Podcasting pioneer Panoply took media watchers by surprise last fall when the Slate-born network shut down the entirety of its content operations to train its full focus on ad tech.
The move underscored a long-extant mismatch at the heart of the podcasting boom: While content production has flourished into a glut of wide-ranging titles with devoted audiences, the monetization needed to support that often-niche content has failed to keep pace. Advertisers are trying to figure out: Are podcasts like radio or like digital?
In a metrics-obsessed digital ads industry, podcasts have historically struggled to offer the kinds of targeting, measurement and packaged scale needed to sell advertisers on the types of smaller but more devoted audiences the medium tends to attract. But with recent tectonic shifts in the podcasting landscape, including Panoply’s pivot (the company has since rebranded as Megaphone) and Spotify’s reported $340 million acquisition of Gimlet Media and Anchor, the industry may finally be poised to tackle these challenges through the guise of dynamically inserted ads.
Welcome to the Wild West of podcasting
A May report from the Interactive Advertising Bureau and PwC revealed a milestone in the adoption of dynamic insertion technology, through which publishers can plug and swap ads into episode slots at the time of download rather than release. The survey found that the share of ads placed through dynamic insertion (48.8%) was close to surpassing those baked into the content for the first time last year.
“That’s important because dynamically inserted ads are targetable, flexible and can be traded programmatically,” said Anna Bager, the IAB’s evp of industry initiatives.
Whether the goal is to serve promos to specific demographic segments, replace ads in archive episodes with timelier ones or A/B test creative, the precision of dynamic insertion has expanded the capabilities of podcasting ads, according to Ken Lagana, Megaphone’s head of sales and marketing.
“It’s shifted our landscape in a huge way,” Lagana said. “The majority of our business last year was direct-to-consumer direct response. This year, the majority of our business is now brand-based business and brand advertisers.”
But the shift also raises questions about the future of the industry that every growing ad-based media eventually faces in some form or another. Namely, can it maintain the bantering familiarity of host-read ads as blue-chip brands enter the market and demand more automated efficiency?
“What’s appealing about host-read ads is that it’s nonstandardized and every read is different—there’s improvisation,” Jacob Weisberg, the former editor in chief of Slate Group and CEO and co-founder of podcast network Pushkin Industries, said. “But I think in general, that appeals to the direct-response-type advertisers more than it does the big brands. And with more and more big brands coming into podcasting, they have tended to use prerecorded spots that can be dynamically inserted.”
Megaphone’s Creative Solutions arm is currently experimenting with new types of dynamically inserted ads that don’t entail a trade-off with creative quality. One such format is serialized ads that tie into a bigger narrative arc or theme across multiple ad breaks and episodes—sort of a podcast within a podcast. While the company only broached the idea with advertisers last month, Lagana mentioned that potential concepts might include, say, a tech holiday gift guide series or recurring automotive or travel featurettes.
Fresh off its February acquisitions of Gimlet and Anchor, Spotify meanwhile announced a new ad product last month that will allow brand marketers to target segments of Spotify Free users based on their podcast listening, including across category interests like comedy, music and tech. Brands like Samsung and 3M have signed on to be part of the rollout.
If podcasting continues to consolidate as expected, dynamic insertion will allow for the kind of bundling and targeted segmentation that makes niche audiences more marketable to advertisers. Before its sale, Anchor claimed that its sponsorship program, which spreads relevant ads across swathes of small titles on the platform, doubled the total number of ad-supported podcasts on the market in a few months.
“The growth in dynamic ads is just another example of the way that podcasting can address differing audiences at the same time,” said Richard Miron, founder and director of podcast consultancy Earshot Strategies. “Podcasting isn’t broadcasting; it’s narrowcasting. Different types of programs are able to address varied niche audiences, and it’s exactly the same for the advertising that goes into these programs.”