Justine Moore is a enterprise investor at CRV and co-founded Cardinal Ventures alongside her sister, Olivia.
More posts by this contributor
What VidCon means for the way forward for social media platforms
More posts by this contributor
What VidCon means for the way forward for social media platforms
This 12 months has been a breakout one for podcasting. According to Edison Research’s Infinite Dial report, greater than half of Americans have now listened to a podcast, and an estimated 32% hear month-to-month (up from 26% final 12 months). This is the most important yearly enhance since this knowledge began being tracked in 2008. Podcast creation additionally continues to develop, with greater than 700,000 podcasts and 29 million podcast episodes, up 27% from final 12 months.
Thanks to this rising listener base, large corporations are lastly beginning to concentrate to the house — Spotify plans to spend $500 million on acquisitions this 12 months, and already acquired content material studio Gimlet, tech platform Anchor, and true crime community Parcast for a mixed $400 million. In the previous week, Google added playable podcasts to go looking outcomes, Spotify launched an analytics dashboard for podcasters and Pandora launched a device for podcasters to submit their exhibits.
We’ve been going to Podcast Movement, the most important annual business convention, for 3 years, and have watched the convention develop together with the business — reaching 3,000 attendees in 2019. Given the elevated buzz across the house, we had been anticipating this 12 months’s convention to have a brand new degree of vitality and professionalism, and we weren’t disenchanted. We’ve summarized 5 high takeaways from the convention, from why podcast advertisements are laborious to scale to why so many celebrities are launching their very own exhibits.
Rise of movie star podcasters boosts listenership
We’ve formally entered the age of movie star podcasters. After early successes like “WTF with Marc Maron” (2009), Alec Baldwin’s “Here’s The Thing” (2011) and Anna Faris’ “Unqualified” (2015), high expertise is flooding into the house. In 2017, 15% of Apple’s high 20 most-downloaded podcasts of the 12 months had been hosted by celebrities or influencers — this jumped to 32% of the high 25 in 2018. And of all the brand new exhibits that launched in 2018, 48% of the highest 25 had been celebrity-hosted.
Though podcasts are undermonetized in comparison with different types of media, expertise brokers now contemplate them to be an necessary a part of a well-rounded content material technique. Dan Ferris from CAA tells his purchasers to think about podcasting as a approach of connecting with followers that’s “much more intimate than social media.” Podcasts additionally assist celebrities discover a new viewers. Ben Davis from WME mentioned that whereas his consumer David Dobrik has a smaller viewers on his podcast than on YouTube (1.5 million downloads per episode versus 6 million views per video), the podcast helps him attain a brand new group of listeners who come across his present on the Apple Podcast charts.
While some podcast veterans grumble in regards to the rise of movie star discuss exhibits, well-known podcasters are good for the business as a complete. Advertisers are drawn to the house by the chance to get to entry A-list expertise at decrease costs. One current instance is Endeavor Audio’s fiction present “Blackout,” which starred Rami Malek, who was recent off an Oscar win. Endeavor’s head of gross sales, Charlie Emerson, mentioned manufacturers might need to signal a “seven or eight-figure deal” to promote alongside Malek’s content material in different types of media. Other podcasters additionally profit from new listeners introduced into the medium by their favourite stars — a Westwood One survey in fall 2018 discovered that 60% of podcast listeners report discovering exhibits through social media, the place celebrities and influencers have big current audiences to push content material to.
Creator backlash towards “walled garden” apps
Paid listening apps characterize a reasonably small share of podcast listenership, with manufacturing platform Anchor estimating that Apple Podcasts and Spotify management greater than 70% of listenership. A venture-backed firm referred to as Luminary is attempting to alter this — it raised $100 million to launch a “Netflix for podcasts” this spring. Consumers pay $7.99/month to entry Luminary-exclusive exhibits alongside podcasts which are free on different apps. Because podcasts have RSS feeds, distributors like Luminary can simply seize free content material and put it behind a paywall. The platform, not the creator, advantages from this monetization.
Within days of Luminary’s launch, outstanding podcasters and media corporations (The New York Times, Gimlet and extra) requested their exhibits be faraway from the app. It’s fascinating to notice that YouTube has the same premium plan — for $11.99/month, customers can entry and obtain ad-free movies. Unlike Luminary, nonetheless, YouTube, pays creators a lower of the income from these subscriptions based mostly on how often their content material is considered.
Unsurprisingly, creator sentiment is extra constructive towards platforms like Spotify and Pandora . Though these corporations do earn cash from premium subscribers who hearken to podcasts, creators can select whether or not or to not submit their exhibits. And podcasters profit from making their exhibits discoverable to the prevailing consumer base of those platforms, which already dominate “earshare.” Spotify alone has 232 million MAUs, which dwarfs the 90 million folks within the U.S. who hearken to a podcast month-to-month.
Industry anxiousness round sustaining high quality at scale
Podcast advert income has been scaling rapidly, with $480 million in spend final 12 months and a projected $680 million this 12 months. Over the previous 4 years, advert income has scaled at a 65% CAGR, and this progress is anticipated to proceed. In its early days, the podcast advert market has largely been pushed by D2C manufacturers — you’ve most likely heard a whole bunch of Casper, Blue Apron and Madison Reed advertisements. However, larger manufacturers are additionally beginning to enter podcasting (Geico, Capital One and Progressive made the high 10 listing for June 2019) because of the rising viewers scale and elevated precision round focusing on and attribution.
