A common thread through many of the discussions at this year’s virtual Podcast Movement conference is talk of growth, and how to capitalize on a media that is seeing its audience and revenue expand. Since the industry gathered last year in Orlando, there have been several large deals that are reshaping the industry. The biggest to date – SiriusXM’s $325 million deal to buy Stitcher – closed this week. Wondery CEO Hernan Lopez thinks what is driving much of the deal-making is a reaction to the streaming video space, where media companies a decade ago were too slow to move and many felt as though they missed out on a once-in-a-lifetime opportunity.
“Companies in the media space have seen this picture before when they look at what happened with Netflix,” said Lopez. “They see the same thing is happening in audio.” But more than in video, he thinks there is a more profound evolution occurring in audio because Netflix simply offered a service and content that resembled much of what was already available on cable television. Podcasts, on the other hand, are offering something different. “People are not only changing the way they listen, they are changing what they listen to. And they have more options as the supply and quality has increased,” he said. Lopez told a panel on Thursday that he expects more consolidation in the years to come, saying podcasting remains a young media with a lot of room for growth. “There’s still a lot of growth in the industry, both organic and for consolidation,” he predicted.
Ad technology is playing a role, since as more companies grow revenue and turn profits, investors are more willing to pony up the cash needed for not only acquisitions but also investments in building the industry’s infrastructure.
During the past 18 months Stitcher has transitioned all of its podcasts over to dynamic ad insertion, which Chief Revenue Officer Sarah van Mosel said is shoring up all of the potential ad products and allowing sales reps to have new conversations with advertisers that extend beyond host-read ads to audio-based sales. “We can take more data into account when we are putting campaigns together and beef up the ones that haven’t been that beefy,” she said. “We all love the host-read ads and custom branded stuff, but what about the more efficient stuff? How can we do them together and preserve the magic that we know makes podcasting so effective but still feed hungry mouths with the efficiencies that we can now roll out because of some of the technology.”
Lopez said host-read ads and dynamically inserted ads should not be thought of as mutually exclusive. “All those who suppose that we have to move to pre-produced, radio-style ads – that’s not true at all,” he said.
Thinking of dynamically inserted ads as a radio-style spot is a “failure of imagination” according to Edison Research Senior VP Tom Webster, who told podcasters they should learn from Facebook’s experience. Five years ago, he said, the social network had “terrible” ads but today it serves relevant ads that actually appeal to users. Webster said it’s important for brand advertisers to realize that if they just put the exact same ad that they put on the radio into a podcast, it won’t work any better based on a few hundred brand lift studies done by Edison. “There’s no particular halo given to a bad ad just because it’s on a podcast,” he said.
Van Mosel said an influx of new brand advertisers is driving the industry to embrace new ad tech as major marketers bring expectations of measurement and attribution with them along with their ad dollars. “The key thing is we don’t want to evolve so fast that we break what’s working,” she said.
The Interactive Advertising Bureau predicts podcast ad revenue will grow 14.7% this year despite the impact of the COVID-19 and the industry is on track to cross a billion dollars of revenue in 2021. But the pandemic is nevertheless leading companies to rethink how they greenlight projects.
“Podcasting is the most intimate form of media, and over the last seven months of our global nightmare that’s given us a lot of time to think through the shows that we are putting out,” said Three Uncanny Four COO Laura Mayer. “I’ve been more drawn to how a show can make a potential audience feel – what is that habit-forming factor – as opposed to what is the topic.”
Mayer said podcast companies today have longer lead times from development to launch in order to conceive a marketing plan to promote a show with three to six month timetables to help bring an audience.
Lopez said Wondery relies on a mix of paid ads on other podcasts and promo exchanges with other companies. “Podcast ads on podcasts are still the most effective tool,” he said.