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:
One of our favorite kids’s podcasts is The Unexplainable Disappearance of Mars Patel, produced by Gen Z Media. The show was optioned for TV by Anonymous Content and Paramount TV.
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.
Rubin also includes a step-by-step guide on how to subscribe to her podcast across platforms (Desktop, iPhone, Android, etc.) on her website.
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.
There’s no reason why podcast apps shouldn’t have Netflix or Spotify-style recommendations or even auto-playlists based on what you’ve already listened to. Photo courtesy of TweakTown.
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.
This is a standard example of a cross-promotion ad — Up and Vanished is promoting the RFK Tapes in its feed through airing its first episode. This is a somewhat controversial practice among listeners (who might not want another “random” show in their feed), but given hurdles in discovery, it is still one of the most reliable ways to build an audience.
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:
Gimlet’s Sandra, another great fiction podcast, starred Alia Shawkat and Kristen Wiig (an increasingly common example of Hollywood to podcast talent crossover), and was notable for its fairly natural incorporation of ads into the story. The show was also recently acquired to be developed as a premium television series.
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.
One of the best ever podcast ads, in our opinion.
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.
Coleman Insights’s Media EKG for the Almost Famous podcast showed that a three-minute ad (pink line on graph) performed surprisingly close in terms of listener sentiment to the actual podcast content (blue lines on graph). Please excuse our somewhat blurry photo!
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:
Some of the major brands working with Panoply on the launch of itsMegaphone Targeted Marketplace for podcast ads.
“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.”
Amazon has been an early adopter in translating podcasts to TV— aside from the upcoming Homecoming show, they also adapted Aaron Mahnke’s Lore into a two-season show.
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.
Screengrabs of Google’s new podcasts app, courtesy of Lifehacker.
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.
Spotify’s app has now has a dedicated “Podcasting” section.
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 !)