While many attendees had been excited by the large progress in advert income, others frightened that it could kill what makes podcasting particular. They’re notably involved that podcasts could go the best way of on-line video, with annoying, generic, low CPM advertisements. Podcast hosts sometimes learn their very own advertisements, and are sometimes true followers of the product — they share private tales as an alternative of reciting model speaking factors. This leads to premium CPMs in comparison with most digital media — AdvertiseCast’s 2019 survey discovered a median CPM of $18 for a 30-second podcast advert and $25 for a 60-second advert, greater than 2x the common CPM on different digital platforms.
While these advertisements are efficient, they’re time-consuming and costly to provide. Big manufacturers interested by podcast advertisements typically count on to reuse radio spots — they aren’t used to the method of crafting and approving a host-read advert that will solely attain 10,000 listeners. Podcasters, in the meantime, worth their belief with listeners and don’t wish to spam them with loud, unoriginal radio advertisements. The stress between sustaining the standard of advertisements whereas scaling amount was an underlying theme of most monetization discussions, and business veterans disagree on the way it will play out.
Podcasts are nonetheless undermonetized — however there may be hope!
Despite the expansion in advert income and comparatively excessive CPMs, the business is considerably undermonetized. Using knowledge from Nielsen, IAB and Edison, we calculated that podcasts monetize by way of commercials at solely $0.01 per listener hour — lower than 10 occasions the speed of radio. Podcast monetization per listener hour has elevated over the previous 12 months, up 25% by our calculations, however nonetheless considerably lags all different types of media.
Why are podcasts so undermonetized? Unlike many different types of media, the dominant distribution platform (Apple Podcasts) has no advert market. Creators have traditionally needed to method manufacturers themselves or signal with podcast networks to assemble customized advert offers, and the “long tail” of podcasters had been unable to monetize. This is lastly altering. Anchor, which reported in January that it powers 40% of latest podcasts, has an advert market that has doubled the variety of podcasts which are working advertisements. Other in style platforms like Radio Public have launched packages for small podcasters to opt-in to advert placements.
The second main hurdle in monetization is attribution. Podcasts have traditionally monetized by way of direct response campaigns — a podcaster supplies a particular URL or promo code for listeners to make use of when making a purchase order. However, many individuals hearken to podcasts when exercising or driving, and might’t write down the promo code or go to the URL instantly. These listeners may keep in mind the product and make a purchase order later, however the podcaster received’t get the attribution. Thomas Mancusi of Audioboom estimated that this occurs in 50-60% of purchases pushed by podcast advertisements.
Startups try to convey higher adtech into podcasting to repair this concern. Chartable is one instance — the corporate installs trackers to match a listener’s IP deal with with a purchaser’s IP deal with, permitting podcasters to say attribution for listeners who don’t use their URL or promo code. Chartable at present runs on 10,000 exhibits, and the early outcomes are so promising that advert companies count on to see greater CPMs and considerably extra spend within the house.
Podcast followers of the longer term ≠ podcast followers in the present day
As podcasting grows, the listener base is diversifying. Edison Research appeared into knowledge on “rookie” listeners (listening for six months or much less) and “veteran” listeners (listening for 3+ years), and located vital demographic variations. Only 37% of veterans are feminine, in comparison with 53% of rookies. While the plurality of veterans (43%) are age 35-54, 54% of rookies are age 12-34. Rookies are additionally 1.6x extra more likely to say they most frequently hearken to podcasts on Spotify, Pandora or SoundCloud (43% versus 27% of veterans). And social media is a vital approach that rookies uncover podcasts — 52% have discovered a podcast from video and 46% from audio on social media, in comparison with 41% and 37% for veterans.
These new listeners can have a profound affect on the way forward for podcasting, in each the kind of content material produced and the best way it’s distributed. Industry consultants are already noting vital new demand for female-hosted podcasts, in addition to audio dramas that enchantment to younger folks in search of a fast-paced, suspenseful story. They’re advising podcasters to share clips of their content material on social media, and to leverage broader listening platforms like YouTube and SoundCloud for distribution.
International markets additionally characterize an infinite alternative for progress. Most podcast listeners in the present day dwell within the U.S. or China, however content material producers are beginning to see vital demand elsewhere. Castbox’s Valentina Kaledina mentioned that many followers overseas have resorted to listening of their non-native language, with the highest 100 exhibits in every nation comprising a mixture of English and native language. Adonde Media’s Martina Castro, who not too long ago performed the first listener survey on Spanish-language podcast followers, mentioned that 53% of the survey’s 2,100 respondents reported listening to podcasts in English — and solely 20% of them use Apple Podcasts.
Larger podcast producers are starting to translate exhibits for non-English-speaking markets. Wondery CEO Hernan Lopez introduced on the convention that the corporate’s hit present Dr. Death is now accessible in seven languages. Lopez famous that it was an costly course of, and he doesn’t count on the exhibits to generate revenue within the close to future. However, he believes that Wondery will finally see a big return from investing within the growth of latest podcast markets — and in the event that they do, different podcast corporations will probably observe of their footsteps.