Long Read - Podcasts, a hot advertising medium

A loyal listenership and a rising revenue. The emerging podcast market is seeing a huge uplift in advertising opportunities for brands.

Growth means podcasts are no longer an optional experimental channel, but rather one that allows for integration, trust and authenticity, say industry insiders.

Those working in the sector say the abundant advertising opportunities are the result of podcasts creating target specific audiences, tailoring content that aligns with a particular brand or product. 

The barrier to entry for content creators -- just use a mobile phone -- means there are currently more podcasts than there are advertisers. 

However, rising podcast consumption is also coupled with high audience engagement.

 

Growth forecasts: 

According to numbers presented to shareholders in April at the AGM for the ARN, the iHeartPodcast Network reached 6.6 million combined listeners and 28.5 million monthly downloads.

The growth of podcasts is undeniable, says Michelle Lomas (pictured right), chief strategy officer at Ampel, an audio creative agency that produces podcasts, podcast & radio ads and sonic ID for brands. 

Lomas says that while the numbers are important, what’s even more exciting is the evolving patterns of consumption.  

“The podcasting phenomenon experienced an explosive surge in popularity over the past few years, but now we are witnessing a natural phase of maturation. Listeners are beginning to determine how podcasts fit into their lives and cater to their specific needs,” she said. 

Lomas said, on average, individuals are now dedicating themselves to listening to six episodes per week, and some even manage to consume as many as eleven episodes weekly.  

“This upward trend in consumption, combined with a widening selection of podcasts, is causing a diversification in listenership patterns.  

“People are discovering new niche podcasts that offer valuable educational content, advice, and guidance.” 

Adam Johnson, chief growth officer at NOVA Entertainment says podcast audiences continue to grow both in terms of listeners and downloads, something that is evidenced across the industry and clearly visible in the Podcast Ranker.

“That said, at NOVA we are focused on building a commercially sustainable network,” said Johnson.  

“Our focus has been on growing titles where we see audience engagement and commercial demand, rather than buying scale to generate headlines.” 

The state of podcast advertising today

For media agencies, podcasting is rapidly becoming a key medium of advertising; one that’s driving results for brands and is effective in enhancing target audiences and reaching new ones.  

Simon Gellibrand (pictured right), head of digital at independent media agency, Half Dome, notes a trend in the space whereby podcasting has gone from niche to mass media.  

There are 45% of Australians listening to podcasts, he says, the highest percentage in the world.  

The IAB Online Advertising Expenditure Report and SMI data, indicates that although media spend is flat-line compared to YoY, there has been an increase of audio spend and specifically podcasts, said Gellibrand. 

Gellibrand said as the podcasting medium continues to gain traction; advertisers increasingly recognise its potential to reach a highly engaged audience. 

“Brands are investing in podcast-specific ads and host-read endorsements,” he said. 

“What is the attraction? Brands are attracted to podcasts due to their intimate nature, loyal listenership, and targeted niche audiences at scale.  

“Podcast advertising also often allows for host integration, creating a sense of trust and authenticity with listeners.” 

Seb Rennie (pictured right), SCA's chief sales officer, said as podcast listening and streaming continues to grow, ad spend follows.  

“The IAB and CRA latest data showed that audio streaming ad revenue rose by 13% year on year, to $51.9m for the March quarter,” said Rennie. 

“Podcast revenue rose even faster, by 20.7%, to $19.8m for the quarter. Should that growth rate continue, podcast advertising revenue reach $100 million by the year end. In calendar year 2022, ad spend on digital audio was worth $221.2 million with this total industry value expected to increase YOY in 2023.” 

The LiSTNR podcast network reached a new record in May of 8.658 million monthly listeners - up from 6.6 million, according to the Australian Podcast Ranker.

In the SCA's half yearly results report, soon to be former CEO, Grant Blackley, said the group's portfolio of audio assets is positioning for growth while continuing to return funds to shareholders.

"Awareness and use of our LiSTNR digital audio ecosystem continued to scale. With more than 1.4 million signed-in users, and nearly 6 million monthly stream starts, LiSTNR is providing critical mass for brands to reach engaged and addressable audiences at scale," said Blackley.

