Podcasting Consolidates – But Don’t Expect Programmatic Ad Buying Just Yet

Major acquisitions have recently brought both podcast content and distribution under key players like EW Scripps, Spotify, iHeartMedia and Pandora.

But advertisers won’t see immediate benefits around better targeting and automated buying.

Under this new, consolidated landscape, EW Scripps owns the podcast network Midroll and player app Stitchr, iHeartMedia has Stuff Media, Spotify owns producer Gimlet Media and platform Anchor and Pandora owns programmatic podcast exchange PodWave.

Apple still exerts enormous influence

Granular targeting and measurement are difficult because Apple captures over half of all podcast listening, but doesn’t share listener-level data with advertisers.

“In order to compete, you need to own multiple pieces of the value chain,” said Owen Grover, CEO at podcast platform Pocket Casts.

Better targeting and automation won’t come to podcast advertising until a significant chunk of distribution shifts away from Apple.

“At the end of the day, it really depends on Apple and what their plans are,” said Francesco Baschieri, CEO at podcast ad platform Voxnest. “They’re the sleeping giant here.”

While streaming platforms and audio distributors can apply their unique data to target ads based on listener behavior, the podcast audience isn’t large enough yet on any one platform for granular targeting to be worthwhile.

“The majority of plays will happen outside of these platforms,” Baschieri said. “They will not be able to do real-time targeting on other plays.” 

But Apple’s refusal to innovate on its user experience has opened inroads to competitors.

For instance, Pandora and Spotify, which is the second-largest listening platform, offer more personalized listening experiences for podcasts like they do for music.

“Apple has had a very passive approach to what is essentially their invention,” said Leo Saucedo, chief business officer at Acast. “From the consumption side, people have shifted away from the default iOS podcasting app.”

Programmatic might harm the podcast experience

While iHeartMedia, Spotify and Pandora could theoretically enable automated buying of podcast inventory, they are wary of disturbing the user experience.

Dynamically inserted ads must prove they’re better than native host-read endorsements before being widely adopted, said Jeff Hinz, chief growth officer at podcast distribution platform RawVoice.

“Part of your podcast campaigns will become programmatic,” he said. “But all of the research skews toward host endorsements being a better ROI generator than ad insertion placements.”

Smaller publishers also fear that moving to programmatic sales will erode the value of their inventory, which are still selling at high CPMs directly. But as personalization emerges in the podcast listener experience – Pandora’s Podcast Genome Project, for example, suggest shows and episodes to listeners based on their interests – advertisers will need to follow that trend.

“How can you get a pre-designed host read to be a smooth, non-intrusive, personalized ad?” Saucedo said. “The business that solves that will shift the market one way or another.”

Is there a podcast bubble?

With more deal activity than ever before, some are wondering whether the podcast market is entering a bubble, especially with the high price Spotify paid for Gimlet and Anchor.

But that acquisition says more about Spotify’s strategy as an audio platform than it does about the podcast market, Grover said.

“You have a buyer with the very deepest of pockets, but also a strategic intent for the assets,” he said. “Spotify feels strongly about diversifying not only their content portfolio, but also the risk regarding their core product.”

Money flowing into the space is the sign of a growing industry rather than over-inflation.

“It’s definitely a large amount of money right now,” Saucedo said, “but if you’re betting for a $33B US market like radio, everybody is making their investments.”

And consolidation is just getting started. Spotify CEO Daniel Ek said the company will likely invest more in its podcast offering this year. And there are a number of shiny players on the market up for grabs, like content network Wondery.

“There are some consolidating trends, but the industry is still pretty wide,” Grover said. “There’s going to be room for lots of players.”

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