Unlocking Podcasting's Revenue Potential
This item originally appeared in NetNewsCheck 8/26/16. Thanks to Mary Collins for the coverage and continued interest in on-demand audio.
Podcast audiences are only growing – up to 35 million each week – and Mary M. Collins writes that’s one of many compelling reasons for publishers to begin experimenting with them if they haven’t already. The revenue promise is exciting: top podcasts are pulling $40 CPMs, while 65% of listeners say that podcast ads increase their purchase intent.
Mary M. Collins - NetNewsCheck
Podcast audiences are only growing – up to 35 million each week – and Mary M. Collins writes that’s one of many compelling reasons for publishers to begin experimenting with them if they haven’t already. The revenue promise is exciting: top podcasts are pulling $40 CPMs, while 65% of listeners say that podcast ads increase their purchase intent.
When I got off a plane the other day, I happened to overhear a young man greeting a colleague who’d been seated a few rows behind him. He caught my attention when he said, “Did you like the podcast?”
It was real world verification of what I’ve been reading – people are listening to podcasts. And those people include millennials – that group that advertisers are desperate to reach. Moreover, listeners are engaged. They are talking about the content.
A growing number of publishers, large and small, have become enthusiastic about podcasting. Some are even seeing it as ushering in a new golden age for the audio format.
If you find it hard to believe that there is a future in audio, Steven Goldstein will be among the first to remind you that it’s death has been greatly exaggerated since Thomas Edison observed “the radio craze will die out in time” back in 1922.
Goldstein is CEO of Amplifi Media, a firm that advises companies and podcasters with a focus on strategy and content development. In an article he wrote for MFM’s The Financial Manager (TFM) magazine, he outlined some of the reasons publishers including E.W. Scripps, The Washington Post, Hubbard Broadcasting and Amazon have all made major investments in the podcast space. He also shared the latest data with radio broadcasters at last month’s NAB Radio Show, encouraging descendants of audio’s first golden age to join the podcast rush.
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While it’s been around for 10 years, podcasting was largely niche for most of that time. It is hardly niche anymore. Today, 57 million people listen to podcasts each month, with as many as 35 million listening each week. That’s a 24% increase over last year according to Edison Research.
The catalysts for much of the format’s recent growth, in Goldstein’s opinion, come from both the content and technical fronts. On the content side, he points to the success of the Serial podcast from the makers of This American Life radio program, which focuses on unsolved crimes, and the popular WTF With Marc Maron, which reaches nearly 3 million people.
Technology Drivers
In speaking about technical factors influencing podcasting’s growing popularity, Goldstein points to smartphones, where one in every five audio minutes originates, according to an Edison Research “Share of Ear” report. He also expects artificial intelligence (AI) features like Apple’s Siri and Amazon’s Echo “will increasingly make the audio dial infinite and flat, enabling easier search.” YouTube and Netflix are also poised to “disrupt the audio sector with podcasts.”
In addressing the radio station’s need to get involved, Goldstein says more than 100 car models already include Apple’s new auto integration service CarPlay, which populates the car audio dashboard screen with personalized smartphone content. In addition, Google is rolling out Android Auto, which simplifies connectivity to smartphones.
Although in-car listening would seem to be the best place for a podcast audience, Edison Research reports that nearly two-thirds (64%) of podcast listening is done in the home. Another 12% occurs in the workplace, 12% in cars and the remaining 9% happens elsewhere.
Audience Delivery
Similar to the history of radio, these numbers show podcasting has the ability to deliver the audiences advertisers want to reach. About half of the top 25 most popular titles on Apple’s charts originate from National Public Radio (NPR) and other public outlets. “NPR has around 7.2 million monthly downloads in the U.S. alone,” Goldstein said, citing data compiled by Podtrac, a podcast measurement and advertising services company.
On the demographic front, NPR has found podcasts can compliment radio’s over-the-air audience, which is largely over 50 years of age. Podcast listeners’ median age is 30. Overall, the 18-44 demographic accounts for almost half of all podcast users. Goldstein observes, “With the newfound popularity of podcasts, public radio outlets are aggressively pursuing advertisers and listeners with a trifecta of youth, a highly educated audience and content not overrun with commercials.”
Commercials delivered live by show hosts have been very popular with advertisers. According to Goldstein, these ads have helped drive cost per thousand (CPM) rates of $40 for top podcasts, which is higher than most rates for commercial radio. In addition, a recent poll by the Interactive Advertising Bureau and Edison Research found 65% of listeners said podcast ads increase their purchase intent, with 45% saying they're likely to visit an advertiser's website after hearing an audio promo. Additionally, Adweek reported that more than one-third (42%) said they would consider a new product or service after hearing a plug for a brand, while 37% use podcast ads to help research brands.
Differentiated Content
Similar to what we’ve observed in the video world, differentiated content is critical for attracting listeners. “As podcasts become more widespread, brands are looking to distinguish themselves with distinctive audio experiences,” Goldstein points out. Examples include ESPN, which has 28 unique podcast titles, as well as podcasts from news sources like Rolling Stone, The Wall Street Journal, CNN and Runner’s World, which speak directly to niche constituencies.
You don’t need to be a big name company to participate in the audio’s second golden age. As Goldstein observes, “Many small businesses have created podcasts for lead generation, and hobbyists have created podcasts focused on everything from movies to gardening.”
In another article in the same issue of TFM, this one about strategies to drive growth, A.T. Kearney’s Greg Portell recommends that companies explore new lines of business adjacent to their established products or services. Media companies are in the content business. It may be a while before we know for certain if podcasting will usher in a second Golden Age for audio. Regardless, there are a sufficient number of market indicators to suggest podcasting done right can reap valuable rewards for a relatively modest investment. That’s a message worth hearing.
Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at mary.collins@mediafinance.org and via the association’s LinkedIn, Twitter, or Facebook sites.
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Steven Goldstein is CEO of Amplifi Media, LLC, an advisor in strategy and content development for companies and podcasters. Steve can be reached directly at (203) 221-1400 or sjgoldstein@amplifimedia.com.