Three New Rules For The Next Phase Of Podcast Advertising

Jonathan Gill is the founder and CEO of Backtracks and serves on its board of directors.

The podcasting market is maturing, and the “norm” for running successful advertising campaigns will need to evolve as the audience grows and more brands increase their budgets. As a result, traditional methods of targeting, attribution — the process of determining sources and channels of data and revenue — and even creative must change in order to address scale and keep pace with the medium’s growth.

Setting The Context

Podcast advertising has been largely driven by two types of brands, collectively making up the medium’s first generation of advertisers.

The first group consists of challenger brands — think Blue Apron, Harry’s and MeUndies. These companies tend to be startups that are disrupting their industry. They often take a direct-to-consumer approach, while foundational brands in their industry have relied on retailers or channel partners. When starting out, they don’t have the marketing budgets of larger companies in their competitive sets and often rely heavily on podcasting as their main advertising channel.

This works because these brands often have a niche consumer base that fits the most common demographics of podcast listeners. They could run campaigns on a few podcasts in the form of live reads with an attribution model based on promotional codes. This cuts production costs by the brands as publishers produce and record the ads as custom for each show, but it does not allow for scalability. 

The second group of advertisers includes legacy brands with not much to lose by experimenting with a new medium (e.g., Capital One and ZipRecruiter). They have significant media budgets and a strong presence in their industry and are always looking for new ways to reach audiences. These large brands are only dedicating a sliver of their overall media budget to podcasting and aren’t terribly concerned about ROI.

These campaigns include a mix of live reads and prerecorded audio ads. Attribution is less important because the ad spend is considered minimal.

This model worked for both types of brands for some time. However, as more listeners flocked to tune into their favorite podcasts, more brands became interested and willing to invest in the medium. But the existing models are not set up to scale; this will require the traditional podcast advertising models to evolve and adapt.

Podcast Advertising 2.0

As we enter the next phase of podcast advertising, three elements of the traditional model will need to change: attribution, targeting and creative.

First, podcasters must evolve their attribution models to go beyond promotional codes to track the effectiveness of a campaign. They need both better data and reporting/results in order to be taken seriously by brands and justify their ad spend. This phenomenon isn’t unique to podcasting; every new ad format goes through a similar cycle of adoption and the need to establish industry standards for measurement and effectiveness. This is a natural and necessary next step in the medium’s evolution.

Second, better attribution requires better data and targeting methods. Beyond just drilling down in the demographics for a specific show, while extremely useful, audio content creators must be able to reach the same level of audience granularity as other media, down to the individual level. Podcasting is in a good position to do this, with available analytics that don’t infringe on listener privacy.

And third, podcast ad creative must also evolve. Live reads likely won’t die but shouldn’t necessarily be the norm. The only way to scale is through prerecorded brand ads and formats that allow for consumer action to be clearly and accurately measured based on listenership.

To succeed in monetizing audio content at scale, podcast publishers must first address some of the growing pains that accompany the growth and evolution of any new media. What has worked in the past to bring podcasting to this point won’t necessarily work to propel it into the next stage, and methods for targeting and attribution must, in turn, become more sophisticated as the medium matures. 

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