We spent last week in Philadelphia at Podcast Movement, the largest annual conference for the podcast industry. We’re big fans of podcasting, and it’s been exciting to see the conference grow from a few hundred attendees in 2014 (with a $32k Kickstarter budget) to 2,500+ attendees today. The event brought together podcasters and podcasting companies (Gimlet, Panoply), tech companies (Spotify, Google), media companies (NPR, Buzzfeed), and even consumer brands (the closing party was sponsored by Jack Daniel’s!).
Over the last ten years, the percentage of people in the U.S. who reported listening to a podcast in the last month has grown from 9% to 26%, a significant jump (read more stats at Edison Research). There are more than 500,000 active podcasts on the Apple Podcasts app alone, with 10,000 new shows created every week. However, the size of the podcast ad market falls far short of this level of consumer traction, at only $314 million in 2017.
This year’s Podcast Movement focused heavily on how to close this monetization gap, while also covering topics like diversity in podcasting, attracting younger listeners, and how the tech industry can promote podcast creation and discovery. Here’s our five key takeaways from the event.
The audience for podcasts has gotten larger — but has quite a ways to go in terms of listenership and diversity.
Edison Research’s 2018 “Infinite Dial” survey found that only 17% of respondents reported listening to a podcast in the last week. While this percentage has been steadily increasing, we haven’t seen an exponential jump in listenership, even as podcast creation has exploded over the past few years. The question of how to capture and engage the “other 83%” was a major theme of this year’s conference. Our thoughts on a few demographics that need to be welcomed into the podcasting community:
- Women and people of color. Most early adopters of podcasts were white, affluent men, and serving a broader audience continues to be a challenge. This issue was front-and-center at Podcast Movement (and the focus of one of the keynote sessions) — but some attendees criticized the conference for not having broader representation on non-diversity-focused panels. We won’t pretend to have all of the answers here, but we believe that networks and broadcasters need to be held accountable for hiring and retaining more diverse hosts, promoting their content, and inviting a more diverse range of guests on their shows.
- Kids. Kids podcasts have started to take off thanks to shows like NPR’s “Wow in the World,” WHYY’s Eleanor Amplified, and Gen Z Media’s audio dramas. As parents try to cut down on screen time, podcasts are a great way to entertain and educate kids. Kids Listen recently conducted the first study of children’s podcast listening habits, and found that 80% listen to an episode more than once, and 18% listen ten or more times (!). 74% start discussions about the podcast after listening, and 56% tell others about what they’ve learned. Kids clearly love podcasts, but many parents struggle to find the right content, especially since Apple’s podcast app features dramas for teens alongside stories for preschoolers. There’s a big opportunity to curate and categorize content for the under-18 crowd.
- Fans of “casual entertainment.” Edison Research did a survey of non-listeners to learn why they hadn’t tried podcasts, and 78% said that podcasts “aren’t for me” — many said that they were too long, too educational, or didn’t cover topics that they were interested in. We need more podcasts for people looking for “guilty pleasure” entertainment like The Bachelor, celebrity news (check out Juicy Scoop), sports content, and sitcoms. As Edison Research’s Tom Webster noted during his keynote, Apple’s “Top Charts” doesn’t do the industry any favors, as it’s dominated by daily news shows, political analysis, and deep-dives on informative content. Podcasts aren’t just for people who consider themselves “intellectuals,” and the industry needs to promote other types of content.
Discovery remains a major issue.
Another limiting factor in the growth of podcasts? Friction in accessing content. Edison’s study found that 48% of non-listeners weren’t sure how to access podcasts, 47% said that subscribing to a podcast costs money, and 80% said they don’t have a podcast app on their phone (despite the fact that many had the Apple app pre-installed on their iPhone). For people who haven’t listened to podcasts before, it can be tough to know how to find them— it’s not as easy as flipping on your TV or radio.
In addition, 65% of respondents said that they were overwhelmed by the quantity of content and didn’t know how to find something of interest. Many podcasters only advertise on other podcasts, and therefore miss the entire market of people who aren’t podcast listeners but may be interested in their content. Why shouldn’t a true crime podcast advertise to Facebook users who watch crime TV shows? When a user clicks on the ad, he or she could be directed to a guide on how to listen, solving the access and content discovery problems. A good example of this is Happier With Gretchen Rubin’s eponymous host — Rubin was a bestselling author before she was a podcaster, and leaves instructional sheets on seats at some of her book readings to show attendees how to subscribe to her podcast.
To be fair, podcast listening apps should also share the blame for poor content discovery. Even if you’re a podcast fan, it can be difficult to find new shows to listen to. Unless you’re regularly scouring the Internet for new releases or combing through the Apple charts, you’ll likely miss content that you would love. We’ve tried a lot of podcast apps, and have shockingly found none that provide good recommendations for new content based on shows we already like. Continuing to serve relevant content is key to retaining listeners over time, so we’re excited to talk to anyone working on this problem.