The report also outlined that exclusive Australian sales representation of premium partners, such as Wondery and Stitcher, has expanded the reach of the LiSTNR sales network to 6.6 million monthly listeners. 

For media agencies, podcasting is thought to have become the new year of the mobile, says head of strategy for Initiative Sydney, Ali Coysh. 

Coysh credits the emergence of podcasting that has given a new life to radio sales. 

“Podcasting has also given rise to the idea of audio as an attention platform (lean in and 1:1), doing what traditional radio has done exceptionally well but on steroids,” he said. 

“For many, podcasting is offering a younger demo to traditional radio, rejuvenating conversations and reaching elusive 18-34’s many clients seek to reach.” 

Coysh acknowledges that it’s a fragmented marketplace, with more and more titles varying in quality and reach. 

Besides the key talent tent-poles such as Hamish and Andy, who have long reigned in the top of the market, other big hitters are few and far between, he says.  

“Recent rankings indicating not one podcast hits more than one million a month. That’s only an issue if you’re a consumer (or a podcast star), no media buyers or strategists care about the volume of YouTube channels, they care about the scale the platforms can deliver,” said Coysh. 

Ultimately, says Coysh, the real strategic opportunities come down to balancing reach and scale with meaningful integration that talent have long been great at creating. 

Strong growth in the market

For NOVA, podcasts are doing well and its audience is using them as a way to catch-up on a show they they’ve missed or that's broadcast at a time that doesn’t suit their routine, says Johnson (pictured right).  

“A great example of this is The Chrissie Swan Show, which, since its launch in late January, has recorded an average of 282,000 downloads per month,” he said. 

“We’re also seeing strong growth in health & fitness, evidenced by our latest show Bounce Forward with Tiff Hall, as well as longer-form news content. Brands are also getting more comfortable being in and around categories such as true crime and investigative journalism.” 

Coysh notes the expected audio & radio players have really built out strong propositions and are well versed in talent integrations, live reads and sponsorships. 

“With solid integration opportunities and new content arriving all the time the market is growing at pace,” said Coysh. 

“As further sophistication to the product develops, we are seeing opportunities for rich audience targeting at scale moving beyond sponsoring titles for contextual alignment.  

He says digital insertion and ad streaming with players like Spotify and iHeart are helping bring the best of their capabilities to podcasting.  

“As this increases, growth from advertisers will surely test this further. Measurement is the key to maturity against the digital landscape.” 

Lomas from Ampel is also seeing growth is many areas, including healthcare education. 

“It makes sense really. When people have an ailment, they don’t run to the doctor first - they research. But Dr. Google is fraught with danger, and when every symptom could be cancer, people are looking for more credible sources that don’t strike fear,” said Lomas. 

This is a direct result of the upsurge in educational content focused on specific health topics, led by genuine medical professionals rather than health influencers, she says. 

Lomas notes it’s an exciting time with the potential impact such health education could have on the entire industry.  

“Are podcasts poised to become the new frontier of search engines? The possibilities are truly thrilling and present so many opportunities for brands looking to connect deeper,” she said.  

Gellibrand from Half Dome says the industry’s rapid growth in Australia is remarkable. 

“According to recent statistics, podcast listenership in Australia reached an all-time high in 2022, with over 10 million Australians tuning in each month,” he said. 

"The average Australian listens to one hour and 54 minutes of podcasts per week,  with the most common day being a Tuesday, 7-8am, and the most popular genres being news, politics, lifestyle, specialist discussions and sport. 

"The banner of 'specialist discussion' includes personal finance and technology. This diversification of content caters to a broad range of interests and contributes to the overall growth and vibrancy of the channel."

SCA executive head – LiSTNR Podcasts, Grant Tothill, said the biggest growth areas are in comedy, sport, crime and popular culture, and health and wellbeing podcasts.  

“Investigative journalistic docuseries will continue to grow as more and more Australians discover podcasting as an alternative to mainstream media headline news,” said Tothill. 

