The Future of Podcast Advertising

Have you considered podcast advertising as a medium for marketing your business?

Podcasting has become huge over the last decade or so, with many popular podcasts attracting thousands of listeners. Here are some key statistics that show the reach of podcasts:

• 50% of all US homes are podcast fans
• 55% of the US population has listened to a podcast
• 45% of US podcast listeners have household income of over $75k

As you can tell, getting an advertising spot on a podcast could be a great opportunity to reach your target customers. There are podcasts on almost every topic, and your own customers are bound to be listening.

One of the key questions every business has before undertaking any new marketing venture is, how effective is this likely to be? Some new developments in the world of podcast advertising are set to make it an even more beneficial medium for business ads. Here’s how podcast advertising is shaping up…

Podcast advertising: The “traditional” way

First, how does the “traditional” way of podcasting advertising work? This is still used by many platforms, so it’s worth understanding.

One of the big advantages of advertising on podcasts is that “ad avoidance” – where consumers find ways to avoid consuming ads – is much less of an issue. In fact, people have reported that they find podcast advertising less annoying than on other channels and that they see the connection between sponsors and getting the content that they enjoy. (Besides that, they can’t use the ad blocking software that people often put in place to avoid display ads!).

Podcasts typically have three main slots for advertising: pre-roll, mid-roll and post-roll. The mid-roll slot is generally the longest, averaging 60 to 90 seconds in the middle of podcast content. Sometimes ads are read by podcast hosts, or other times they are pre-recorded, a lot like what you might hear on your local radio station.

There have been limitations associated with the traditional delivery of podcast advertising:

1. Advertisers can’t say for sure who the audience is that they’re reaching. Podcasts have often been downloaded via RSS feeds and the only way to build up some sense of who you are reaching is to analyze actions taken (such as by offering a unique coupon code for an offer).
2. It’s difficult to uncover true ROI because accurate measurement of ad data isn’t available. Advertisers often resort to promo codes, surveys and unique URLs, but you wouldn’t necessarily know if someone heard your ad, then Googled your company a few days later.

In fact, the way podcast advertisers traditionally measure their impact and reach is a lot like how magazine advertisers do it. They have a reasonable idea of who the audience is for the podcast and they use measures like total number of downloads. As you can tell, this leaves a lot of gaps. Who specifically took action? What did they do? How many people who downloaded actually listened to the podcast? 

In short, traditional methods of podcast advertising, while they can still be effective, leave you in the dark as to how effective. It might not matter to your company as long as you’re seeing some results, but in some organizations, marketing must be able to show specifics for any initiatives they take. The more clear data they can gather to prove effectiveness, the better.

This is where the “future” of podcast advertising comes in…

Streaming podcasts lead to clearer ad data

I mentioned that traditionally, podcasts have been downloaded via RSS feeds, but there is another way. More and more host platforms are allowing streaming of podcasts, meaning that the audience can choose to listen directly from their site, without downloading any files. It’s advantageous to the listener because podcast files are usually quite big, while streaming also offers advantages to advertisers – like the fact that you can get access to better data on audience interaction and behavior.

To date, most podcast hosting platforms haven’t really shifted how they operate in terms of advertising. In fact, many podcast hosts still record those ads, or insert them into their podcast at editing, before uploading on their host platform. This means that you’d still be left to look at total number of downloads to draw any assumptions about the effectiveness of your ads.

However, there is a shift in the air and Spotify is leading the charge. As a hugely popular streaming platform (at the end of 2020, they had 144 million premium subscribers and an even larger number of “freemium” users), Spotify is well-placed to shake up podcast advertising and bring it into the future. 

Last year they announced their proprietary SAI (Streaming Ad Insertion) technology, which makes key ad data such as impressions, frequency, reach, device type and some demographic information available. This is the first time that podcasters and their advertisers have had access to this information.

In short, it’s a game changer for podcast advertising, allowing advertisers to gain true, actionable insights. Among the areas Spotify is wanting to deliver upon are:

• Providing data-driven insights and recommendations so that advertisers can reach the right audience. (Remember, Spotify listeners are logged in so that means Spotify already knows a lot about who they are).
• Real measuring of ad impressions as they occur – no more guessing based off of downloads.
• Demonstrating ROI for advertisers. You should know who heard your ad and insights such as how people perceive your brand.

Spotify is offering this service on their own original and exclusive shows as they control the content and backend, making it easier to implement the technology. Puma is one major brand that was an early adopter, appearing in host-read ads on the Spotify Original Podcast, “Jemele Hill is Unbothered.” Spotify reported that the ads resulted in ad recall lift of over 180%. They currently have a beta waitlist here for advertisers who would like to get involved.

The future of podcast advertising

While Spotify’s current SAI offering is limited to their own content, they anticipate expanding to include third-party podcasts in the future. For advertisers, this represents incredible opportunities for reach and for getting a good understanding of how effective their podcast ads are. 

(Note: Spotify has also announced an upcoming Spotify Audience Network, which they position as a game-changer for podcasters looking to make money from ads, as well as for advertisers wanting to take advantage of the massive reach of Spotify. The details on this are still light.)

One thing we know – wherever there is innovation, someone else is sure to follow in a similar fashion. Spotify’s new way of producing more effective podcast advertising is setting a standard for other platforms to emulate. I’d anticipate that we’ll see more offering this granular advertising data, particularly among the bigger platforms – Apple, iHeartRadio, Amazon and Liberty Media (owners of Sirius XM and Pandora).

This more Facebook-like targeting of advertising is a popular demand among marketers. We increasingly need to show straight lines between marketing initiatives and results, and the more data we can get, the better. The future of podcast advertising is likely to be more data-centric and targeted.

Final thoughts

I’m excited to see developments happening in the podcast space and would encourage businesses to look into podcast advertising if you haven’t already. Even without the innovations from Spotify, there is clear data to support that you can reach a large audience, and, if you choose the right podcast, you can find a cross-section of your own target audience.

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