Podcasting. As Yogi Berra once said, “It’s like déjà vu all over again.”

  • 2001 – Apple releases the iPod
  • 2007 – Apple releases the iPhone
  • 2014 – The hit podcast Serial reaches millions of listeners
  • 2018 – Spotify acquires Gimlet Media and Anchor for about $340M

Fourteen years after the initial launch of podcasting, Apple has finally vowed to improve by funding original content, providing analytics (which it started in early 2018), and elevating podcasting to the coveted status of TV and Music. The IAB has also released its 2.0 guidelines for measurement and metrics to help standardization. Is this the break-out that podcasting-as-revenue-generator has been waiting for?  

In 2007, I left Yahoo! after managing a suite of multimedia products, including a beta branded Yahoo! Podcasting, and joined a podcast advertising technology start-up called Podbridge (subsequently rebranded to VoloMedia). Podcasting was being heralded as a new frontier for digital advertising given the impressive list of brands making podcasts available for free through iTunes, including NBC, MSNBC, ESPN, and NPR. Media companies were essentially re-packaging their previously aired TV or radio programs into an RSS feed and making it available for download and offline consumption on your iPod (pre-iPhone) or RSS-capable device, an economical way to achieve episode longevity and gain additional reach. Market researchers, including Edison Research, noted that podcasting offered a growth market and a very captive audience for advertisers, as listeners were spending more time with podcasts as compared to traditional radio or, at the time, online video. The Association for Downloadable Media even colonized (and has since decolonized…). Yet, in parallel, the streaming market was powering ahead with the success of YouTube and its $1.6B acquisition by Google. Apple wasn’t helping the Podcasting cause by burying the content in its ever-clunky iTunes, offering very limited (if any) metrics and advertising opportunities. Many tech companies that had been funded to capitalize on the emerging podcasting trend, including VoloMedia, either shut down, sold for much less than expected, or significantly trimmed staff to maintain operations. 

Despite the lack of investment and attention, podcasting has continued to grow, albeit largely in the background. Smartphones and the incredible ecosystem make content more and more accessible. Broadband’s progress, including wireless speeds, has been a huge contributor to wide access. 5G holds even more promise. This connectivity wave has turbocharged content mobility through markets such as wearables and automobiles, where a lot of podcast listening occurs.

Investors are taking notice. In 2018, VCs poured in over $200M into podcasting businesses. Pricewaterhouse Coopers (PwC) is forecasting 30%+ advertising revenue growth from $600M in 2018 to $1.6B in 2022, this following 50%+ growth from 2017-2018. Monthly listeners have grown from 23M in 2013 to over 78M in 2018 with the 18-34 demographic leading the growth. Edison states that “85% of people who listen to podcasts, listen to the end,” and the average listener listens to up to five podcasts per week. 

These numbers have reignited advertising interest, especially when evaluated and compared to spend on traditional Radio. A 2017 study by Podcast distributor Audioboom found that “68 percent of podcast listeners had reduced the time they spent listening to broadcast radio in favor of podcasts.” PwC cited this research but was careful to note that there is a lack of evidence suggesting podcasting is actually, today, taking advertising dollars away from broadcast radio. 

According to PwC, traditional US Radio advertising revenue was $15.9B in 2018, essentially flat to slightly down from 2017. They forecast the same $15.9B number in 2019, then again about the same number in 2020. This lack of growth might be due to the same misconception that the TV folks suffered from when the concept of Internet delivery (now OTT) surfaced. TV folks got themselves all worked up about preserving their “cable and broadcast” economics forgetting that the viewers care more about the content than they do the delivery method. Cue the rise of Netflix, and the subscriber decline at ESPN. Radio has been stuck in a rut for a while, and Podcasting represents a growth path even though podcast advertising is still less than 2% of radio advertising. Although in 2013, YouTube’s video ad revenue was just under 4% of cable and broadcast.

Speaking of 2013, remember Jeff Zucker’s quote that year when asked about online video’s impact?  Jeff was then the head of NBC Universal and said that the media industry should be careful not to “end up trading analog dollars for digital pennies.” At the time, online video threatened the $70B+ cable and broadcast business. Well, this time, it’s Radio’s turn. Since Radio is not as economically healthy as TV was back then, maybe the incumbents will actually embrace and extend this movement as opposed to trying to kill it. Another reason podcast growth should continue, and continue less encumbered. 

Podcast investment is now about the content, and specifically original content. Not a week goes by without a celebrity launching a podcast given the low cost of entry and access to a growing audience within their target demographic. This low cost of entry encourages many non-celebrities and companies to jump is as well. Apple reports over 650,000 shows with more than 20 million episodes available as podcasts on iTunes. Last month, the NY Times asked, “Have we hit peak podcast?” in a much discussed article, suggesting that we, as consumers, are ready to be more discerning. Just because you can podcast, doesn’t mean you should. What it does mean is that content has to be really good to survive.

With this vast amount of content, podcast technology start-ups have also secured funding, albeit on a more limited basis than their content-focused counterparts. Production, delivery, monetization, and analytics require underlying tech (just pitch yourself as “Podcast AI,” and the funding should start flowing!). Regarding content delivery and discovery, RSS might be on its way out. As an example, all podcasts on Pandora are actually content streams, as opposed to downloads. This may not matter much so long as listeners can readily find and discover content and internet connectivity is reliable (the download is useful when connectivity is scarce — the anytime, anywhere value proposition). Google recently announced its search engine will surface individual podcast episodes (if published using RSS, Google will automatically index) and Google Assistant will allow users to ask for the content, which certainly helps discovery. And Apple continues to leverage RSS, and as long as they are using the feed format, it will survive. 

The key technology challenge is the same today as it was in 2007, which is advertising metrics. Host-read ads (or read-outs) are still the most effective and popular ad unit followed by brand awareness and direct response. Measurement of performance, however, remains elusive. Apple is certainly helping, but the metrics provided are listener-based for now. Other options include NPRs Remote Audio Data (open-source), Podtrac (founded in 2005), and a recently launched analytics dashboard from Spotify.

The IAB is helping with its standards, but it remains difficult for advertisers to understand performance, which would really turbocharge podcasting.

Yogi was right, “It’s like déjà vu all over again.”

Jeff