarding them properly
Although users might think their favorite podcaster is responsible for the DAI overload, the truth is most creators have little say over this. While most monetisation platforms allow creators to control the placement of ad slots within an episode, what types of ads they allow (based on IAB categories) and whether they allow advertising at all, platforms usually have far more control over what, when and where ads appear on podcasts. This explains why caregivers listening to a true crime podcast can be served with otherwise-irrelevant nappy ads.
Keep in mind that podcast listeners weren’t always exposed to DAI, baked-in, and host-read ads, as these practices only became popular once the industry’s listeners skyrocketed. In fact, DAI started as an digital advertising model for webpages, and podcasting picked this up. However, it doesn’t suit the industry’s needs in the slightest: To be rewarded for creative work so poorly—because a hard-earned stream could never equal to someone scrolling a website—feels unfair for artists who pour a lot of their time into their content.
Platforms should begin working on more fitting ad systems for creators to earn their fair share for their creative value and for listeners to relate to ads smoothly and contextually. For example, instead of rewarding podcasters per download or stream, it should be about total time listened. Independent platforms are already starting to do this, and it does pay off for everyone.
An Edison Research and Sounds Profitable study showed that 51% of recurring podcast listeners (who listen to at least five hours weekly) are more likely to consider purchasing a product after hearing a host-read ad. This is because, unlike Spotify announcements that feel out of place, these ads include the host’s voice, making them less intrusive and more familiar. That’s why giving ownership back to creators on what ads they play and when helps keep their audiences engaged and allows them to regain full control of their content.
There’s no denying the power of podcasters using their voice and inserting ads wherever they feel right for them. While experts assert the importance of announcer-read DAI in specific cases, many believe the future is in host-read ads that can be personable and relatable. Platforms that haven’t started prioritising the host-read style could easily lag and see their ad revenue drop.
There are increasingly more services for ad personalisation and insertion, so the options are available for podcast streaming services to make better ads—but it’s up to them to take these opportunities.
Building better ad systems for video podcasting
A recent study revealed that 46% of recurring American podcast listeners now prefer listening while watching a video. The numbers keep pointing at a future filled with this format, so gearing up to offer video ads will be a new challenge and a fresh revenue stream for podcast platforms.
The looming video podcast wave means streaming services must do their best to avoid the stale model of YouTube ads, which feel off with their abrupt insertion points and overly-personalised targeting. This issue is similar to what audio podcasts are going through now, where disparate commercials bombard listeners, targeting their personal qualities rather than the content they seek.
To do right by creators, platforms must allow podcasters to get as hands-on as possible with ads and introduce DAI in a smarter way, granting them more control of what they advertise. For example, having creators do a quick unboxing video and let them replay it in the episodes and exact sections they choose. Another video ad approach for podcasts is the classic product placement, which is subtle and wouldn’t need something like DAI to work. This can only work, however, if platforms are more lenient with podcasters.
Currently, podcast advertisers and hosting platforms seem to be forgetting the art, the creators, and the listeners at the heart of the industry. It’s time it returns to its beginnings, catering to the people and the content rather than the pocket of big corporations.
As the industry grows and evolves, so should its advertising systems. DAI can be cost-effective and time efficient, but it’s often detrimental to creators’ reward system and the listening and viewing experience of consumers. Likewise, new regulations mean advertisers must find better ways to approach users via context-based ads instead of using personal information. It all boils down to letting creators reclaim their ad content with dynamic host-read ads and implementing the same for the rising video phenomenon.
