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If you have a commute of any kind, you’ve probably listened to a podcast. Since their launch in 2005, Podcasts have become a popular cultural touchstone and entertainment outlet, continuing to reach a mix of demographics and implement new innovations. In fact, a 2017 Nielsen study found more than 50% of the U.S. population listened to podcasts. In 2019, revenues in the U.S. are anticipated to reach half a billion, growth of about 65% in two years.
This growth has led to advertisers pouring significant resources into the podcast sector. According to Nielsen, “From consumer packaged goods (CPG) brands that enjoy widespread familiarity to upstart services in the constantly evolving tech sector, brand advertisers are experimenting – and ultimately staying – with podcast advertising.”
The success of brands big and small with podcasts is leading to long-term relationships with podcasters. Squarespace was an early adopter of advertising in the podcast space, and has stayed a steady presence for the last seven years. Nielsen adds, “Many popular brands with as much as 69% top-of-mind awareness, to lesser-known brands with as little as 17% awareness, are tracking the performance of their podcast ads.”
While podcast revenue is still significantly lower than traditional TV and radio, marketers are reaching audiences through a number of different branding and advertising opportunities separate from traditional ad revenues, including subscriptions and original content.
Subscription Services For Podcasts Offer Revenue Opportunities
“This is the final step of podcasting in my mind. You can monetize through ads and you can monetize through payment,” said Måns Ulvestam, Co-Founder and CEO of Acast, which is based in Sweden. Acast and Sticher, among others, have followed the streaming model, offering exclusive podcasts to members for a monthly or yearly fee.
Some of the services offer a mix of free and premier content depending on the level of membership. These podcast networks or platforms allow for a more seamless listening experience, typically without awkwardly-placed ads, although there may still be some sponsorship messages. Consumers have become so comfortable with subscription services, they’re unlikely to balk at having to pay for a service they enjoy, although the surfeit of free podcast content still presents a challenge to the subscription model.
However, as demographics for podcasts evolve, the ability to target listeners with tiered subscription memberships could provide less barrier to entry for podcast fans. According to Marketing Charts, “74% of Americans from 25-year-olds to 54-year-olds tap into podcast listening every month. And the group of 55-year-old Americans and older are among the fastest growing online audio listeners, leaping in growth from 33% in 2018 to 40% in 2019.” This growing demographic offers opportunities for optimized marketing campaigns from subscription services.
Spotify, Audible And Endeavor Increasingly Become Players In The Podcast Business
Music streaming services like Spotify and other major players like Amazon and Endeavor are also getting into the podcast business, with different approaches to delivery. As with other offerings on Spotify, podcasts air without traditional commercials and can be downloaded with a paid membership. Spotify is also creating branded podcasts with advertisers, and recently launched a new audience tool that allows advertisers to reach listeners based on their podcasts habits. The big push by Spotify into Podcasts includes the recent acquisition of three significant podcast creator-producers including Parcast, Gimlet and Anchor and an exclusive deal with the Obamas to co-produce podcasts for Spotify.
Audible podcasts are available on the Audible app to Amazon Prime members at no extra cost. Offering podcasts with these streaming services increases brand engagement for Spotify and Audible, even if podcasts don’t provide a direct revenue increase.
Endeavor Audio is taking podcast networks a step further by creating original content, similar to a Netflix model. According to TechCrunch, “Endeavor Audio launched on September 13 as the podcast division of entertainment conglomerate Endeavor, dedicated to financing, developing and marketing podcasts made for as diverse a set of topics and styles as there are in TV: scripted dramas, competition shows, documentaries, etc. that appeal to different audiences.” Endeavor owns mega talent agency WME, which offers them access to a stable of talent most podcast producers can only dream off. For example, Oscar winner Rami Malek stars in Endeavor’s podcast Blackout.
“We see an opportunity to take podcasts mainstream and open up a lot more revenue,” said Moses Soyoola, General Manager of Endeavor Audio. Clearly, the saturation of podcasts and their revenue potential is creating a stir across digital industries. Whether podcasts turn into “peak TV” remains to be seen.