Potential Financial Impact of Implementing Podcast Advertising for Businesses.

Prepared for

Shari Weiss

Business Communication

San Francisco, California

Prepared by

Patricia Honan

Group 2

Business Communication Tues Eve

April 7, 2015

Table of Contents

Executive Summary.....iv

Introduction: Advertising on Podcasts.....................1

Findings: ...2

Conclusions and Recommendations..8

Works Cited.9

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List of Figures

Figure

1 Increase in Mobile Technology

2 US Podcast Audience

3 Podcast Listeners are affluent, educated, & engaged

4 Listeners Feelings about Advertisements

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Executive Summary

The purpose of this report is to understand the benefits of advertising on podcasts based on this new mediums growth and the demographics of the average podcast listener to see if businesses should consider podcasting for their advertising.

Analysis of the data shows:

Growth. Podcasts have gained at least 3 million new listeners yearly. From spring 2014 to fall of 2014 there was an increase of 18%.

Demographics. The demographics shows that listeners are educated, affluent, and have used podcast ads to make purchases.

Costs. Average costs of podcasts are $30 CPM which is higher than Radio and television ads however advertisers see the benefit of the extra cost because ads are more personalized and intimate for listeners since ads are made by the host of the podcast whom they have a connection with.

Benefits. There are 5 major benefits to advertisers which are increased authority, larger reach, new/fresh content, different audience, and intimacy.

The conclusion of the findings is that it is beneficial for businesses to utilize podcast advertisements. It is recommended that businesses use a company such as Midroll which specializes in matching podcasts and advertisers so that both parties can gain revenue.

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Introduction: Podcast Advertising

This report was created to analyze the potential financial impact of advertising on Podcasts for businesses. The report seeks to answer the following:

Is podcasting popular enough to advertise on? Will the advertising reach the businesses customer demographic?

Who are typical podcast listeners?

What are the costs of advertising on podcasts?

What are the current benefits current businesses are receiving from advertising on podcasts?

Background:

Podcasts are a digital medium with recorded audio in an episode format that is web syndicated or streamed online. Although it is a new industry it is quickly growing. The main source of revenue for podcasts has been through sponsorships and crowd-funding. With the instant rise of a podcast show Serial more advertisers are interested in using podcasts as a medium.

Purpose:

To ensure that businesses understand the growth of podcasts and the benefits of using podcasts as a medium for advertising. Podcasts is an emerging industry and consideration should be taken in advertising with this medium.

Scope:

The objective of this report is to see if it is beneficial at this point to use podcasts as an advertising medium. It is a growing industry with very intimate advertising done by the hosts of the podcast. This type of advertising can persuade listeners to buy easier than regular advertising. The costs of podcast advertising varies based on popularity of podcast but averages $30 CPM. A budget needs to be created to determine if this is financially feasible for the business as it is more costly than radio and television advertising. It should result in increased revenue. The data was all found through online websites.

Organization:

The findings are organized by explaining the growth of podcasts, who podcast listeners mostly are, viewpoints of advertisements by podcast listeners, the cost of podcasts, and the benefits to businesses of advertising on podcasts.

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Findings:

Podcasts are rapidly growing

Initially podcasts were a hobbyist activity and people were not creating them for profit. However now with smartphones and blue-tooth enabled cars it is a lot easier for people to listen to their favorite podcasts. Figure 1 displays statistics on the increase in mobile phones.

Figure 1: Increase in Mobile Technology

www.socialfresh.com Source: Nick Cicero

The rise in their popularity has helped Podcasting go through a renaissance as it has made podcasting much more accessible to people. It has allowed podcasting to slowly grow into its own industry.

Podcasts have continually gained listeners year over year from their start in 2005. Figure 2 shows the

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growth of the podcast audience from 2008-2013. It has grown at least 1% each year which is at least 3 million new listeners per year.

Figure 2: US Podcast Audience

In 2014 from spring to fall podcast consumption grew 18% and is expected to continue to grow. Serial a popular crime show podcast has created a lot of interest in podcasts from consumers as well as businesses wanting to advertise. Apple released a statement stating that Serial has been downloaded more than 5 million times from the iTunes store at just 9 episodes into the series which is the fastest any podcast has been at hitting this growth mark. With this type of surge of listeners it is an opportune time for small businesses to use podcasts for their advertising. As the average American spends at least three hours daily, commuting, working out, or on household chores which could also be used for listening to audio.

The Average Podcast Listeners are Young, Educated, and Affluent Males

Although there are podcasts available on hundreds of topics 54% of podcast listeners currently are males. Figure 3 gives some more statistics on podcast listeners that is beneficial information for advertisers to know.

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Figure 3: Podcast Listeners are affluent, educated, and engaged.

Source: Midroll

More than half have made a purchase from a podcast ad showing that it would help create revenue for new businesses as there are new listeners consistently choosing podcasts as a new form of audio entertainment. As well as the existing listeners listen to most or all episodes of a podcast. Advertisers are able to understand the income and habits of podcast listeners to better market their ads. Podcast advertisers have used direct-response advertisements.

