‘There is no defined playbook that I could point to that says, ‘these are the exact ingredients to have success in podcast advertising.’”
Advertisers were all ears during the Interactive Advertising Bureau’s podcast upfront earlier this week and for good reason — ad revenue for the medium grew 19 percent to $848 million last year, the IAB said in a report released Wednesday. And this year, revenues are estimated to exceed $1 billion in the U.S., or a whopping 60 percent increase from 2020, the trade body says.
Despite the double-digit growth, advertisers likely won’t be surprised by the IAB’s figures, given the surge in podcast popularity: Roughly 80 million people in the U.S. tune into a podcast each week, or about 28 percent of the country’s population, and some 176 million engage with digital audio weekly, according to the widely-cited Edison Research.
But while the future looks promising, advertising on podcasts is not without its challenges. The IAB’s report highlights that only 2.2 percent of podcast ads were purchased programmatically in 2020, which was flat year-over-year. The figure is widely expected to grow, though three things must first happen for that to occur, says Lizzie Widhelm, senior VP of ad innovation and B2B marketing at Sirius’ newly-formed ad unit, SXM Media.
The industry is currently testing and learning, says Widhelm. “That’s where we’re at,” she says. “There is no defined playbook that I could point to that says, ‘these are the exact ingredients to have success in podcast advertising.’”
Widhelm, who recently celebrated her 15th anniversary with Pandora (Sirius acquired Pandora in 2019), shares three things that must change if programmatic podcast advertising is to take off.
Standards in measurement
First, from a planning standpoint, Widhelm says the industry must first overcome its measurement hurdles. Marketers who want to reach “moms,” for instance, can’t do so easily. “I hear stories of agencies hiring people to track and listen to shows to try and understand who the audience is so they can add them to an Excel spreadsheet,” says Widhelm. “Obviously, that can’t scale.”
Widhelm emphasized that it’s also critical to understand what was discussed in a certain episode. “Those are the challenges we’re trying to solve before marketers can see that billion dollars come to bear,” she says.
Buyers also want to know the effectiveness of their ad spend. Host-read or announcer-read podcast ads are almost always priced at a premium. And most marketers want to know how those investments stack up with ad buys made in channels such as display or video.
“If you’re looking at a bunch of different programmatic transactions, you want to establish norms so that someone on the buy-side can look and say, ‘Okay, this campaign is doing better or worse than this other campaign,’” says Widhelm. “It’s really understanding the norms for what a great campaign looks like and how any given campaign stacks up against other audio transactions for that same advertiser.”
Growing primacy of announcer-read ads
For many advertisers, conventional wisdom holds that host-read ads are the most powerful. Host imply credibility, right? Especially if you’re targeting a specific podcast because of its hosts. However, an alternative perspective is emerging.
Announcer-read ads “must become a common currency,” says Widhelm. Announcer-read ads are those where the brand hires a voice talent who is not part of the fabric of the show.
Announcer-read ads allow buyers to dynamically insert their creative programmatically, allowing them to reach the right audience through automation — something a host-read ad obviously cannot achieve. SXM Media is seeing success with announcer-read ads through its platform. Shows such as “Mommy Doomsday,” for instance, feature ads that are all announcer read and dynamically inserted, says Widhelm. The program is currently among the most downloaded shows on Apple’s podcast charts.
Lastly, advertisers want critical information such as the genre of the show, as well as the topic, when transacting programmatically. And that’s already starting to happen. SXM Media is working with The Trade Desk and its other partners to solve these issues to determine what information needs to be exposed to the buyer in the bidstream, according to Widhelm. “It’s like any other way you transact audio programmatically,” she says.