The discovery problem is a major pain even for established podcast creators, like Marc Smerling (Crimetown, The RFK Tapes). Smerling said that cross-promotion of shows (advertising one show through another) was the “fastest, most effective way to build an audience.” Given the quantity of podcasts in the Apple Podcasts app, Smerling says even high-quality shows can easily “get lost” without a concerted cross-promotion effort. This sentiment was shared by How Stuff Works President Conal Byrne, who said the network reserves 50 to 100 million (!) ad impressions to promote each of their new shows — even at a $15 CPM, this is the equivalent of a $250k+ ad campaign.
Ads are typically significantly better received on podcasts than in other forms of media.
According to the IAB’s latest Podcast Ad Revenue Study, the vast majority of podcast ads (67%) are delivered by the host(s). Another 32.5% are delivered by a separate announcer — this often occurs when a news organization doesn’t allow journalists to read ads. Only 0.5% of ads are supplied by the advertiser, which is the type of ad you would typically see or hear on TV, radio, or even YouTube videos.
This is great for advertisers. Host-read ads are often more entertaining, more memorable, and less “skippable” than other types of ads, for a few reasons:
- Every ad is different. One of the most annoying things about traditional ads is that you see and hear the same ones repeatedly, so even the best ads quickly sour. Many podcast hosts record new ads every episode, so you rarely hear the same ad twice. You may hear ads from the same company across multiple shows, but each host will likely have a different take.
- Hosts incorporate personal anecdotes. Listeners often consider podcast hosts to be friends and mentors, and value their opinions. Personal anecdotes can be powerful. A good example of this — Lisa Zambetti, one of the co-hosts of Real Crime Profile, has told listeners about her struggles using at-home hair dye. She’s now using a color kit from Madison Reed to dye her hair (“Sienna Red”) and keeping listeners updated on the process.
Mimi O’Donnell, the director of scripted content at Gimlet, took advertising to the next level in the network’s recent AI/technology-focused fiction show Sandra — ads were integrated almost into the storyline. O’Donnell said the show creators actually “loved” the opportunity to work on the ads, as they had more of a say in how the ads were placed in the podcast, and could therefore keep the listeners in the world of the story.
- Podcasters are great storytellers. The best hosts can turn ads into funny or memorable moments, creating stories around the ad content. When Matt Gourley’s show I Was There Too was added to Stitcher Premium (and the ads were removed), fans took to Twitter to ask for the ads to be added back in, as they were some of the funniest parts of the show.
Coleman Insights did a study of listener affinity during different sections of The Bachelor-focused podcast Almost Famous. Listeners were asked to turn a dial indicating their satisfaction with the content throughout the podcast (Coleman called this the “media EKG”). They found that the EKG score dropped immediately at the beginning of an almost three-minute long ad for the FabFitFun box once listeners realized it was an endorsement. However, by the end of the ad, the score had almost recovered to the level of the actual podcast content — with listeners commenting that they liked hearing the hosts’ funny takes, or that they learned something new about the product.
However, monetization lags audience growth, for a number of reasons.
According to Nielsen, more than 73 million people listen to podcasts monthly, and more than 15 billion episodes are downloaded annually. $314 million in annual ad revenue isn’t just small on an absolute basis, but also relative to other types of media. Using Nielsen data, we calculated ad revenue per consumer per hour for different types of media in the U.S., and found that podcasts monetize at only a penny per listener hour, on average.
This is more than 10x less than the next closest competitor, radio. The discrepancy is confusing given that podcast ads are especially effective, as discussed above — a Nielsen study found that pre-roll podcast ads increased purchase intent by 10.8%, slightly higher than the 10.3% lift from video ads. The podcast listening audience tends to be young, urban, and affluent, an attractive demographic for advertisers. Apple analytics data presented by Panoply showed that the average listener completes 85–95% of an episode, regardless of show duration — so both pre-roll and mid-roll ads should have very high completion rates.
So why are podcasts lagging so significantly in monetization? Brands seem to be valuing podcast ads at an appropriate level — CPMs (cost per thousand impressions) generally range between $25 -$50, and have actually been increasing as more listener data becomes available. The main issue seems to be the fact that only an estimated 15% of podcasts are able to monetize, and that existing ad standards don’t account for the “evergreen” nature of many shows. Here are a few of the factors at play:
- The dominant platform isn’t monetized. Though alternative podcast platforms (Stitcher, Pocket Casts, etc.) have grown, Apple still owns 55% of podcast market share. Unlike YouTube, where brands can easily run ads via the TrueView program, it’s much more complicated to monetize on Apple Podcasts. Brands and podcasts have to connect directly, usually via networks. Most networks will only take on podcasts that have 50k+ monthly downloads, an extremely difficult benchmark to reach. Radio Public launched a Paid Listens platform partially to solve this problem — any listen of any show that is published on Radio Public gets a guaranteed $20 CPM.
