Since the earliest days of podcasting in 2004, the key points of change over the years have been around monetization, content quality, devices used for listening or watching and software distribution platforms.
Podcasting has seen a heavy amount of churn on the content and distribution platform sides for many years. Tools platforms have enabled content providers and apps to be more usable and stable in recent years. Most of the current companies have proven to be steadily improving and economically viable.
Although many of the podcasting tools providers have been successful, many of the early providers struggled to stay viable. Companies that endured and found acceptance among content providers were those that worked hard to adapt their tools and platforms into what content providers needed. The common thread is they all had and continue to have a single point of contact that was reachable and respectful of podcaster community.
The podcast content community is very sensitive to platforms that are looking to take advantage of the community. In the past, podcasters have been burned by many early companies. For this reason, it is very important for new companies coming into the podcasting space to build trust with the podcast content community and engage with them as deeply as one can to learn the pitfalls to avoid and opportunities to move towards.
Key Trends and Challenges:
The podcasting market growth continues to center on mobile device adoption that includes smartphones, phablets and tablets. The market is dominated by audio content, with the vast majority of revenue for all major players in the market coming from host-read sponsor and inserted advertising in downloaded or progressively download play streams. Pre-roll advertising in podcast content can be effective, if kept in the 30 to 60 second range or less. Much longer host read sponsor messages can also have a significant value as well.
CPM revenue for podcasts and on-demand audio can vary wildly and range from just a few dollars to as high as forty to fifty dollars per thousand of reported downloads. The reason for this wide range is because the advertising market for podcasting and on-demand audio shows is immature and advertising buyers are mainly funding direct response campaigns today. The ROI results of properly matched advertisers and shows can be very high.
The podcasting space is still in the process of establishing audience reporting standards around the exact method for how to count downloads; play duration and advertising message impressions are tracked and reported. The other big issue is around having a credible third-party advertising agency recognize an audience research entity to verify reported metrics.
We are seeing advertisers tending to work with podcast brands and networks that have a strong awareness and reputation for delivering compelling content and advertiser ROI results.
Radio listeners are steadily increasing ownership of smartphones and tablets, thus will have the mobile data connection and device to get access to podcast and on-demand spoken-word audio content. The podcast hosting platforms are showing strong growth in podcast usage across smartphones, but tablets are growing in usage as well. Most of these devices have access to mobile wireless and Wi-Fi, thus making many tablets mobile devices as well. All tablets and smartphones have integrated Bluetooth radios that can connect to car head units.
Over the next few years, this same tablet/smartphone technology and mobile wireless data connections are going to be integrated into the dashboards of higher end new cars that are purchased by the same age group and education level as current and future on-demand audio/ podcast users. The other major impact on the podcast market is wearable mobile devices. The next generation of mobile device processors will be able to predict our needs and desires, based on sensed usage and activities.
Mobile devices and software are headed towards more hands-free usage and thus access to wireless on-demand radio-like experiences via the wireless carrier data networks. Every mobile device will be a radio replacement device that is with the user all day long versus just when in the car. This has the potential to grow the consumption of audio and video content. Smartphones are evolving to become PC replacements and, with phones getting larger screens, they also become tablet replacements or phablet devices. These larger screen smartphones and phablets will help grow media consumption for both audio and video.
The other major enhancement to the on-demand radio and podcast market will be more content coming from the broadcast radio side. I believe that more local radio stations will begin to utilize digital on-demand distribution of online only and some broadcasted content targeted at local, regional, national and global markets. The radio stations and broadcast radio groups will need to do a much better job of selling a combination of local, regional, national and global sponsorship packages to advertisers or better utilize savvy digitally focused advertising agencies that truly understand the on-demand radio and podcast advertising market.
The advertising messages in podcasts will need to be uniquely targeted to the specific podcast listener. Actual Ad placements will need to be heavy on the mid-roll side, but well integrated pre-rolls, mid-rolls and post-rolls can be 30 or 60 second spots or shorter. Like always host story telling about his or her experiences with the product or service is always good to have after or before the spots.
The other opportunity is that show donations will require a different approach than has been done in the past. Individual show donations will need to be a very easy and convenient donation process that would be visible with every episode of an on-demand radio/podcast series.
Looking to the future, we will see more premium paid ad-free on-demand radio and podcast content enabled via in-app purchase wrapped by free content in a freemium model. Podcasts or on-demand radio shows are a very personal medium and success is often measured on engagement that often leads to revenue coming from live events and selling related products like books, t-shirts, tickets, wine, hard alcohol and consulting services.
All mobile app distribution and ad sales platforms for podcasts will need to focus on generating revenue from offering services that meet the market needs to help generate revenue for the content providers. The opportunity for technology tools, client app development, ad sales and metrics providers is to tap into the $17 billion radio advertising market to fuel the on-demand radio and podcasting market.
This all means that revenue in the future of on-demand radio and podcasts will come from a variety of cash flow streams and each show will need to be able to custom tailor their show or network platform to a combination of all or some of the outlined revenue strategies.