An Exclusive Marketing Trends Report
There is a tidal wave coming.
Each year, there is around $17B of advertising dollars that get spent on radio ads.
Meanwhile, podcast advertising barely broke $200M this year. Podcasts are still a niche market, but they’re heating up, and there is a tidal wave of money from radio advertising that will continue to pour into podcasts all throughout 2018. By 2020, it’s estimated that podcast advertising will be at $500M.
What are some early signs that the podcast space is heating up?
The first sign is from one of the savviest marketers on the planet, Apple. Not only does Apple crush it at marketing, creating products, and distributing them… but they also happen to be one of the savviest company-acquirers on the planet:
Everyone laughed back in 1996 when Apple was struggling. They laughed even harder when Apple made one of their first acquisitions, Next Computers. At the time, Next was struggling more than Apple. But they were run by a guy (Steve Jobs) who had some ideas about how to fix Apple. The rest is history.
So why is this so important to the podcast space?
Because Apple just acquired the podcast search startup, Pop Up Archive.
Apple is making moves to continue dominating it’s hold on the podcast industry. For the smartest marketers out there, you know that history has a habit of repeating itself, or rhyming. In this case, both seem to be happening. Back in 2012, when industry analysts were saying that the App Stores were going to die and go away, Apple made a move to firmly double down. Sidenote: Apple always seems to do this prior to an industry blowing up, or prior to a market turning out to be radically important. So prior to App Stores being solidified as extremely important cash printing (for the host company) and marketing channels (for other companies), Apple acquired a little known app search and discovery startup called Chomp.
Apple acquisition of the podcast search and discovery startup, Pop Up Archive, is a massively positive signal for the industry. It’s also a signal that all marketers should take careful notice of this emerging marketing medium.
The other strong signal that podcasts are going to continue to blow up came from the one and only, Oprah. You know, the former news anchor who was told she wasn’t, “cut out” for news. Earlier this year, Oprah’s podcast put all their inventory slots for sale at once. They sold out in 24 hours. Yes, we know it’s partly because of Oprah. But it’s also partly because the demand for podcasts, podcast advertising, and branded podcasts will be massive in 2018 and beyond.
In today’s edition of marketing trends, we’ve compiled a brief (3 minute) report on the history, current state, and future of the emerging medium known as podcasts.
We think you’ll find some important lessons below for marketing professionals who are either already buying podcast ad inventory, or exploring having their own custom, branded podcast created.
Let’s jump into the most important points of the history, present, and future of podcasts for marketers.
The History of Podcasts
“The term “podcast” is derived from the media player, “iPod”, developed by Apple, and the term “broadcast”, the traditional means of receiving information and leisure content on the radio or television. When the two words were merged, the terms podcast, podcaster, and the art of podcasting were born.” –Wikipedia
“Podcasting was developed in 2004 by former MTV video jockey Adam Curry and software developer Dave Winer. Curry wrote a program, called iPodder that enabled him to automatically download Internet radio broadcasts to his iPod. Several developers improved upon his idea, and podcasting was officially born. Curry now hosts a show called The Daily Source Code, one of the most popular podcasts on the Internet.
Right now, podcasting is free from government regulation. Podcasters don’t need to buy a license to broadcast their programming, as radio stations do, and they don’t need to conform to the Federal Communication Commission’s (FCC) broadcast decency regulations. That means anything goes — from four-letter words to sexually explicit content. Copyright law does apply to podcasting, though. Podcasters can copyright or license their work — Creative Commons is just one online resource for copyrights and licenses.” –HowStuffWorks
Here’s a comprehensive history and timeline to geek out on.
The Present Podcast Industry
You know podcasting and podcast ads are becoming legit when the IAB releases a playbook. Podcasting has come a long way since the first podcast hit the web in 2003 as Radio Open Source. In 2009, only 9% of Americans listened to podcasts. Today, that number is nearly 40%, with 24% of total Americans listening to a podcast monthly. That’s nearly 60 million people.
And the % of people listening to podcasts is going up.
Image credit: ConvinceAndConvert.com
This presents a unique opportunity for the savvy marketer. The majority of podcasts are run by one-off enthusiasts and sole proprietors of podcasts, many of whom are not committed to running their podcast in the long run. However, for those companies that sponsor their own branded podcast, you can still be an early mover in a rapidly growing market.
What is perhaps most interesting about podcast advertising is that it reaches a typically (very) hard to reach demographic.
Image credit: Marketing Charts
Podcast listeners are more likely than the average person to be highly educated, earn a high household income, and be a professional. Even more, effective podcast sponsorship can drive actions on the part of listeners that traditional advertising rarely brings with it.
Interestingly enough, they also tend to be the most affluent and educated millenials on the planet.
Image credit: Marketing Charts
Source: Edison and Triton
Source: Effective advertising
So podcast listeners are the smartest, most educated, most affluent… AND represent some of the hardest to reach millenials on the planet?!
Yes! But wait, there’s more!
To cut through the noise around podcast advertising and understand how to use it effectively, let’s look at the two main types of advertising in podcasts.
“Baked-in” and “dynamically inserted ads”
Let’s define these two ad types. Per IAB’s Podcast Playbook, “Baked-in features an advertising message that is a part of the podcast content and therefore lives within the content for its lifetime. This message is often ‘host-read,’ a unique opportunity that leverages the host personality for brand endorsement.”
Dynamically inserted ads are those that are pre-recorded then placed in by an ad-server. These are problematic, and often cause a jolt or disruption out of the natural podcast storytelling and flow.
It’s no surprise then, that the IAB report examined the 2017 performance trends of baked-in ads (live endorsed) versus dynamically inserted ads (pre-recorded).
