Podcasts have been a growing phenomenon for several years, and with the rapid growth, advertisers were quick to jump on how to leverage this medium to their advantage. Although the advertising space has always been exclusive to major national brands with large advertising budgets, that is beginning to change. Two of the largest podcast providers are disrupting the status quo with a new way for brands to access podcast advertising. Spotify and iHeart Radio are making podcast advertising more accessible, addressable, and scalable through their new audio ad technology to insert ads programmatically into podcasts.
If you’re a regular podcast listener, then you probably can immediately think of the advertisements your favorite podcast host reads for the same two or three sponsors week after week. HelloFresh always comes to mind, and I will admit, after listening to the Crime Junkies rave about HelloFresh over several episodes, I caved and signed up. Podcasts have proven to be a beneficial advertising tactic for increasing awareness, brand recall, and purchase intent because of the influential authority podcast hosts bring to the table. Nielsen conducted a study where they found 69% of respondents agreed podcast ads made them aware of new products/services. Additionally, 62% were able to correctly recall the brand being advertised and agreed ads made them consider new products/services.
Previously, the only way to advertise in a podcast episode was through sponsorships with the individual podcasts. The majority of sponsorships would include live reads by the host throughout the episode. The live-read aspect of podcast advertising contributed to the success because the message is coming from a trusted source and feels more authentic. One podcast couldn’t endorse two products in the same category, so advertisers had exclusive advertising rights with the sponsorship. This made advertising very expensive and untouchable for brands looking to advertise on a smaller scale.
With the new capabilities from Spotify and iHeart, podcast advertising is now more accessible at a smaller scale. Instead of advertisers having to negotiate a sponsorship with an individual podcast creator, they can go through one of the platforms to programmatically insert ads into a variety of podcasts. Meaning an ad can appear across multiple podcast episodes based on an advertiser’s desired audience demographic (age, gender, location) and audience segment (for example, fitness enthusiasts, luxury shoppers, new parents, etc.).
This new way of advertising in podcasts helps brands who previously wouldn’t consider podcast advertising because they needed to reach a more defined audience or were limited by advertising budget. For example, a university can now target its ad towards prospective students based on geographic region and age segments to eliminate wasted impressions. Additionally, without the exclusivity of sponsorships and more inventory available across multiple podcasts, advertising costs are now more realistic for various budget levels. Spotify and iHeart are also able to provide insights and reporting on ad delivery, which was not previously available with podcast advertising.
One of the downsides to the new platform for podcast advertising is brands lose the live-read aspect of the ads. The ad must be pre-recorded instead of the host reading a script, so naturally, some of the authentic nature is lost when ads are delivered this way. However, this is a small price to pay for being able to more cost-effectively target your desired audience across multiple podcast titles.
Podcast sponsorships are not going away, but with Spotify and iHeart Radio delivering a solution to make podcast advertising more accessible, brands can choose which form of podcast advertising is more strategic to meet their marketing goals and budgets.