The annual Podcast Movement conference, true to its name, is hosted in a different city each year. 2023’s event was held in Denver, but depite the desert setting, there was a collective cold sweat permeating the otherwise dry Colorado heat. For the thousands that descended upon a compound adjacent to Denver International Airport, it was the uncertainty in the air that had them perspiring through their stretch khakis and golf shirts (to paraphrase the hosts of How Long Gone).
Much of the hand-wringing was spurred by the fact that the audiences adopting podcasts are getting younger. In some ways, that’s a good sign - it means that podcasts are still being discovered and makes the medium more attractive to advertisers - but it’s also contributing to a shift in how people are consuming podcasts, and raises questions about how video and ads fit into the equation. Given the billions of dollars at stake, the sweat is warranted.
The video pivot
Like it or not, the definition of a podcast is changing. In their session, Amplifi Media CEO Steven Goldstein and Jay Nachlis, vice-president of research firm Coleman Insights, outlined their latest study on how people consume podcasts. Though listeners still use multiple apps for podcast consumption, 75% of their study participants defined podcasts as being both audio and video. They also identified YouTube as being the most used app for podcast consumption.
This is being driven in large part by Gen Z, who are heavy consumers of video podcasts according to research from SXM media. While Millennials are the “here and now” of podcasting, with more of them listening to podcasts each week than any other group, these younger listeners are the bridge to future generations, says Gabriel Soto, senior director of Edison Research. They have caught up to Gen X in terms of their rate of podcast consumption per week, and Gen Z listeners who started listening as children spend an average of three hours more per week with podcasts than those who started listening later in life.
There is no consensus, however, around what this shift means for creators. What seemed like something to try out last year, now demands a decision; whether you employ video or not, you need a reason why.
Sharon Taylor, senior vice president of podcast strategy and product operations at Triton Digital, declares, “There is an audience waiting on YouTube that does not know about podcasting.” Two days into Podcast Movement, the company announced a data integration with YouTube that will allow publishers to view their video metrics in conjunction with their overall podcast downloads.
She explains the potential for discovery is the driving reason for the integration. She points to podcasts like The Basement Yard, a tightly edited show with highly produced graphics, as an example of podcasters succeeding in video because they have a video-first mentality. Or celebrity podcasters, like Conan O’Brien, who are a visual draw— “people want to see him talk.”
A ‘video mentality’ seems antithetical to podcasters, but while you don’t have to be on YouTube, it’s hard to resist the lure of new audiences. Taylor, a self-described podcast purist, wonders whether the term ‘podcast’ is serving the industry.
“We're a little quirky, real nerdy, we’re the butt of some jokes, and it's cracking into mainstream media,” she says. “Bob's Burgers, The Simpsons, and Family Guy are making jokes about podcast listeners.” With this in mind, she’s happy for people to use whatever term they want to describe the talk-based content being produced by creators.
Podcast network DCP Entertainment sees new opportunities for monetisation with video, and CEO Chris Colbert is pitching sponsors on a 360-degree digital platform— where advertisers can invest in one creator or show with many touchpoints, selling the spot on the podcast, including a presenting sponsor for a social media clip, and adding a product placement in a YouTube clip. “You can have a Remy Martin bottle behind you or just put the logo on the clip,” Colbert explains; “That’s something you can’t really do on audio.”
However, he warns that podcasters could be making less through YouTube. “The way that YouTube monetises is by far less superior,” he cautions. “The CPM model on YouTube is something like $7 and YouTube takes 45% of that. So, you are making pennies to the dollar compared to what you’re going to make on a podcast.”
For a company like Lower Street that specialises in branded podcasts, founder Harry Morton observes that the audience you are trying to reach is a key factor in your video strategy, remarking that “if you are trying to reach an audience of CEOs, YouTube probably isn’t the channel that they’re going to reach for.”
It’s a different story for video in the premium content space. Supercast CEO Jason Sew Hoy says the company is weeks away from bringing video to the subscription platform, with Users seeing a non-linear video feed of the content they’re subscribed to. In the premium experience, the value is the access to the creator, even if the quality of the bonus content is sub-par,.
