About four minutes into a recent episode of Marc Maron’s hit podcast “WTF,” the host began musing about a new sponsor, home alarm system provider SimpliSafe.
Maron told listeners that he had a SimpliSafe system delivered to his home recently, though it was still in the cardboard box, “which I’m realizing now is not the best use of a home security system ... I should probably get on that,” he said. Maron then relayed a story about a friend who had a security system stolen from his house. (“That hurts twice, people!”)
Soon, Maron’s riff segued into more of a standard pitch: “I’ve wanted to change my home security system for a while. It’s hard to be happy with it. There are high monthly fees and long-term contracts, but SimpliSafe is different…”
For fans, the live read is arguably an integral part of the “WTF” experience. You never know what tangent Maron is going to follow, and if you skip ahead there’s a good chance you’ll have no idea what he’s talking about.
In other words, people will actually pay attention to the security system ad. Proponents of podcasting say that’s why this medium is different. They also argue that podcasting is poised to become a more intimate form of radio that makes up for the lack of scale with better metrics and unskippable advertising.
“If you listen to radio or Pandora or anything else, the ads are really an interruption,” said Lex Friedman, EVP of sales and development for podcast advertising network Midroll, which represents “WTF” as well as some 200 other podcasts, including “Comedy Bang Bang” and Dan Savage’s “Savage Lovecast.” “When the host reads, it’s far less jarring and invasive, and the host is able to leverage the reputation and trust that they’ve created with the listener.”
No one disputes that podcasting is growing. Edison Research recently estimated that some 46 million Americans–17% of the population–listen to at least one podcast a month. In 2008, the figure was 9%. Tom Webster, VP of strategy and marketing at Edison, told CMO.com that podcasting is now a $50 million to $100 million business.
“This is where audio is heading, just like with video–media that’s on-demand,” added Patty Newmark, president and CEO of Newmark Advertising, which sells ads on podcasts and on radio. “When people are relaxed, they tend to opt in more to marketing messages. With more content coming in and the scope of podcasting becoming more mature, it’s a perfect time for people looking for ways to market their product to get involved.”
For comparison’s sake, radio advertising is a $47 billion market, according to PricewaterhouseCoopers. Yet many think podcasting has potential. Bluetooth and Internet connections are now standard in most new cars, and smartphone penetration is over 50% in the U.S.
Some also point to the success of “Serial,” a 2014 podcast spinoff from “This American Life” investigating the 1999 murder of Hae Min Lee, as a watershed moment for the medium. “Serial” became a crossover hit with more than 72 million downloads. A second season of Serial is scheduled for this fall.
“Really for the past year we’ve seen a steady, accelerated growth of interest on the listener side and correspondingly on the advertiser side,” Midroll’s Friedman told CMO.com. “It certainly helped that on iOS8 Apple put the Podcasts app as a default app.”
Those factors, among others, prompted online publication Slate to launch Panoply, a podcasting network of some 18 shows in February. The lineup includes hit podcasts such as “Political Gabfest” and “Culture Gabfest,” as well as titles developed elsewhere, including “The Ethicists” from The New York Times and “FutureCast” from Popular Science.
“We believe higher-quality podcasts attract a more affluent, more educated audience,” said Matt Turck, chief revenue officer at Panoply. “As this market continues to expand, quality is going to be critical.”
New advertisers, including HBO, Volvo, and Acura, are bringing branding ads to augment longtime direct-response podcast advertisers, such as Squarespace, LegalZoom, and Audible, Turck told CMO.com.
That’s the hope, anyway. According to an analysis by FiveThirtyEight, such direct response advertisers still very much dominate podcasting. The site analyzed the top 100 podcast on iTunes in February and found 87% “were for products or services that acquire customers online.” Live reads were also the norm; of 186 ads FiveThirtyEight analyzed, only one had voiceover and music like a radio ad.
Direct-response advertisers have stuck around for good reason, Turkck said: The medium works. Most are able to prove ROI by directing listeners to a dedicated site, such as simplisafewtf.com, that demonstrates how many people have responded to the ads.
Critics, however, say podcasting is small potatoes in the media landscape and that no matter the spin, people don’t like listening to ads.
“I think that there’s a very delicate relationship when it comes to people and their content, and podcasting is still a new medium,” said Alex Amado, senior director, creative and media at Adobe, which recently created podcasts based on its whitepapers featuring actor Malcolm McDowell. “Especially when people are connecting through their mobile devices, it’s really important not to be intrusive. That old mechanism of interruption advertising somehow feels more aggressive when it’s right on your device in your hand or right on your headphones.” (Note: Adobe is CMO.com’s parent company.)
Brand-created podcasts make more sense than brand advertising on podcasts, Amado also told CMO.com.
To be sure, podcasting doesn’t have nearly the scale of radio. iHeartMedia, the biggest player in radio, said it reaches 110 million listeners every week and 245 million every month. In contrast, at the time of its launch, Panoply reported 6.5 million monthly downloads. Its top show, “Political Gabfest,” gets around 150,000 downloads per episode, and with rates that top out at $80 CPM (cost per thousand listeners), the most an advertiser could possibly pay for advertising on a Panoply podcast is $12,000.
Still, compared to radio’s $10 CPMs, podcast rates are generally higher, which is a reflection of the medium’s efficacy. The top advertisers on radio–Home Depot, T-Mobile, Geico, Comcast, and AT&T–likely prefer scale, which is why podcast’s top advertisers are companies with much smaller ad budgets, such as Squarespace, Stamps.com, Audible, MailChimp, and Dollar Shave Club.
Despite the fact that there are more and more options to radio–including streaming services like Spotify and Pandora, satellite, and podcasting–radio advertising is still growing, albeit anemically. PwC predicts global radio advertising revenues will expand around 3% from 2015 to 2016, though there will be a fall-off in growth in 2018.
Indeed, people are still listening to radio a lot, Newmark said. “What I’m seeing is that all of this is additive,” she told CMO.com. “People still have their habits of getting into the car and turning on the radio, then maybe at work they’re going to turn on a desktop or mobile curated list from Pandora or Spotify, and then on weekends they’ll listen to a podcast.”
Newmark said she is also seeing more advertisers consider podcasting for branding messaging. “That’s typically the way most mediums work,” she said. “Direct response advertisers come in first, and once they’ve proven that there’s a response, the bigger agencies and the bigger brands come in.”
One such brand is Scion, a unit of Toyota, which has been advertising on “This American Life” and “Planet Money.” Pamela Park, advertising and media manager at Scion, told CMO.com that the medium of podcasting is an effective way to reach the auto brand’s Millennial target.
Post-“Serial,” the audience for podcasts may be younger than the somewhat fogey-ish image of podcasting in general. In fact, like Snapchat, podcasts are hitting an 18-to-24 demo, albeit with a diametrically opposite approach, Park said. “It’s really about the content and connecting with the audience we’re trying to reach,” she said. “It’s appropriate for us because our audience is there.”