Advertising On Podcasts
Podcasts have been around for a while but only recently have become popular as an advertising medium. Since I work in marketing, I am always curious about new advertising mediums. And, of course, I am curious about the new medium as well so I launched a podcast - Valley Nordic. The podcast covers business, technology, and culture from Silicon Valley and Nordic perspectives.
Advertising on podcasts works similar to advertising (ad) on streaming videos i.e there are three places you can advertise:
1. Pre-roll: ad is played before the podcast begins.
2. Mid-roll: ad is played with an interruption to the podcast.
3. Post-roll: ad is played at the end of the podcast.
All three have multiple slots in a podcast i.e. there could be more than one pre-roll, mid-roll, or post-roll ads. Also, an advertiser can "takeover" the podcast i.e. all three slot types belong to a particular advertiser for a specific period of time.
There are over 500,000 podcasts on Apple Podcasts. Last year, the podcast advertising market in the US was ~$500M and is expected to be $1B in 2021. The numbers vary depending on which report you look at but the basic idea that the podcast advertising market is noticeable and will continue to get bigger is correct.
I find podcasts to be a passive medium i.e. we listen to podcasts when we are doing something else i.e. cooking, driving, walking, etc. Many podcast hosts advertise in their own voices and explain that the ads are paying for the show to exist. Hence, the podcast ads are less annoying compared to traditional ads.
To experiment with podcast advertising, I ran an ad for my podcast (Valley Nordic) on Fareed Zakaria GPS podcast in all three places i.e. pre-roll, mid-roll, and post-roll.
Big companies pay over $20 CPM (cost per thousand impressions i.e. for $20 your ad is listened to 1,000 times) per ad slot for the Fareed Zakaria show. Mid-roll is generally the most expensive. I was able to bid $1 CPM and get my ad played on the show thousands of times in the geography I wanted to target.
For comparison, geographically targeted ads on Forbes.com have a CPM of $15. There are many other ads on the page and the consumers probably see the add for a fraction of a second. On the other hand, the podcast ads can be 30 seconds or longer and the consumer is not distracted by other ads while listening to your ad.
To find out why the rates are so low, I called the ad marketplace I used to run the ads. Mainly, the marketplace company has a lot of inventory so they sell it to whoever is willing to pay. However, they spin it as that they want to democratize advertising. When I asked why the big companies were paying over 20 times more than what I was paying, their implied response was that the media buying for big companies is done by media agencies who keep a percentage of the ad buy. Hence, their incentives are not aligned to pay the lowest rates.
When I buy ads on streaming video, I tend to prefer pre-roll because I want to avoid annoying consumers. On YouTube, you can skip the ad most of the times so it is not so annoying. I find mid-roll can be annoying depending on where it is cut. Generally, where the ad is played in the middle of the show, is not in your control. On video, post-roll is not that effective because people are watching actively and move on to the next thing before watching the ad. Coming back to ads on podcasts, I found post-roll to be the most effective. Since listening to the podcast is a passive activity, generally, people don't tend to skip the ad at the end like they do in streaming video. And, nobody is going to skip the podcast they are listening to so that they can listen to a new unknown podcast. Same thing applies to any other call to action (CTA). For example, if I hear an ad pre-roll or mid-roll for a deal on razors, I will not stop the podcast and go to a webpage or app to get that deal. The probability is higher for me to take that action if I hear the ad at the end of the podcast. I found that it takes three to six weeks for the ads to become effective on podcasts if you are advertising on a weekly show.
Measuring the performance of the podcast ad is tricky. Companies that do the ads for staying on top of mind (retention) or for creating awareness get more for their dollar than any other advertising medium. Companies that are advertising to sell a product will have to create a seperate url or promo code related to every podcast they advertise on. Or, they can add another step in the checkout process to ask the buyers how they learned about the product (not recommended). If you have historical data and you are advertising only on one podcast then you can see the uptake which comes from the podcast.
In summary, if you are a startup or a small business, advertising on podcasts is the best deal in town today.