Independent podcast company Acast this month launched Acast+ Access giving companies with existing membership offerings -- including news publishers, media organisations, streaming services -- the ability to integrate podcast benefits into the paywall they already use for their subscribers.

Henrik Isaksson, Acast managing director for AUNZ, says Australian consumers are faced with more choice than ever when it comes to the subscriptions they pay for.

"We know that a direct result of this is that subscription-based businesses like news and media, as well as streaming services, need to offer a truly valuable and easy-to-use experience for their customers," he says.

"This is precisely why we’ve developed Acast+ Access, to give any company with a paid subscription offering the chance to meaningfully increase that offering by integrating podcast benefits into the experience.

"This will allow subscribers to access additional benefits like ad-free listening, exclusive content and more through their podcast platform of choice, simply through being a subscriber of their favourite media brands.”

A myriad of opportunities for advertisers

Industry insiders attribute the success of advertising through podcasts to the platform's ability to deliver content to niche and highly engaged audiences. Many podcasts effectively host read sponsorships; a fluid tie-in with their listenership and topics of discussion.  

Rennie said the network is seeing a big uplift in brands enhancing those sponsorships with the addressable reach that can be delivered via network buys.  

“At LiSTNR we have a wide variety of content that can provide advertisers market leading reach and context,” said Rennie. 

“On the platform we have a blend of LiSTNR Originals and some amazing content from our partners – Wondery, Siriux XM, Schwartz Media and Diamantina.” 

Lomas notes the mistake many podcasters make as they would in traditional radio, that is, employing identical advertising practices in both purchasing and messaging.  

“Yet, it's a misstep to seek broad 'reach' when advertising on podcasts. Instead, focus on the 'niche' and explore those long-tail podcasts,” said Lomas.

“These shows boast highly engaged audiences with dedicated listeners who are highly receptive to your message - as long as you tailor it to them.” 

She does, however, acknowledge the myriad of opportunities podcasting presents in the advertising landscape.  

A major reason for this is podcasts capacity and power to craft bespoke content tailored to diverse topics, aimed at specific audiences that align perfectly with a product or service, says Lomas. 

“Whether it's through lengthy host read ads or even full-fledged podcasts, brands can now connect with the most hyper-targeted of listeners, making it a phenomenal channel for optimising ad expenditure and minimising waste,” she said. 

“Arguably, no other platform can deliver such precise outcomes. Catering to gamers? There's a podcast for that. Targeting apartment dwellers with small dogs? There's likely a podcast for that too. And if there isn't, you can create one.” 

Johnson agrees, noting the beauty of podcasting is that it's now a mainstream media channel, but built on deep and varied content verticals.  

“For advertisers, that can mean they can find genuine scale in a run-of-network by reaching millions of listeners, they can own a category where they have a pre-qualified audience (such as car podcasts for automotive brands), or they can work with a single show and have an integrated, endorsed message that talks directly to a highly engaged audience,” he said. 

“The lower cost-of-entry to creating podcasts (vs visual media) means brands can even build their own podcast series where they have 100% share-of-voice.” 

What makes a good podcast? 

Formats are what drive strong podcasts, says Tothill from LiSTNR (pictured right). 

“LiSTNR Podcasts focus on premium podcast content – whether it be our own originally developed podcasts or domestic and global partner podcasts,” he said. 

“LiSTNR prides itself on its depth of original podcasts (such as The Children in the Pictures, You Don’t Know Me), with rich storytelling, advanced audio production techniques to create the best possible listener experience, a large pool of high profile hosts such as Hamish & Andy, Mark ‘Howie’ Howard, Abbie Chatfield, Tom Tilley, and Jess Rowe all growing their unique audiences month on month.” 

Johnson from NOVA defers to its in-house expert on this, NOVA’s head of podcasts & digital content, Rachel Corbett. 

“Having done this for as long as podcasts have been around, Rachel believes that the magic ingredients are to make sure you have an audience in the first place, choose a niche, deliver your content consistently and in high quality audio, always put your audience at-ease and then to promote the crap out of it!,” he said. 

While the podcast market thrives on variety, the realm of mundane talk show-style podcasts featuring semi-prominent celebrities or influencers discussing random topics is becoming oversaturated, says Lomas. 