Sew Hoy points to one creator who overcommitted on what she could deliver to her subscribers. “One night she just went out to her backyard and [made] a memo on her iPhone. It was a short 15-minute thing; she uploaded it super fast. People loved it!”
How to buy ads that listeners won’t skip
Increased monetisation is one of the major draws of video content, but audio revenue channels are also evolving. There was plenty of programmatic advertising talk at the show, but what filled the cavernous corridors were whispers that programmatic ads aren’t so great for the listener experience, and critics argue that they can feel out of sync with the quality or tone of the show.
Taylor recognizes the value and challenges of creating ads that are “worthy of the medium.” Agencies like Australia’s Eardrum specialise in creating perfect, fit-for-purpose audio ads, but they require a lot of time and money, and she stressed that if the industry is going to continue growing into the realms of multi-billion-dollar valuations, “that scale only comes with programmatic.”
Whether you are a creator drafting a monetisation strategy, a show that’s turning advertisers away, or an advertiser, you should be thinking about listener attention and how advertising affects it.
Earlier this year, former Acast execsGeorgie Holt and Christiana Brenton founded Telling Media, a UK–based podcast media agency specialising in creating performance marketing strategies. Telling Media believes audio is not only the most effective medium for advertisers but also the most ethical, in part because “when you listen to a podcast, you don’t ever feel bad about yourself”.
Brenton believes that the industry is at an inflection point. She says they’ve seen a lot of lazy ad buys, relying on top-ranked podcasts and existing relationships. There is an opportunity, she thinks, for agencies who spend the time to do more discovery and analysis to create more effective media plans. In her view, including smaller shows in your media buy can produce stronger results for your clients.
This bias towards the top-ranked shows could lead to excessive ad load. Magellan AI’s Q3 '22 Podcast Advertising Benchmark Report found that 44% of all advertising, in an industry that’s forecasted to hit $2 billion by the end of the year, lands in the top 500 shows alone.
Brenton explains that ad overloads reduce effectiveness and result in CPM inflation. “When you have such a concentrated demand - so a billion dollars going to 500 shows this year - [advertisers] are paying higher rates and then on average, these shows have 30% higher ad load.”
Overloads may increase a listener’s propensity to skip through some ads. A noteworthy study by Magana and Nexxen published earlier this year found that overexposure to ads on streaming platforms negatively affected a brand’s reputation, and the same is likely true for podcasting.
An optimal campaign, she says, can include one or two of the top 100 podcasts in the U.K., with the remaining five to 10 shows being mid to long tail, citing a campaign that they worked on for Orange Theory before launching Telling Media,
“Rather than cherry-picking 10 creators from the top 100, they spread their entire budget out over the long tail and partnered with a series of niche creators, and they found that that test delivered on an average of 16% more efficient CPA than anything else that they had tested before.”
It demonstrates what makes podcasting potent—the loyalty of listeners, across the ranks.
Despite the industry shifts, podcasting is rising in popularity. So “when that money comes in,” Brenton cautions, “we have to make sure that we’re distributing it the right way - so that [ads] remain effective”. No doubt, the money is coming; the bigger question is, will it last and fuel the future of the industry?
Advertisers will need to see (and hear) how audio can impact audiences, without being overbearing and losing what drew people to podcasting in the first place. That could mean better-crafted ads, but whether they are human or AI-generated is to be seen. It could also mean more effective media strategies that work harder to reach audiences outside the top 500 shows.
Video is now firmly in play within podcasting, too. It could be another monetisation opportunity - but a video strategy doesn’t look the same for all creators. As with so many other things in podcasting, it’s a question that is answered by knowing your audience, 40% of which, we’re told, still prefer audio-only.
However creators approach their monetisation strategies, one thing is clear from Podcast Movements 2023: the industry’s models are changing faster than ever before, and podcasters will need to make sure they’re agile enough to keep up.