“We took a sample of our largest clients in Q3 (who buy both baked-in and dynamically inserted ads) and measured cost per acquisition (CPA) levels between the two ad placement tactics. On average, across all ad delivery types, baked-in ads were approximately 3.5 times more efficient than dynamically inserted ads from a CPA perspective.”
When it comes to sponsoring existing (high quality) podcasts, you’re looking at a CPM of anywhere from $25–$100 for a slot on a top 50 podcast with a growing fan base. That can feel pricey, and there are some pros and cons of sponsoring an existing podcast:
- Requires less setup work and time on your part.
- Comes with a guaranteed, existing audience.
- Should give you baseline expectations for conversion rates on successful shows.
- Often pricey. Could be more cost-effective to launch your own professionally produced podcast. A premium show with 500,000 regular downloads can cost you $50,000 just for a few minutes of airtime.
- You don’t get to control or influence the content of the podcast episode you’re sponsoring. The episode you sponsor could be totally unrelated to, or run against, your company culture and brand.
- There is usually a waitlist. Successful podcasts are going to have a waitlist of other sponsors knocking down the doors to get in. The CPMs for those podcasts are typically non-negotiable.
So what’s a CMO to do?
This is where Branded Content comes to the rescue:
Branded content (also known as branded entertainment) is a form of advertising that uses the generating of content as a way to promote the particular brand which funds the content’s production. –Wikipedia
Specifically, Branded Podcasts. These solve some of the biggest pain points for CMOs who want to explore the world of podcast marketing.
Branded podcasts are when a brand partners with a media company to create a custom podcast that the media company owns, operates, and grows into a channel for the sponsoring brand. In some cases, the studio will be able to not only create and launch the podcast, but achieve long term podcast growth and sustainability.
Regular podcast advertising isn’t nearly as attractive to large brands as branded podcasts.
DigiDay reports that branded podcasts are gaining traction among advertisers. The old model of ad reads (both live and dynamically inserted) doesn’t cut it.
“People will ignore or skip anything they don’t like. So brands have to start making things they love.” -Steve Pratt, Pacific Content
Brands are increasingly starting to underwrite content that consumers love, like Podcasts. Branded content is the single most undervalued tool in most marketers arsenal.
Why? We’re currently working on much larger and comprehensive case studies about this. For now, just consider one example of Mailchimp helping to underwrite the first season of Serial. This worked out very, very well for both parties. Consider a small example from this massively successful branded podcast campaign:
Mailchimp got several headlines and podcast episodes like “Why are ‘Serial’ fans so obsessed with MailChimp”. If they simply bought dynamically inserted ad inventory, they would have bought an asset that listeners skipped, or that quickly got lost in the digital ether. Instead, their marketers and MailChimp’s CMO acted like an investor and venture capitalist, and underwrote a show idea that they loved.
That is a case study of branded content (and podcast marketing!) done very, very right.
The harsh truth about branded podcasts though is that they (on the surface) are pricey.
“It’s a half million dollars to even think about it,” said Russell Lindley, the president of media agency Ad Results Media. “A million for a really well-produced one.”
This is partially true, it’s extremely expensive to create and distribute original podcasts. It’s even more expensive to find the right studio and partner who can help with podcast growth. But, there are ways to create and launch branded podcasts that help make it affordable. Case in point: at The Mission, we’re currently creating branded podcasts for some of the world’s largest companies, and we’re doing it more cheaply (and if we dare say so — more effectively) than people previously thought possible. If you want an original, branded, podcast, plus distribution, and you don’t want to spend $500,000+… The Mission Studios has you covered.
Besides, what other Studio has a Golden Doodle who thinks he’s a person as a mascot?
Toasty enjoys a good podcast while taking long walks on the beach.
If you have any questions, our Chief Content Officer, Ian Faison, is always standing by to answer them. Tweet them to @IanFaison or email them to Ian (at) TheMission.co.
If there is a fit between your company and The Mission, our team can turn around a custom creative brief and timeline for your own custom branded podcast (plus distribution) within 72 hours. Simply fill out this form, and Ian will be in touch.
The Future of Podcasts
The future of podcasts (and of all media!) is exceptionally bright.
Podcast Advertising spend is poised to more than double between now and 2020. That means jumping from its niche levels of $200M now, to $500M in just two years.
And now, the share of the U.S. population that have listened to an audio podcast in the last month is also on the rise. Plus, there are around 128M Americans that commute to work each day.
There are around 90M Americans whose average commute time is around 20 minutes one way. So that means the Americans who work hard and earn a salary have around 40 minutes each day to listen to podcasts! This number is going to continue growing all over the world. Soon, everyone who commutes to work will discover the magic of podcasts.
The future of podcasts is a booming industry that will swallow up the $17B of radio advertising spend. The future of podcast advertising for marketers is also bright, and an important contributor to growth and branding. Especially original branded podcasts created by media companies with a growing following of fans who trust them, and tune in on a daily basis.
Although we’re biased (hey, creating and distributing branded content is what we do!) we hope this brief report on the history, present, and future of podcast advertising was helpful.
We’ve been calling this daily report, Marketing Trends. Over the coming months in Marketing Trends, we’ll be exploring podcasts in more depth, as well as additional types of branded content and case studies. To make sure you get them, you can subscribe to our newsletter here, or follow @TheMissionHQ.
If you’re enjoying Marketing Trends, please share it on the socials, or forward to a colleague who might be interested! If there is a topic you’d like to see covered, let @IanFaison know, or tweet us at @TheMissionHQ.
Until next time, stay marketing my friends!