I love podcasts. I listen to them when I’m going for a run, when I’m getting ready in the morning, and when I’m taking the T. I never knew I needed someone talking to me all the time, sharing either relatable/educational stories or horrifying true crime mysteries, but here we are. And I’m certainly not alone: according to Apple Podcasts, 51% of the US population has listened to a podcast, which has increased from 44% in 2018.
Podcasts are growing, and fast. Apple Podcasts shared that there are currently 800,000 podcasts on their platform, with over 30 million episodes as of December 2019. Again, this is a substantial number considering that as of June 2018, there were 550,000 podcasts on the platform - a 45% increase in just a year and a half.
Why are all of these numbers so important? Because, as marketers, it’s our job to know when a new medium has the potential to add value for our clients. And when the average display ad click-through rate is 0.06%, we have to seriously consider advertising options that offer more bang for the buck.
Podcasts aren’t just valuable for advertisers because of how many people are tuning in, but also because of who’s tuning in. For instance, 45% of monthly podcast listeners have a household income over $75K. Additionally, podcast listeners have been shown to be more likely to follow companies and brands on social media (check) and are more likely to subscribe to Netflix or Amazon Prime, meaning that they’re less likely to already be exposed to TV advertisements (double check). According to WebFX, 67% of listeners find sponsored messages helpful, and 63% of listeners have bought a product advertised on a podcast.
Anecdotally, I’ve been very close to pulling the trigger on a couple of products that have been advertised on my favorite podcasts, and have visited a few of their websites to check them out. People listen to podcasts where they enjoy and trust the hosts, so if a host is endorsing a product, I’ll put much more stake in that than if I were to see a banner ad pop up across my screen.
This is all why podcast advertising spending is increasing year-on-year, with Statista stating that in 2018, ad spend was estimated to be $320 million. This year, these figures are forecasted to surpass $500 million. Borrell Associates has said that no other digital media segment will grow faster, and it estimates streaming audio local ad spending will increase 17.1% next year, compared to their forecast of digital ad spending to grow by just 4.9%.
So what do all of these figures mean for your advertising strategy?
To effectively advertise on podcasts, you need to understand the format and develop a plan. Below are three tips to keep in mind as you create your podcast advertising strategy:
Find the right ad format for you
There’s a variety of ad formats to consider when determining how and where to place your ad in a podcast. A few of these include:
If you’re looking to spend a little less, a pre-roll ad would likely be your best bet since it has a cheaper CPM (cost per thousand impressions). However, if you’re looking for higher engagement, it may be worth spending extra money on a mid-roll ad. Listeners are conditioned to tune ads out when they first start listening to a podcast, but if it’s a mid-roll ad, the podcast audience will already be engaged in the content and will be more actively listening when it’s your ad’s time to shine. According to Digital Music News, pre- and post-roll spots are currently selling around $10-$25 CPM, while mid-roll spots are selling for $20-$80 CPM.
Additionally, determining whether you want to have a baked-in or dynamic insertion depends on your ad content. Because baked-in advertisements can seem like they’re more a part of the fabric of the show, they tend to be about 3.5 times more efficient than dynamically inserted ads, despite the increase in dynamic ad spending. Dynamic ads can seem more jarring to audiences since they’re not woven into the podcast episode and could stand alone, but if you need to A/B test your messages or if you have an ad that’s time-sensitive and contains an offer that expires, dynamic insertion may best fit your needs.
Understand the intended audience, and don’t try to force a fit
An ad needs to result in conversions in order to make the spend worth it, but in order to convert, you need to find the right podcast and understand its audience. For example, if you’re a company that sells beard butter, you wouldn’t want to place an ad on a podcast like Girlboss, which is primarily geared toward women. Rather, you’d want to look into a podcast that’s geared toward men, or that has a host who might be interested in your product, which would make the commercial more relevant to them and then translate into more enthusiasm if they’re reading your ad script.
It doesn’t need to be an exact fit where you can only place an ad on a podcast that talks about beards (if you found one, that would be the place to be - just don’t count on me listening). However, finding one where your ad would be relevant for the audience without forcing a connection is important for your ad’s success.
Track your conversions
If you don’t track how your podcast ad is doing, you won’t be able to adapt your strategy, and who wants that if they’re investing hundreds, if not thousands, of dollars in the ads? Figuring out your ad’s effectiveness can be as easy as offering a unique promo code for listeners. According to WebFX, 89% of ads feature a coupon code for listeners, and 80% use a call to action saying, “Go to [website] for a percentage off your next purchase.” Not only do the listeners feel as though they’re getting a good deal, but it’s also a way for you to track who was driven to your website from the ad. Additionally, you could mention a vanity URL that’s unique to the podcast ad, so that when users go to it, you know that they were directed there straight from the ad, and will be able to properly determine your ROI.
As mentioned before, you can A/B test your podcast ads by using dynamically inserted ads and, based on the conversion rates of each, moving forward with the one that performs the best. Your strategy is strongest when it’s grounded in data, and the beauty of marketing on podcasts is that you’re able to pinpoint the user journey, all the way to your desired endpoint.
Podcasts can be a powerful tool in a marketer’s tool belt. As listenership and ad spend grows in the medium, the definition of success may evolve, but one thing remains clear: Marketers need to adapt, use data, and listen to their audiences in order to be successful in this burgeoning ad format.