- Detailed data on listeners is just now becoming available. Brands, understandably, need data on audiences and ROI to be willing to allocate part of their marketing budgets to a relatively new medium. Apple Podcasts is famously secretive with data — it just turned on a beta version of an analytics feature in December 2017, which still gives fairly basic data on listeners, devices, and time listened per session. Programs like Panoply’s Megaphone Targeted Marketplace, which allows for dynamic targeting of listener segments, as well as Nielsen studies showing significant brand lift will help brands gain confidence — but it will take time.
- Lack of cohesive ad standards, and inconsistent (and sometimes unfair) measurements of a “listen.” Thus far, there hasn’t really been a consistent way for brands and podcasts to measure KPIs of brand campaigns, as everyone has different answers to questions like: “Does a download count as a listen?” and “What’s the acceptable time range for a listen to be monetized?” The Interactive Advertising Bureau (IAB) recently released a set of guidelines that will go a long way towards resolving these inconsistencies — and most podcast networks plan to adopt them by EoY 2018. The continued development of the dynamic ad market (where ads are not permanently placed in the show, but can be removed and replaced over time) should also help clear up these issues.
“It has become clear that unless we have a set standard, brands will say, ‘We don’t get it, we’re not sure the numbers are right, it will be easier to spend on TV or Facebook.’ [The IAB’s] V2 is it and we all have to get on that bus, whether there’s short term discomfort or not.”
-Marshall Williams, CEO of Ad Results Media (largest purchaser of podcast advertising in the world)
This is especially true for “evergreen” shows, like Serial, which continues to get huge amounts of monthly downloads even three years after season 1 was released. Ads on shows like this should be treated differently than time-specific podcasts like NYT’s The Daily, which likely gets the bulk of downloads on each episode within a 24 or 48-hour time period.
Aside from direct response ads (which make up 73% of podcast revenue), we expect branded content and IP licensing to become increasingly large sources of revenue. One of the first branded shows was GE’s scifi podcast The Message, created in partnership with Panoply. The GE team was so happy with the content that they asked to take out the GE ads, as they interrupted the flow of the show. Gimlet has also been aggressive in the branded content space, inking deals with Mastercard (Fortune Favors the Bold), eBay (Open for Business), and Tinder (DTR), among others — but VP of Brand Partnerships Anna Sullivan said that this money is still primarily coming out of brands’ marketing experimentation budgets, which “isn’t sustainable or scalable.”
On the IP licensing side, Gimlet has formed Gimlet Pictures to sell shows to Hollywood, and currently has seven projects in development. Sullivan said it was “very unexpected how hungry Hollywood is for new IP from podcasts.” The trailer for the Julia Roberts-helmed adaptation of Gimlet’s Homecoming dropped on Amazon last week. How Stuff Works’s Byrne agreed: “I believe LA is invested. I believe it when I heard catchphrases like ‘podcasts are the new scripts,’ and people are thinking that audio translates even better than text to the big screen.”
Tech companies are starting to invest in podcasting.
Apple has long been criticized for essentially ignoring the podcasting market — the Apple podcast app is extremely difficult to navigate, analytics are limited, and, as previously mentioned, there’s no built-in monetization. While Apple’s listening app has long dominated the market, Google is now making a major push to have a bigger presence in the space. Google launched a podcast app for Android in mid-June, and PM Zack Reneau-Wedeen gave a keynote at Podcast Movement about the tech giant’s move into the space.
The current app is integrated with Search and Assistant, giving listeners personalized recommendations of shows and allowing them to easily start and stop playing across devices. Why now? Reneau-Wedeen said that his team has noticed that the “number, quality, and variety of podcasts has really taken off,” and believes that Google is well-equipped to tackle the challenge of categorizing and curating content. Google’s goal is to double worldwide podcast listenership, and the company has launched a Podcast Creator program to help train and amplify the voices of diverse podcasters.
Another tech company making moves in the space? Spotify, which reportedly spent $1M to acquire the exclusive distribution rights for Amy Schumer’s new podcast. Dossie McCraw, the company’s Global Head of Podcast Partnerships, wouldn’t confirm this amount, but commented that $1M would arguably be a “good deal” for access to exclusive content from an A-list celebrity.
Spotify’s spending isn’t limited to Schumer’s new show. McCraw noted that the company has dedicated “more and more money” over the past year to make consumers aware of the presence of podcasts on Spotify. These marketing campaigns seem to have worked — according to Libsyn data, Spotify is now the #2 most popular podcast listening platform in the world, representing 6.8% of listens. With stiff competition in the music streaming from Pandora, Apple Music, iHeartRadio, and many others, it makes sense for Spotify to differentiate itself through a robust podcast offering.
Thanks for reading our thoughts on podcasting! If you’re interested in more of our podcast-related content, check out the five-part series we published last year summarizing the space, the history of podcasting, listening stats, monetization, and what needs to happen for the industry to expand.
We loved our time at Podcast Movement and would recommend that anyone interested in podcasting check out next year’s conference in Orlando. Even as just a fan, it’s a great opportunity to meet your favorite podcasters in real life (we got to meet a few!)
If you’re building a company in the podcasting space or have any thoughts or feedback on this article, please email us at email@example.com or reach out on Twitter at @venturetwins.