The Radio Comeback: Can Podcasts Bring Advertisers Back to the Airwaves?

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Advertising has undergone monumental shifts over the past century, moving from print, to radio, to billboards, to TV, to online/social media, to online streaming, and even to VR online experiences. Today, while billboards, subway ads, television commercials, and radio ads all still exist, the vast majority of advertising is done online, through Facebook, Twitter, and Google. Indeed, according to a NewtonX analysis of global ad spend by channel, online digital channels will account for 46% of total ad spend globally by the end of 2018, and will surpass 50% by the conclusion of 2019. Flying in the face of this trend, however, is one significant outlier: podcasts.

Over the past four years (ever since Apple added a podcasts app to its iPhones in 2014), podcasts have had a meteoric rise: “The Daily,” from The New York Times is only two years old and already has over 5M unique listeners per month — an audience that has prompted brands including Chanel, HBO, Facebook, and BMW to advertise on it. 2.2 million people every week tune into NPR’s “This American Life,” arguably one of the first podcasts ever. 44% of Americans — 124M people — listen to or have listened to a podcast, up 12M from the previous year. There are over 500,000 active podcasts that range from the very niche to the all-encompassing.

This popularity has not gone unnoticed by advertisers.

Seamless Advertising to Highly Engaged Audiences: Why Ad Revenue for Podcasts is Set to Double By 2020

By 2020, ad spend on podcasts is expected to go from $314M in 2017 to $663M in 2020. While this is a small percentage of overall U.S. ad spend, and is significantly lower than overall offline ad spend (TV, radio, billboards), it’s a medium that is growing rapidly, and attracting attention from global brands.

One of the primary reasons that podcasts offer a unique outlet for advertisers is that the ad can be “baked in,” meaning the podcast host can deliver the advertisement themselves. This is in stark contrast to most radio and television ads, where the advertisement is wholly separate from the content of the show. For instance, Squarespace, which was one of the earliest major adopters of podcast advertising in 2009, allows podcasters to script their Squarespace advertising in order to make the ad feel like an extension of the podcast.

Additionally, podcasts are delivered to a highly engaged audience, unlike, say, promoted posts on social media or ads on the sides of online publications. Most podcast subscribers don’t bother skipping an ad when it’s delivered by the host and lasts no more than 20 seconds. They will, however, bother to install ad blocker or skip past a commercial on a streaming site.

As more and more Americans come to depend on podcasts for entertainment during their daily commutes, while they cook, or even while they work, ad spend will continue to grow at astronomical rates.

Branded Podcasts: How Some Brands Claimed Podcasting For Their Own

Some brands have launched their own podcasts. Trader Joe’s, for instance, launched “Inside Trader Joe’s”, a podcast that follows crew members on wine tastings, tasting panels, and interviews with the founder of Trader Joe’s. Direct Line, a British insurer, launched a podcast called “Good Carma,” which features comedian Richard Herring talking with the host of the podcast about his driving experiences. The company reported that early results show that website click-throughs from “Good Carma” are more than 9x what the company expected.

Podcasts are also becoming almost as ubiquitous as blogs in Silicon Valley. Slack, for instance, discontinued its “Slack Variety Pack”, which covered “work, life, and everything in between” for a year, and then replaced it with its current podcast, “Work in Progress,” which claims to be a podcast about the meaning and identity we find in work. Shopify’s “TGIM” podcast has been going strong since 2016.

Just as branded blogs followed the rise in popularity of online media consumption, branded podcasts are becoming increasingly common. While most probably have fairly lower listenership, those that manage to truly create interesting content without sounding like an advertisement may reap the benefits of the podcast medium.

Back to Basics: Will Podcasting Bring Advertising Back To Its Roots?

While podcast advertising is targeted in the sense that, for instance, TV targeting was (i.e. certain demographics tend to be interested in certain shows), it’s incredibly broad by the standards of online advertising, where highly precise, targeted groups receive different advertisements when viewing the same page. It’s also difficult to track conversion rates from podcasts without using a discount code. Online advertising is appealing because you can see ROI in absolute terms, rather than depending on vague metrics such as brand awareness. It’s more difficult to track conversion on traditional mediums including radio, television, and billboards. That said, NPR recently released an open-source listener analytics platform that offers remote audio data on when listeners are tuning in. Since it’s anonymized, though, it cannot be used for retargeting.

Despite these drawbacks, podcasts have one distinct advantage: highly engaged audiences that are unlikely to tune out during advertisements. This alone is enough to garner serious advertising spend, and it’s no wonder that in a world where attention is increasingly divided, advertisers see the benefit in a medium that is wholly engaging.



About Author

Germain Chastel is the CEO and Founder of NewtonX.

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