She believes this saturation is creating background noise that risks diluting the quality of content available. 

“Inevitably, we will witness a shift away from these run-of-the-mill podcasts as discerning listeners seek more substantive and engaging content,” said Lomas. 

“It's essential to invest time in crafting a podcast vision that revolves around your listeners. Define what success means for your show. 

“Gauging success should transcend mere download numbers. Instead, a noteworthy podcast should be gauged by the commitment of its listeners, their dedication, and their actions.” 

Again, it comes back to putting audiences first for Layton. 

He says podcasters need to know exactly who their listeners are, engaging them through rich storytelling while being respectful of their time.  

“The last thing audiences need is yet another meandering two-person chat podcast,” said Layton. 

“When fighting for audience attention, don’t make another soundalike show, create something new that gets people talking.” 

The power of long-term campaigns

Gellibrand says Half Dome is starting to talk to clients about a medium to long-term investment in podcasts due to the ability to target higher-value audiences and the multiplier effect. 

“That’s hearing from a brand multiple times and building reach and frequency within an intimate, trusted and flexible channel, under the banner of a medium that can mould easily around a commute, screen-free environments and is more accessible than hard-copy materials,” he said. 

For Gellibrand, he credits the ability of long-term campaigns to allow advertisers to build brand awareness, cultivate relationships with podcast hosts and tap into the devoted listenership that podcasts offer.  

“Consequently, podcasters and brands are collaborating to create engaging content that seamlessly integrates ads into episodes,” he said. 

“We know that listeners usually over-index across more affluent, higher-educated households. They are likely to be time-poor and multi-tasking but also particularly interested in a niche topic, which means brands can customise the message to the listener.  

“Buying through programmatic pipes allows this to be done at scale.” 

Coysh (pictured right) from Initiative says this commitment depends on what one’s role for podcasting is within a media mix. 

“For clients that are signing off deep and integrated campaigns, like the podcast we launch for Lego “How to Build a Human” with Mamamia, the strategy, ideation and time to create such rich content has to be planned months in advance,” he said. 

“For those looking to deliver incremental ears to their campaign quickly or with budget upweights, the supply and demand in general feels balanced, there is enough scale across the 1000’s of titles to be able to take short term money and still deliver scale.” 

Too many podcasts? 

Those working in the podcast sector have different opinions on whether or not the market is too crowded.  

Johnson says there is certainly more inventory than there is revenue in the market at the moment. 

“Which validates our approach of building podcasts that sit at the intersection of the listeners and commercial audiences,” said Johnson. 

“When all you need is a smartphone to record a podcast, there is inevitably a long tail of lower-quality content that doesn’t find audience scale or advertiser interest, which creates a perception in the market that it’s crowded.  

“The reality is that there is a two-speed podcast economy, where the classic Pareto criterion applies of 20% of the podcast generating 80% of the revenue. My guess would be, in reality, that ratio is probably closer to 5:95.” 

On the other hand, Layton says that the market doesn’t have an issue with overcrowding, but more so discoverability.  

“While the number of new books published in 2022 was over 4 million^, when contrasted with the 235k podcasts launched in the same year, it highlights that the podcast market isn’t overcrowded,” he said. 

“How do we help existing fans and those new to the medium to overcome the choice paralysis and discover their next podcast favourite? 

“Every day across our podcast, radio and social networks we continue to close that gap, guiding Australians towards compelling content, ensuring they become hooked on their next podcast hit.” 

This concern is dependent on who is asked, says Coysh. For consumers it’s becoming more and more difficult to choose content. 

“I know personally I find it as hard as Netflix now to find something I want to listen to,” said Coysh. 

“No one is complaining about the scale of YouTube and the volume channels within, the same should be said for podcasting too, the supply is there if you’re looking for scale.” 

Coysh said the with the rise of new podcasts every week, the key will be to figure out the right strategy for the brief.  

“The nature of listenership means new titles often have a slow burn in building an audience base,” he said. 

“Agencies and clients need to balance the age-old desire for those shiny first to market opportunities with building meaningful scale and impact for your money.”