The Battle In Podcast Advertising: Is There Room For Big And Small?

 In a recent article in The Verge, writer Ashley Carman focuses on the recent emergence of large brands in the podcast advertising space, which has made life more complicated for the smaller direct response advertisers who were the early pioneers in the industry.

This important discussion about the future of podcasting isn't exactly an MMA cage match, but it does point out a schism among podcast acolytes. Those concerned that as podcasting grows, consolidates and matures, it will lose its special affinity with independent podcasters and small advertisers. 

A quick reminder that it was these independent, "basement" podcasters and small advertisers who took a chance on a nascent media format during the formative years of podcasting beginning about 2005. 

 As the podcast industry has grown and independents have been gobbled up by large companies (Yes, you, Spotify, SiriusXM, and Amazon, among others), advertising has been "professionalized," with the result that long-time smaller advertisers have been shuffled to the sidelines as these large companies now go fishing for "advertising whales."

 In this corner is Ashley Carman, a writer for The Verge. On December 14, Carman published a well-researched and tightly reasoned article called, "Say Goodbye To Your Podcast Promo Codes." 

Carman is also the editor of Hot Pod, a newsletter from The Verge, that delivers news, analysis, and opinions on the audio industry.

In the other corner is Dave Hanley, Chief Revenue Officer of Libsyn’s AdvertiseCast. Libsyn is the largest podcast hosting service and purchased AdvertiseCast in June 2021.

Hanley published a nicely calibrated December 20th article in Podcast Marketplace. 

 Carman begins her article with:

"McNeil is one of many direct response advertisers who’ve found a home in podcasting. You’re likely familiar with the others: Mailchimp, Casper, Manscaped, Tommy John, and any other that relies on promo codes. They’re synonymous with the industry. But in a year filled with indie shows going to big networks in eye-popping, multimillion-dollar deals, as well as a broader push from tech companies to make money off the space, these direct response advertisers say they’re getting priced or pushed out while the aspects they’ve come to know and love about the industry are disappearing."

Hanley counters with a recognition of the frustration felt by smaller advertisers and podcasters:

" ...the progression from direct response towards brand campaigns is a positive signal that the medium is moving towards maturity. On the other hand, many who supported the podcast advertising industry early on in its awkward years are feeling pushed aside"

 Then Carman summarizes key consolidation moves in the industry with a flashlight on Spotify and Amazon. To Carman's credit, she does not exempt her employer, Vox Media, from the "Pac-Man" gobbling up of smaller podcasts and studios. 

Here is just one example from Carman:

"One ad buyer, who also requested anonymity to speak freely about rates, says Spotify upped prices for its acquired and licensed shows. CPMs, or the cost per thousand listeners, on those programs are up three times as much, they say. A host-read ad that lived forever on Joe Rogan’s show used to cost tens of thousands of dollars previous to him going exclusive to Spotify. Next year, to get any ads on Rogan, the minimum spend is $1 million."

Hanley's response is:

 "What many new to the industry don't realize is that even though the lion's share of podcast advertising revenue goes to the top 2,000 (ish) podcasts, the ecosystem is much more vast. In fact, more than two thirds of podcast downloads can be attributed to shows outside the top 2,000. Much of this content is not only untapped by advertisers, but those brands who do decide to partner with small and mid-sized podcasts often receive greater value, a larger share of voice and have the opportunity to engage directly with the creators to help craft a powerful message for the audience."

 Carman counters with a description of the evolving landscape in which "Big Podcast" becomes an actual entity.

"This leads to a world in which direct response advertisers not only lose access to the programming or treatment they once enjoyed but have to contend with bigger brands dominating the space because they can afford the more expensive ads. Magellan AI tracks the brands spending the most on podcast ads per month, and the top 10 list from October includes, yes, some brands one might expect, like HelloFresh and ZipRecruiter, but also Fortune 500 companies, like Capital One and Amazon.

"These brand advertisers also often care more about putting their name into the world rather than literally selling a product, which changes the stakes of the marketing game. No more promo codes necessary."

Hanley responds with:

"My personal opinion on optimizing results in a direct response podcast campaign has always been that I would rather spend across 10 podcasts doing 10,000 downloads per episode than one show doing 100,000. Not only is there a portfolio diversification concept in play with this strategy, we have typically found some of the most engaged podcast listening audiences in these smaller tiers of shows. Of course, employing this strategy is not without challenges. 

