After digging into the topic in a previous article I found that the podcast advertising model is broken. In the previous article I talked about podcast advertising, how it works and untraditional ways that podcasters are using the medium to promote their own businesses. (You can read that previous article to get a sense of how everything works now.)

In this article I want to dissect a major problem in the way podcast advertising works. This broken model also applies to other forms of on-demand media (Netflix, Hulu, etc) but for the purpose of this article I’ll stick to podcasting alone.

How podcast advertising works now

As I mentioned in the previous article podcast advertisers pay for sponsorship based on the number of downloads your podcast gets per episode. Podcast advertisers pay based on each segment of 1000 downloads per episode release. Typically they are paying $15 per 1000 downloads. So, for example, if your podcast is getting 5000 downloads per episode release and you’re charging $15 dollars for each of the three ads during your show, your looking at about $225 per episode.

How podcast advertising is broken

That’s easy math, but the problem is that advertisers are only looking at your current download rates. The number of podcast listeners is increasing drastically and over time new people will be introduced to your show. Just because you release your show on a weekly basis doesn’t mean that listeners will begin with your most recent episode and then listen forward. For instance, when I find a show that is interesting I will go back to episode one and then listen moving forward until I’ve caught up. I actually prefer to find shows that have been live for about a year because there is several weeks worth of listening that I have to catch up on before I’m current on the show. That’s a lot of great content!

Currently, the podcast advertising only focuses on your current listener strength, but moving forward that strength is likely (hopefully) to increase and those past episodes may double or triple in downloads. However your advertisers are only paying for the current listenership.

Now, advertisers will say, “tough! You can’t prove what the future will hold.” But I’d suggest that you keep this nugget of information in the back of your mind when negotiating rates.

A possible solution for podcast advertising

I think a method that would work much better in the world of advertising on podcasts is a dynamic advertising network. Technically I haven’t thought through how to make this work, but in theory it would be something similar to the YouTube ads that we are familiar with. Each podcast would have (for instance) three available ad slots. Those ads slots would be filled with audio ads dynamically while the listener is enjoying the podcast. Advertisers would still have the ability to choose podcasts based on the content/style/subject matter in the podcast but instead of having their ad “hard coded” into the show, their ad would simply fill a dynamic slot. The advertiser may pay for each play.

For instance if your show is typically getting 1000 downloads per episode release the advertiser may pay for 5000 ad entries. Every time your episode is loaded and played their ad would fill an audio slot. That would count as one “play” against the 5000 that they purchased. Eventually when their 5000 ads run out, they’d have the ability to either purchase more “plays” or you could replace the ads with a new advertiser.

Benefits for the podcaster

This works in the benefit of the podcaster by monetizing the podcast over the life of it’s existence. For example, if you develop a podcast that doesn’t become popular for over a year, you can begin monetizing past shows that will likely be enjoyed by future listeners. Having those ad slots available will allow you to fill the slots with paying advertisers even though the shows were recorded months ago. The dynamic ad placement would allow podcasters to focus solely on building a great podcast and reap the reward in the future.

Benefits for the podcast advertiser

By having dynamic ads, podcast advertisers can have a more flexible approach to the content they deliver in their ads. Because all the ads that are inserted into episodes now are static, the content of the ads may become irrelevant in the future. For instance, if an advertiser is pitching an upcoming event. Once that event is over, the ads is pretty much worthless (except for brand awareness). With dynamic ads, all episode (future and past) could be filled with current content. Essentially even podcast episodes that were recorded years ago could be advertising events that are happening next month.

By allowing advertisers to create dynamic ads you are giving them flexibility in content creation and ensuring that their money continues to go towards valuable media.

Technical issues with this approach

There are many complications with this approach to “fixing” the current podcast advertising model. The most obvious one is the podcast episode media type. Podcasts are recorded, saved and delivered as a static file (MP3) that does not allow for dynamic space. If one were to allow for dynamic ads the file would have to be broken into sections that are separated by ad slot gaps. Those gaps could then be filled with dynamic ads that are served from an ad network.

Another complexity is the way in which listeners consume podcast episodes. Most listeners simply subscribe to a podcast using iTunes, PodCruncher, Sticher, or other media source. By subscribing they are simply downloading the MP3 to their device (smart phone, computer or tablet) then listening to the episode when they are ready. It’s not currently necessary to have a connection to the internet in order to listen to pre-downloaded episodes which would be required in order to have dynamic ads delivered by a media source.

Also, the majority of listeners enjoy podcasts during their commute, at the gym, or in other locations that might not have a wireless internet connection. If listeners were required to connect to the internet to consume podcasts they may have to use their device cellular signal (3G or LTE) which is not desirable. Downloading podcasts via a cellular signal can use a lot of data which could drive up the amount they are paying for their device bill.

Potential growth in the podcasting industry

Problems like these could lead to a growth in the podcasting industry. As podcasters, businesses and media companies begin to identify these kinds of problems solutions will arise that will require the work of many additional people. For instance, if a dynamic ad network was presented to the world of podcasting I could see an increase of advertisers coming which would require additional creative services to create the media. Additionally, once the standard for podcast advertising is developed it will be easier for more ad networks to arise requiring workforce to supply the demand. Essentially this industry could grow into a significant sector of the future economy.

Conclusion

There are obviously some technical problems to overcome, and I don’t claim to have the best proposed solution for podcast advertising. But the podcast advertising solution that is currently in place seems to only be a temporary solution while the medium continues to grow in popularity. Advertising networks should consider new formats in which they can deliver ads and podcasters should begin to think about ways they can be innovative in allowing advertising space. It’s exciting to watch a new industry grow and I’m looking forward to seeing what the future holds.


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