This Week in the Business of Podcasting
Hello once again, podcasting. I’m back, I’m 34 years old, and I’m refreshed from spending several days in a forest cottage. There was a Starbucks less than a mile away but it still counts. This week we’re looking at earnings reports, planning for the future, and looking at how podcasting has grown in the past year despite advertising-wide headwinds.
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Q2 2023 Earnings Reports Roundup
Yee haw, it’s time for another roundup. It’s earnings call season, once again, and here’s a quick breakdown of notable reports we’ve covered this week. First up from the Spotify Newsroom on Monday: Monthly active users have grown 14% year over year to 626 million, according to Spotify’s Q2 earnings report. The number is a positive improvement, but falls 5 million users short of Spotify’s goals for the quarter. Subscribers are up 12% y-o-y with 246 million, and the company has a record high operating income of €266 million (which converts to about $288.8 million USD).
During the earnings call, CEO Daniel Ek confirmed there will be a ‘deluxe’ tier coming to Spotify Premium later this year. Details are not fully confirmed but it’s presumed this will be the debut of a long-teased high fidelity feature that streams songs at audiophile-friendly levels of quality.
Keeping inside the world of podcasting, Audioboom reports their revenue per thousand downloads increased 32% year-over-year, reaching $60.09. AdWeek’s Wednesday roundup of YouTube coverage notes the platform’s ad revenue grew 13% year over year, up to $8.66 billion.
Also from AdWeek: Revenue grew y-o-y at NBCUniversal’s Peacock streaming service, bringing operating loss down to $348 million. NBCU also has television hopes on the horizon with an 11 year rights deal to secure NBA games on NBC and Peacock.
Newly-Minted Ethics Guidelines for Generative AI in Advertising
Late last week ADOPTER Media announced a new standard for authentic podcast advertising and YouTube sponsorships, establishing usage of generative AI to make “personal endorsement” style ads as disingenuous and unethical. A quote from Glenn Rubenstein, CEO of ADOPTER:
“The unique power of podcast advertising lies in its deep engagement. Podcast ads connect advertisers, hosts, and listeners in a way other media can’t. As generative AI tools become more available, it’s imperative that our industry safeguards its foundational strengths and proactively sets standards for authenticity. Personal endorsements have incredible value for advertisers and audiences alike. A host’s credibility with their audience matters. We must ensure that sponsorships help preserve that.”
Along similar lines, last Thursday Inside Audio Marketing covered a new set of ethics from the Association of National Advertisers. The new framework includes best practices requiring any use of generative AI tools to be disclosed as such. A quote from the new guidelines:
“Consumers should be given clear or easily accessible notice of the use of Generative AI in audio and/or visual advertisements when the failure to disclose… is likely to materially mislead a reasonable consumer as to the creation of the advertisement.”
While AI tools can innovate post-production processes or fixing small issues, proper ethics guidelines serve to future-proof podcasting’s authenticity and trustworthiness.
Google will Not Break Cookie Jar
As covered last week by Digiday, The Information, AdExchanger, and a host of others: Google has announced they are considering not formally killing off the third party cookie.
The proposed alternative is an opt-out tool that asks for tracking permission from the browser user. The opt-out tool would function similar to existing GDPR-compliant popups that exist on European versions of popular pages and services.
While third-party cookies getting a reprieve has caught a lot of headlines, it is also worth noting Google’s Privacy Sandbox has also recently proposed a new feature called IP Protection. The feature would only apply to Chrome and not entire operating systems. If implemented, the feature would anonymize user IP addresses, undermining a widely-used piece of data in podcast advertising. Similar tools already exist, such as Apple’s IP Relay, though they generally have a barrier to entry like requiring an iCloud account to use. If IP Protection ends up built and deployed to a commonly-used browser like Chrome, it would have real advertising impact.
Podcasting’s Future Looks Sunnier Than it did in 2023
Last Thursday from Ashley Carman’s Soundbite newsletter at Bloomberg: The back half of 2023 saw podcasting mired in downer headlines and less-than-thrilling progress. Still, even with layoffs, lawsuits, and a downturn of new deals, the industry still managed a 5% overall industry ad revenue increase while the overall advertising industry struggled.
That growth builds momentum into this year. iHeartMedia posted an 18% year-over-year growth in Q1. Acast reported a 25% increase in the same period. Production company Audacy filed for bankruptcy in January and their podcast business is now back to turning a profit. A quote from J.D. Crowley, Chief Digital Officer and President of podcast & streaming at Audacy:
“Do I think we’re going to get back to the crazy, Wild West of buying market share? I hope not. That’s not a healthy market. I think we’re in a healthy market now, but it doesn’t mean a show that makes no sense will get capital somewhere.”
While the Wild West mentality of big net-new investments might be gone, 2024 still has several big-ticket podcasting contracts. Names like Dax Shepard, Alex Cooper, and Joe Rogan are either moving platforms or broadening their distribution capabilities with sizable new deals.
Business-savvy Micro-Influencer Pricing Rises Since 2021
This Thursday from Kimeko McCoy at Digiday: Marketers interviewed by Digiday report that, on average, micro-influencers (influencers with smaller, more tight-knit audiences), are charging double or triple their 2021 rates. A quote from the article:
“Mostly, industry experts say the uptick in costs is because influencer marketing has matured, becoming a mainstay in ad budgets. As more advertisers are willing to shell out for influencer content, asking for content usage rights and exclusivity, the more money influencers are asking for.”
Some of the examples of pricing maturation are influencers tacking on fees for content rights, ad access to the influencer’s handle (such as running an ad on TikTok so it appears to be posted by the influencer themselves), and product category exclusivity. Meanwhile, agencies like The Influencer Marketing Factory note that celebrity and macro-influencers (100,000 to one million followers) have not seen the same increase in costs. While macro-sized accounts are effectively using bulk pricing for accessing their audiences, influencers with <100k followers are getting access to more pay transparency, better measurement, knowledge of usage rights, and ways to prioritize engagement over raw following count.
One example given is TikTok micro-influencers (accounts with 5k to 20k followers) charged between $1,000 to $3,000 per post in 2021. Now those same accounts charge $3,000 to $5,000. Blue skies for micro-influencers is good news for podcasting, as every podcaster is themselves a micro-influencer leveraging the medium’s intimate connection with audiences.
Podscribe Index
Purchase Rate by Genre, June 2024
In our latest Podscribe Index, notable changes in purchase rates came out from May to June. “Fiction” made the charts coming in at #1 with a 0.45% CVR followed closely by “Business” and “TV & Film”. The popular genres “Comedy” and “Health & Wellness” saw sharp decreases month over month with “Health & Wellness” decreasing 43% compared to May.
Quick Hits
While they may not be top story material, the articles below from this week are definitely worth your time:
- Educational Opportunities for the Podcast Industry by Tom Webster. An overview of current and upcoming education opportunities, including a free webinar and Tom’s new book The Audience is Listening.
- Introducing the newly branded Spotify Ads Manager. The rebranding also brings a new user experience and new features.
- The Listening and Consumer Habits of the Black Podcast Audience by Jeff Vidler. Signal Hill Insights looks at content preferences of Black podcast audiences and lists category opportunities for advertisers.
- How the Democratic presidential election upheaval will impact the political ad market by Kristina Monllos. With the sudden departure of President Biden from the U.S. presidential race, presumptive nominee Kamala Harris brings potential new ad spend opportunities to the race.
- Here’s Your Very First Look at Critical Role’s ‘Moonward’ by Cheryl Teh. The tabletop actual play company is debuting a new series based in the world of an experimental audio drama they acquired last year.