"In an environment where those placing campaigns are very often compensated based on a percentage of media spend as opposed to effort exerted, the business case is difficult to make" 

Carman offers numerous and compelling examples of direct response advertisers like a smoking cessation company or mattress sellers then wraps up with:

"Multiple people I spoke with suggest the industry is merely stratifying — the top shows are going exclusive in million-plus-dollar deals, cutting off access to the protein shake makers of the world while smaller, newer podcasters stream in, hoping for the protein shake makers to buy an ad. The direct response advertisers, they say, should look in new places and for new talent.

The question is whether the advertisers who helped build the space are willing and able to find a place on these newer shows, or if the podcasting industry’s onward march means leaving the mattress sellers behind."

Hanley clearly sees podcast growth differently, as evidenced by his observations:

 "Our recent acquisition of PODGO, a marketplace that facilitates advertising on emerging podcasts below the typical 5,000 or 10,000 minimum audience thresholds, further demonstrates the power of deploying the right technology in this ecosystem. The micro-influencer craze, which has taken off in other digital media channels, is a massive opportunity for enterprising brands in the podcast space who are willing to tread further off the beaten path to forge partnerships with podcast creators.. 

"Getting in early to build creator relationships can lead to long-term, mutually beneficial partnerships. As podcasts scale, creators very often have a huge sense of loyalty towards the brands who worked with them early on to support the show."

 So did someone win this battle of podcast business philosophies? If so, what was the knockout blow?

First, consider that as podcasts have received more downloads and "listens," it was inevitable that larger media companies would be attracted to the format. If any podcast attracts several million listeners to an episode, there are a hoard of advertisers climbing over one another to sell something to that large audience.  

In addition, podcasting offers advertisers two advantages over television -- niche audiences primed for their product or service, and robust methods for tracking audience size and behavior.

The more pertinent question is: Will these large companies damage podcasting in their quest to squeeze out more advertising and subscription dollars? 

A case can be made that the growth of podcast subscription services has already damaged the refreshing openness of podcasting. The "free" podcast slowly disappears as paywalls are erected.

Moreover, these "corporately-managed" podcasts now continue to increase the number and length of ads on select podcasts. In fact, podcast subscription services use the increasing ad time as a selling tool for subscriptions, as they happily inform you that a paid subscription means "ad-free."

Consider how broadcast and cable TV networks killed the advertising golden goose by flooding viewers with so many commercials on their programs that viewers fled in droves to ad-free streaming services like Netflix, Amazon Prime, and the growing number of free streaming services. 

Should Ashley Carman be concerned about the future of podcasting and its advertising model? 

Absolutely. Sure, there are plenty of new podcasts birthed every day from independent, bootstrapped podcasters. And Mr. Hanley is correct that there seems to be advertising dollars available to them.

But how about a future where Apple, Amazon, SiriusXM, Cumulus Media, Spotify and the other giants release so many podcasts in every genre that listeners no longer find it necessary to search for new podcasts.

What happens when these "Giants" release 275 music podcasts, 602, health podcasts, 342 tech podcasts, 376 comedy podcasts, and so many movie review podcasts that there will be a shortage of movies to actually review?

Will new podcasters be reduced to such tiny niches such as  Lithuanian folk song podcasts and ear hair hygiene tip podcasts? Not there's anything wrong with such topics! Will Spotify saturate every possible niche in the podcasting space? 

If Mr. Hanley is indeed correct, however, and companies like his can connect independent podcasters with advertisers, then there are viable options for people who podcast in their spare time. After all, in the early days of podcasting, finding an advertiser that knew what a podcast was and then wanted to spend ad dollars on it was as challenging as locating a mermaid or unicorn.

It seems apparent -- to me, at least -- that Ashley Carman and Dave Hanley make strong points about the possible future of podcasting. Obviously, they envision different paths for podcasting. It's entirely possible that both may have legitimate points with wildly disparate forecasts for the future.

To be fair and ref this cage match properly, it's only right to provide each combatant with a "last word."

 Dave Hanley:

 "There is still plenty of magic to go around...you just need to know where to look for it."

 Ashley Carman:

"Although the changes are often positioned as good for podcasters and the industry itself — more people are making money and attracting advertiser interest — this also comes with a compromise, the loss of the tight relationships between direct response brands and podcasters. The thing that helped make podcasting what it is today."

 You be the judge.