Are Podcasts the next ad frontier?
Last week, Pocket Casts got acquired by a collective group that includes NPR, WNYC Studios (makers of RadioLab), WBEZ Chicago (makers of Serial), and This American Life. It’s yet another move in a space that’s been heating up for a while now.
Podcasting has been around for ages, but it hasn’t been until recently that it’s making a comeback. For years, it was hard, not only to find good content but to subscribe to it. On top of that, the only place you could listen to podcasts was on your computer.
Apple, smartphones and bandwidth improvements changed that. The simplicity of subscribing to a show on iTunes and listen to it on the Apple Podcast app made it a breeze. It opens the gates for mainstream adoption of podcasts.
Two significant milestones propelled the awareness of podcasts. The first one was the addition of official support for podcasts on iTunes in June 2005. The second milestone was the release of the iPhone on June 2007.
Nonetheless, awareness remained constant during a decade. In late 2014, Sarah Koenig and Julie Snyder released an experimental podcast called ‘Serial‘. The podcast went viral, smashed all podcasting records and went on to win the 2015 Peabody Award. As of June of 2017, it had become the most downloaded podcast ever with 175 million downloads. By mid-2015 David Carr named ‘Serial’ the First Breakout Hit.
Despite Serial’s success, podcast consumption remained low compared to other siblings like video or social media. Audio remains a much-loved but not-mainstream medium.
One of the major problems around podcasting has always been monetization. One the one hand, audiences have been small compared to other content sources. On the other, there’s always been a difficulty with measuring the exact engagement of the audience. You can measure how many downloads but not the precise behavior of listeners. And that’s a problem for attracting money.
Some podcasters turned to their fans for monetization. They joined Patreon and transformed their audience into patrons that kept the lights running. However, not every podcast could pull that feat. Some creators believed brands should sponsor the content, instead of fans. Still, having no metrics was a significant stop-block.
All this changed in 2017. In June Apple announced in-depth analytics for podcast creators. Podcast creators finally had a way to learn what performed and what didn’t on Apple platform’s (roughly 60% of the market). Even better, they could share these metrics with advertisers to help monetize it.
Since then, the space is undergoing drastic changes. Data is already showing what many podcast creators have been claiming for years, that their audiences are hyper-engaged. They might not command Facebook-size audiences, but they sure have very targetted and bespoken listeners.
“On average, according to Midroll’s data, podcast listeners are making it through about 90 percent of a given episode, and relatively few are skipping through ads.”Podcast Listeners Really are The Holy Grail Advertisers Hoped they’d be.
“Those numbers tend to be steady regardless of the length of the show—and according to Panoply, the few listeners who do skip ads continue to remain engaged with the episode, rather than dropping off at the first sign of an interruption.”
As the Wired article mentions, this is the advertising Holy Grail. This has become even more important with Facebook’s recent problems. Not only ads are becoming politically charge on those platforms, but companies that advertise there are also feeling the heat. Also, many advertisers are looking for ways to break out of the advertising duopoly held by Google and Facebook.
It’s not surprising though that brands are looking at podcasts as a new frontier for their advertising dollars. One not controlled by Google or Facebook, but new players. Podcast advertising grew a 228% between 2015 and 2016. That’s not even taking into account 2017 which, as I mentioned, was a stellar year for the industry.
The impact of voice interfaces
As I’ve written before, I believe conversational interfaces will change how we consume many things. I’ve felt the change happening at home. How voice interfaces are pushing me to seek more integrated appliances. That said, I also reckon it still needs more time. It’s not surprising then how few users listen to podcasts with their smart speakers.
“David Markowitz from ListenUp thinks Interactive audio is still very much in the experimental phase. “I don’t think we’ll see broad adoption until we get more comfortable having lengthy interactions with smart speakers. That is going to happen – we are just not there yet.”Global Audiobook Trends and Statistics for 2018
I have to agree with Markowitz. I’ve tried several podcast skills in Alexa, and it’s still not there. Some experiments are exciting and we’ll see more engagement but still needs more time.
Audiobooks to the rescue
I have no doubts that smart speakers will drive podcast consumption even higher. I would expect the newer generations to be used to consume audio as naturally as our parents did radio.
Another trend that will accelerate both smart speakers and podcasts, in general, are audiobooks. Audible (and Amazon’s) success in these past years is opening an entirely new media segment.
People that would never read a book are, surprisingly, willing to listen to one. There is no correlation between the quality of the book and its audio counterpart.
“One of the things that’s most interesting to me here is the fact that it used to be that the success of an audiobook was correlated with the success of the print book. That is no longer true. The number of audiobooks that perform well independent of its print and eBook circulation is increasing. The format itself is creating new ways of discovering content that is becoming increasingly independent of the underlying print and eBook success.”Global Audiobook Trends and Statistics for 2018
It’s remarkable how some writers are even willing to create audio narratives to accompany their writings. In a way, it reminds of a comeback to ‘Serial’. Podcasts and audiobooks will begin to fuse and mingle. Some podcasts will remain radio shows, others will become new narrative portals and will drive audio consumption.
”Margaret Atwood,Amazon Turbocharged Audible’s Domination of Audiobooks
authorof The Handmaid’s Tale, recently worked with Audible to write and record a spoken-word coda to the novel, and comedian David Spade is developing an audio-only memoir. “We’re really trying to break the boundaries,” Blum says, “and go to writers and creators and artists to think outside the traditional boundaries of what is a book.”
Aggregators on the horizon?
It’s not surprising that NPR et al. bought Pocket Casts. There is an impending need to create the ultimate podcast platform. The key here is the word platform, or more specifically, aggregator. As Ben Thompson argued recently, when the market is already modularized, it’s ripe for the rise of an aggregator.
I wonder who will that be. Apple still holds a massive grip on the podcast industry, but they’re slowly losing it. Both regarding client market share and on the follower side. New podcast distribution networks like Midroll, Art19 or Megaphone (Panoply) are carving a space not touched by Apple.
At the same time, Amazon and Google are pushing hard on the audiobook and smart speakers front. Will they control the space by owning the relationship with the end user like Apple had with the iPhone? They have an advantage, one they aren’t exploiting so far.
It’s a fascinating time to dwell in this space. I expect more content producers and creative people to adventure into the audio world during the next few years.