Users do not mind the Advertisements on Podcasts

Podcast advertisements are typically host-reads so the communication is more direct and intimate than radio or television ads. Listeners get really invested into the show so they dont mind the ads because they are from someone they feel familiar and connected to. Podcasts listeners understand that podcasts

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are free and that there are not many sources of revenue for podcasters. Listeners support the advertisements as they know it supports the podcast. Majority of listeners do not mind the ads on the podcasts that they listen to due to this. As figure 3 shows 64% of listeners have made a purchase from a podcast advertisement. Edison Research did a survey on listeners stance of advertisements by the podcast host while listening and 52% did not mind them and found them to be useful and only 8% disliked them completely and/or did not consider them to be useful. Figure 4 showcases the attitudes of listeners on advertisements.

Figure 4: Listeners Feelings about Advertisements

Average Costs of Podcast Advertising

Podcast ads are typically sold as CPM which is cost per 1,000 listeners however the rates vary depending

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on the popularity of the podcast. Advertising rates can average $30 per host read for every 1,000 downloads of a podcast. Podcast ads are higher than radio and television ads but advertisers do not mind because of how personal they are for the listeners. They are more impactful and less likely to be ignored than the prepackaged advertisements seen on radio and TV. Midroll, a company that specializes in finding the right match between brand advertising and podcasts, stated that they had their best quarter for ads ever in the last quarter of 2014. However brand advertisers have been reluctant of advertising with this medium because of the small size and undeveloped analytics. The availability and quality of information and data on podcast advertising is not as good as other digital media. It is understandable as it is still a growing industry trying to figure out their revenue streams. Squarespace which is a regular for podcast advertising and has done so for the last five years. They keep buying more ad space knowing there is limited data on the success of podcast advertisements. They would do even more advertising on podcasts if there was more high-quality inventory like Serial available (Blattberg, 2015). Using more direct-response advertising with offer codes would help connect shows to purchases. Erik Diehn, VP of business development at Midroll stated that they are talking with more and more Fortune 500 companies this year than ever before due to Serial, industry growth, and better data collection.

Benefits of Advertising on Podcasts

There are 5 main benefits of advertising on podcasts: Increases authority, larger reach, new/fresh content, different audience, and it is intimate. Typically Podcasts are hosted by an expert, CFO, or other recognizable name so that gives a business instant authority. Podcasts are another marketing channel and businesses can reach more people by using this channel. The audio content on podcasts is another way to make content fresh and since podcasts are timely can create more depth. Podcast listeners may

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not be part of the same demographic typically advertised to so can create new customers and leads. The intimacy again here is a big one as the listeners feel very connected to the host they are more likely to purchase.

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Conclusions and Recommendations

Analysis of podcasts has shown that advertising on them would be beneficial to businesses. It is a growing industry with lots of potential and opportunity for small companies and Fortune 500s. Although podcast advertisements are more costly than radio and TV they create a more impactful message as they are done by the host of the podcast. Listeners feel more connected and are more like to purchase due to this. There is also have less analytics of podcast advertisements.

Based on these findings, it is recommended to enter into podcast advertisements with a reputable company like Midroll that can help advertisers align their advertisements to potential customers based on podcast categories. Based on average podcast listeners demographics and habits it appears to be financially beneficial and revenue should increase from purchases from podcast listeners.

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Works Cited

Blattberg, E. (2015, February 5). The measurement challenge facing podcast advertising. Retrieved April 4, 2015, from http://digiday.com/platforms/measurement-challenge-podcast-advertising/

Cicero, N. (2014, November 28). The Rise of Podcasting: The Ultimate On Demand Content [Infographic]. Retrieved April 6, 2015, from http://www.socialfresh.com/the-rise-of-podcasts-in-marketing/

Comcowich, W. (2014, November 16). Podcasts Could Be The Next Big Thing for Advertisers. Retrieved April 4, 2015, from http://www.cyberalert.com/blog/index.php/podcasts-could-be-the-next-big-thing-for-advertisers/

Griswald, A. (2014, December 15). Podcast ads are rambling and unpredictable. So why do sponsors love them? Retrieved April 6, 2015, from http://www.slate.com/articles/business/ten_years_in_your_ears/2014/12/podcast_advertising_how_serial_and_other_shows_benefit_from_their_rambling.single.html

How Podcasting Can Benefit Your Business. (2014, December 10). Retrieved April 4, 2015, from http://www.whandassociates.com/why-podcasting-can-benefit-your-business/

Kang, C. (2014, September 25). Podcasts are back and making money. Retrieved April 4, 2015, from http://www.washingtonpost.com/business/technology/podcasts-are-back--and-making-money/2014/09/25/54abc628-39c9-11e4-9c9f-ebb47272e40e_story.html

Riismandel, P. (2014, June 17). Infographic: Podcast Listeners are Affluent, Educated & Engaged. Retrieved April 6, 2015, from http://www.midroll.com/podcast-listeners-affluent-educated-engaged-infographic/

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