Programmatic buying has been labeled by naysayers as a “race to the bottom” especially on ad rates charged to buyers. But podcast executives say the industry is slowly warming to the idea of machine-based buying. During the Voxnest Podcast Advertising Summit on Tuesday, they said it is a way to grow revenue by allowing a wider array of shows to access the marketing dollars that have long gone to only the biggest podcasts.
Voxnest CEO Francesco Baschieri said between January and May there was a 65% increase in programmatic advertising buys across its network. “We started to see more and more shifts from show buys to audience buys,” he said. Baschieri credited that to a flood of demand from ad categories like digital products, software, telecommunications and insurance who were able to step in and replace the cancelled buys from advertisers in other sectors that were more severely hurt by the COVID-19 pandemic.
The conversations around programmatic buying of podcast ads have changed during the past 12 to 18 months, according to Nina Harvey, Senior Director of Audio at Magnite – the former Rubicon Project. “The beauty that we have seen with programmatic in other formats has been the ability for it to enable any seller to be able to connect to premium brands,” she said, adding that there’s been “a bit of resistance” historically among podcasters. But Harvey said the industry is now showing it is ready to connect its programmatic pipes to the outside world. “That is a way for the podcast audience to start to be made available to the big audio buyers who may already be buying audio streaming but want to now enter the podcast space,” she said.
Catherine Patterson, Senior Director of Inventory Partnerships at The Trade Desk, said that will help all podcasters that don’t have download numbers of six or seven digits. “We’re seeing the bigger buyers are able to scale against their audience [targets] in the smaller, longer tail podcasts, and finding a really relevant audience for their brands that they otherwise wouldn’t be able to access if they were just doing insertion orders,” she said.
Scott Porretti, EVP of Digital at Katz Digital, said monetizing more shows becomes an issue as the universe of podcasts now tops one million shows with numbers growing by the minute. “All of those have a hyper-engaged, passionate listener base – we see the opportunity to enable technology to reach that audience,” he said. Porretti also said programmatic buying may be especially useful to allow podcasts to go after regional advertisers by marrying up multiple shows in a way that would have been too cumbersome using traditional sales tools.
Even as programmatic grows, Harvey said just a small percentage of podcast ad buys are done that way. That’s compared to other digital channels where 60%-90% of media is traded programmatically. “We just need to get the pipes connected and sort out some technical challenges,” she said.
Naomi Hands, DAX’s Head of Publisher Partnerships, said there is encouraging news on that front. “We’re seeing the big agencies and trading desks connecting those pipes now,” she said.
Compared To Radio
Even as the question of whether podcasting will cross the one billion dollar mark in annual revenue this year or next hangs in the air, many podcasters have the roughly $15 billion that the broadcast radio industry gets in annual revenue in their sights. But Dave Newmark, CEO of the podcast search company PodSearch and a veteran of both industries, said a significant difference remains in where the ad dollars come from. He pointed out that nine of every ten ad dollars collected by radio are sold in local markets while podcasters rely on national buys.
“While there’s some technologies to allow advertisers and agencies to isolate ads into certain markets, it really doesn’t get to scale in any certain market which is really what local advertisers need,” said Newmark.
Giles Martin, EVP at the podcast ad agency Oxford Road, said that radio also has as much as 20 minutes per hour in advertising compared to just a couple of minutes on a podcast. “As the radio companies become more heavily entrenched into the space, are they going to be pushing podcasters to have a heavier ad load,” he said.
For now, Newmark says national brand campaigns and direct response marketers are the best source of revenue for podcast companies. And in that split, he thinks there is a clear winner. “I don’t think brand advertisers are going to start spending big money until they have strong audience identification and targeting technology and really strong and widely used tools for attribution to measure return on ad spend,” he said. “If brand advertisers aren’t willing to open their wallets and spend the big dollars, who will? I think it’s the direct response advertisers and host reads are going to be how they are going to do it.”