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How Much Is Needed To Make A Worthwhile Podcast Ad Investment? $55,000 Says Podsights.

How much is enough may be a question that ad buyers on the sidelines looking to jump into podcasting may be asking themselves. Now the podcast attribution company Podsights is providing an answer. It finds that the “threshold” dollar amount that an advertiser should spend in order to get results from their marketing is $55,000.

“If a brand starts in the podcast space and spends less than $55,000, what we see is they get a lower conversion rate than those that spend more than $55,000 – around a 56% difference,” said Matt Drengler Director of Partnerships at Podsights. Its data shows brands should run between 400,000 and 800,000 impressions.

During a presentation to Advertising Week in New York on Tuesday, Drengler said advertisers who run ads on multiple podcasts or networks continue to get better conversion rates than those that only use one publisher. The data included in Podsights latest Podcast Benchmark Report shows the conversion rate for a marketer using one publisher is 1% compared to 1.24% for those using two to ten publishers, and 1.31% for those using 11 or more.

“We see a better conversion rate, up to 24% better, by adding a second publisher to that buy. If they go to 11+ publishers, we start to see an even better response. We go from a one percent conversion rate all the way up to a 1.31% conversion rate, which is incredible,” said Drengler. “So if you’re a brand or agency looking to get your marketing department into the podcasting media, the way to start is spending a little bit more than $55,000 and run with two or more publishers for optimal results from your initial toe-dipping into the space.”

The average conversion rate for podcast ads in the third quarter was 1.24% for visiting a brands website. That was down 5.5% from a year ago. It was also down from a first quarter peak of 1.73%. “Although listeners are engaged at a slightly lower rate, they are still purchasing at the same rate as Q2 levels,” the report says.

The average conversion rate for making a purchase was 0.054% during the third quarter, down from 0.062% in the second quarter although it is relatively consistent with the range seen during the past year. Podsights says that stability suggests podcast ads bring highly engaged listeners to advertiser websites with a high propensity to buy. Podsights also notes third quarter tends to have lower conversion rates and it anticipates the numbers will recover in the fourth quarter as the holiday season kicks off.

Drengler has previously warned that some campaigns were hitting frequency numbers beyond where they should be. But there is so far not much change. The latest data shows the average frequency – the number of times a household is exposed to an ad – rose by 16% during the third quarter with the typical listener hearing an ad four times. Drengler previously suggested that the two- to three-ad exposure frequency remains the “sweet spot” for a marketer getting the best performance on their advertising dollars. “Diversifying podcast buys may expand audience and in turn, lower frequency,” its latest report says.

Data from Podsights also points to an emerging gap between some of the latest brand marketers and the smaller advertisers that built the industry. It says Fortune 500 brands are typically spending 4.5-times more money than smaller brands ($238,702 versus $54,395). The result is those big companies are seeing their ads perform at a 56% higher rate than lower market cap brands (1.67% versus 1.20%). That may have more to do with the benefits of diversification. Podsights says with large spend comes more ad placements across more publishers which its data shows leads to a 31% improvement on conversion rates.

Mid-roll ads continue to have the best performance. Advertisers that used a combination of mid-roll and post-roll ads had the highest conversation rates (1.47%) followed by those who used pre-roll and mid-roll ads (1.30%) and just mid-rolls (0.92%). The worst performing campaigns were those that only ran post-roll ads (0.70%).

The Podsights Benchmark Report is based on a rolling average of 12 months of data including about 5.8 billion ad impressions and 3,100 campaigns for 789 brands that spent an estimated $201 million combined on podcasting. The company estimates it captures one of every four dollars spent in the space. Download a copy of the latest Podsights Benchmark Report HERE.

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