Podcasts have been around for over a decade, but it’s only within the last few years that the format has begun to capture the attention of the general public. Shows like Serial and This American Life have garnered over 50,000 reviews on Apple Podcasts. The Joe Rogan Experience has more than twice that amount — on just one streaming platform.
The industry’s surge in popularity hasn’t escaped the attention of advertisers looking to capitalize on the format’s momentum, either. Last year, domestic podcast ad revenue grew by 53% to an all-time high of $479 million and is expected to exceed $1 billion in 2021. Earlier this year, Spotify invested $400 million to acquire smaller podcast networks and tools to help bolster its position as a leading audio platform.
With the rapid influx of revenue and investment, brands are assessing the viability of podcast advertising as a vehicle for their messaging. Here are some crucial factors and pointers to get the most out of your podcast ad campaigns.
Benefits and drawbacks of podcast advertising
Benefits. “We got access to a whole new audience (podcast listeners) and were able to pitch our toolset to them,” explained Rebekah Bek, the marketing manager at Ahrefs who ran the company’s podcast ad trial. “Even if they didn’t instantly convert, we got our name out to thousands of listeners and it did stick.”
Podcasts reach 62 million Americans weekly, and 78% of listeners say they don’t mind ads because they get that it supports the content, making it a receptive channel for advertising campaigns.
Host-read ads have been the primary delivery vehicle for podcast ads, though increasingly, programmatic options have become more widely available. For host-read ads, the hosts play a pivotal role in the delivery and efficacy of your ads. Hosts can turn your product pitch into native advertising, which may decrease the odds of listeners skipping over it. Loyal listeners are also more likely to trust a host’s endorsement because it’s coming from someone they’re already familiar with.
“We get new customers telling us that they found out about us on X podcast all the time, or that they first heard Y host talking about one of our features and they ‘just had to!’ check us out after because they were such huge fans of him or her,” Bek said, also noting that, if your brand left an impression on them, the hosts themselves may also become fans and mention your offerings organically on episodes you don’t sponsor.
Host-read ads are baked directly into podcast episodes, meaning that listeners who dive into a podcast’s archive may hear your ad long after it originally aired. This may increase your brand’s exposure without increasing your ad spend. But…this can also be a drawback.
Drawbacks. You’ll want to keep offer timeframes in mind when planning host-read ads. Listeners don’t want to find out your offer already expired when they tune into older episodes.
Presently, the podcast advertising industry lacks some of the data, transparency
Without detailed, reliable audience information, targeting capabilities may also be limited, which can result in inefficiencies and make it more difficult to scale your podcast ad campaigns. This may change over time as networks begin to introduce more advertising features. Spotify, for example, enabled targeting by genre earlier this year.
“While podcast ads can result in direct conversions, more often than not, it’s a top-of-funnel broad awareness thing,” Bek spoke of her experiences, touching upon the format’s historically limited targeting capabilities. “It’s not like you can go to your boss and say ‘okay, 500 new leads are now aware of our existence and may or may not convert down the line’.” She also highlighted the considerable time and effort spent researching suitable shows, contacting hosts, educating them about your brand, negotiating prices and dates and collaborating on the ad spot.
Prospective advertisers should also be aware of the challenges to attribution and tracking conversions. Direct response ads combined with a dedicated landing page and “how did you hear about us” fields during the registration or checkout process are common tactics, but they may not account for listeners who convert later or after encountering your brand multiple times.
Types of podcast ads
Ads are usually placed at the beginning, middle and end of a podcast. These slots are referred to as pre-roll, mid-roll and post-roll, with pre-roll and post-roll ads typically ranging from 15–30 seconds and mid-roll ads running as long as a minute. For lengthier podcast episodes, there may be more than one mid-roll ad slot.
Regardless of the position within the episode, podcast ads are either read by the host during recording or pre-recorded and dynamically inserted when the episode is downloaded. Last year, 51.2% of podcast ads were delivered by a host. Dynamically inserted ads accounted for the remaining 48.8% (up from 41.7% in 2017), according to an IAB study.
Host-read ads. With careful planning and coordination, this format has the potential to tap into the audience’s trust in the show’s host, which may allow your ad to be conveyed more
“This is very powerful as the host has a huge influence on their audience and advertisers are essentially ‘borrowing their credibility’ as they tap into their audience in this manner,” Trevr Smithlin, founder and CEO of podcast ad agency AdvertiseCast, told Marketing Land, caveating that, “One disadvantage is that it takes more time and energy to execute these types of campaigns, but our platform and team streamlines this as much as possible.”
And, as previously mentioned, host-read ads become part of the episode’s content, which means the ads will continue to serve as long as the episodes are available.
Dynamically inserted ads. “You have more targeting capabilities which works great for advertisers that have time-sensitive requirements or need to reach a certain GEO area,” Smithlin said, referring to the ability to leverage data tied to listeners’ IP addresses. “Dynamic campaigns can also easily scale as it’s all performed digitally.”
One potential, but considerable, trade-off for these targeting and scaling abilities is that your ads may be less engaging to listeners due to the lack of host involvement and cohesion with the rest of the episode’s content, which may hinder your objectives.
Ad spots are commonly priced according to one of the following models:
- Cost per mile (CPM): This is the most common pricing model and refers to the cost per one thousand downloads. Streams are also included as downloads, but a thousand downloads may not equate to a thousand listens as an episode may be requested but not played (as is the case with automatically downloaded episodes that a listener may overlook or not be interested in). Pricing varies. For example, a mid-roll 60-second ad CPM is about $25 on average, Entrepreneurs On Fire podcast host John Lee Dumas found; while podcast advertising network AdvertiseCast’s marketplace average in July was $27-32 for a 60-second ad.
- Cost per acquisition (CPA): There may not be an upfront cost associated with this model. Instead, the cost is determined by the number of leads or conversions that a podcast sends to your business.
- Negotiation: This method can be a mix of the other two or something different altogether. It’s up to the advertiser and the podcast to come up with a deal they can both agree on.
The length of the ad and its position within the episode will also have an impact on the overall cost. In addition, Smithlin pointed to an audience’s demographics, its history of engagement, the genre of the show, overall advertiser demand for the inventory and a show or host’s popularity as factors that can influence pricing.
The technology and platforms that facilitate attribution and conversion tracking of podcast ad campaigns have yet to reach the maturity of search and social advertising, but they are evolving as companies like Spotify pour in investments and advertiser demand rises. Tracking and measurement are challenging for several reasons. For one, listeners can access podcasts across a number of competing apps and services. Conversions happen off-podcast, which makes attribution a challenge — it’s why the ads so often include custom URLs tailored to each podcast. Yet, despite the challenges, gauging success is possible.
Direct response. Many podcast ads use a direct response mechanism to point listeners to their websites. For example, the July 16 episode of current affairs podcast Today, Explained begins with host Sean Rameswaram performing a 30-second pre-roll ad for KiwiCo: “KiwiCo is offering Today, Explained listeners a chance to try them out for free. To redeem the offer and learn more about their projects for kids of all ages, head to kiwico.com/explained.”
This example contains a few common podcast advertising practices: a dedicated landing page, an easy-to-remember vanity URL and a free trial.