ARE PUBLIC MEDIA PODCASTERS TOO DEPENDENT ON PAID ADVERTISING?

As the podcasting industry continues to grow, paid advertising is the primary source of revenue now and likely will be in the future. 

We’ve all seen projections like to one on the left from Bridge Ratings that depict never-ending gains in revenue from commercials.

Unfortunately, these rosy scenarios are at odds with an obvious fact: People don’t like commercials. Study after study show that commercials repel listeners, cause them to tune-out and can hurt brand integrity.

Public media’s biggest podcast publishers – NPR, PRX, This American Life, WNYC Studios, etc. – rely on commercials for the majority of their revenue.  These nonprofit organizations have become increasingly adept in methods and lingo of the ad biz. Here are a few examples:

• According to ad sales representatives for NPR, companies they buy commercials in NPR podcasts can expect listeners to have a more positive opinion of the company.

• Advertisers expect results and public media podcast publishers are ready to deliver them. The chart on the right from the a report by the Interactive Advertising Bureau (IAB), a trade organization that tracks and advocates for the podcast industry, shows the responses advertisers seek from their commercials.

• PRX promises that paid commercials in their podcasts will make a sponsor “a good friend” of the listener and will lead to “whispering recommendations.”

Note a couple the key terms “authentic voice connected to content” and “ads are dynamically inserted or baked in.” These are state-of-the-art references to what podcast advertisers want most: Approval and integrity.

• “Authentic voice connected to content” typically means that the podcast host, and/or other key voices in the podcast, will read the sponsor’s sales message, implying endorsement of the sponsor.

• “Ads are dynamically inserted or baked in” refers to an advertising message that is part of the podcast’s content and therefore lives within the content for its lifetime.

According to IAB, over 58% of podcast commercials are integrated into the program and can’t be avoided by listeners. Podcast producers also allow sponsors to automatically insert commercials into the content, sometime at random points in the show.

To us, relying on paid advertising is a slippery slope. The steady revenue can become addictive and the advertiser gets increasing leverage over the producers and publishers.

PUBLIC MEDIA PODCASTERS SHOULD CONSIDER THE NETFLIX MODEL

A recent post by Eric Peckham on TechCrunch blog [link] describes the choice that podcasters face:

A foundational question about [podcasting’s] future is whether podcasts will continue to be availabl via free, ad-supported [platforms] or become subscription services with exclusive content.

Many people in the podcast biz are skeptical about the subscription model because the current ad-based model is now lucrative for the biggest podcast producers and publishers.

According to Peckham’s post on TechCrunch, a handful of the current podcast creators are generating eight-figures in advertising revenue per year, and other creators are bring in seven-figure revenue. In other words, there is no incentive to change the current model.

This is the primary reason iHeartRadio jumped into the podcast biz when they bought HowStuffWorks. iHeart’s core business is the sale of commercials.

The losers in the ad-based model are likely smaller producers who create passionate shows for niche audiences. They often don’t reach enough people to interest ad buyers. Public media podcasters need to decide if they want to compete in this for-profit world.

ENTER THE “PODCAST AVOIDERS”

Fred Jacobs from Jacobs Media wrote another post we recommend [link], the nagging problem of a sizeable number of people who are “podcast avoiders.”

Jacobs writes about “avoiders” his company has seen in Tech Studies, including the recent Public Radio Tech Survey 10. Jacobs observes:

[Our research] still shows a sizable number of “podcast nevers” – consumers who say they just don't listen to podcasts.  All this, despite “Serial,” Joe Rogan, “Pod Save America,” and the other podcasts making waves. 

More than four in ten respondents in both our commercial and Christian radio surveys say they never listen to podcasts.  And even in public radio – where podcast listening is a popular pastime – three in ten still say on-demand audio is not on their consumption menus.

The number one reason in all three studies is a stated lack of interest in podcasting.  But logic suggests that because podcasts can be about anything, that response is more reflective of a lack of familiarity with the platform. 

In his post, Jacobs also questions over reliance on commercial ad dollars:

Podcasting is going down the same road as broadcast radio – an ad-supported medium.  It doesn't matter whether they're prerolls or midrolls, live reads or produced – they're commercials.  And just like on the radio, people skip them – as often as they can.  We asked that question in this year's Techsurvey among weekly podcast listeners, and we discovered this unsurprising finding:  Consumers are repelled by commercials, no matter where they are or who reads them:

Jacobs recommends that public media podcasters move to a subscription model:

That's the model used by new media brands as diverse as SiriusXM, Spotify, Netflix, and of course, the New York Times and the Washington Post, where millions pay money each and every month to avoid commercials, testimonials, and carnival barker ads.  Yet, the podcasting community (except for Audible) has eschewed the subscription model in favor of the same lame broadcasting model consumers are gravitating away from.

Jacobs says this is an existential question for public media podcasters:

Is podcasting's slow-growth trajectory due to tech problems, discovery confusion, overall awareness issues, or a glut of content?

Is it a lack of exposure, a poor business model, bad metrics, or a dumb name?

Those are a lot of question marks about a medium that should be figuring it out by now.