Two years after Jamie Golden and Knox McCoy launched Popcast, a pop culture podcast they host once a week, they still couldn’t attract high quality advertisers despite the show’s loyal and growing audience. “We found the advertisers who were approaching us weren’t quantifying our value in any kind of tangible way,” said Golden in an interview. “And yet we had these fans who would just go to bat for us. Whatever we asked of them, they would do, and they were supportive and stayed consistent. We never saw a decrease in downloads, not one month we’ve been in existence. It’s been growth, growth, growth.”
In November 2006, Mignon Fogarty’s phone rang. She didn’t recognize the number, but rather than letting it go to voicemail, as many of us do with unknown callers, she picked up. On the other end of the line was John Sterling, the president and publisher of Henry Holt, an imprint of Macmillan. He’d seen a recent item in the Wall Street Journal about Grammar Girl, a hit podcast Fogarty had launched a few months prior that was already receiving nearly a hundred thousand downloads per episode. “He originally called me to talk about doing a book deal,” she told me. But she had already set her sights much higher.
We’ve seen a new phrase enter our lexicon in recent months: the “Serial effect.” Google it and you’ll find this neologism employed everywhere from The Hollywood Reporter to USA Today, and it’s used to describe the cambrian explosion caused by Serial, a podcast that relitigates the trial of Adnan Syed, who was convicted of murdering his girlfriend in 1999. This podcast was so popular, the thinking goes, that it’s introduced millions of new listeners to the podcasting medium, in the process unleashing a tide that lifts all boats. Podcasts are now considered part of mainstream culture, a topic of watercooler conversation as well as a booming market for advertisers.
And there is evidence that the Serial effect is, indeed, real. Edison Research found that podcast listenership has increased by 18 percent in the last year. Each day we hear news of media companies launching new podcasts, the emergence of podcast networks, successes in podcast crowdfunding, and even the introduction of venture capital money. It’s hard to read that Marc Maron pulls in $15,000 for every podcast ad and not conclude that real money is being made on this platform that, up until a few months ago, was considered a hobbyist niche. In fact, it wouldn’t surprise me one bit if we see articles within the next year questioning whether we’ve entered a podcast bubble, one that’s produced an oversaturated market.
But though the Serial effect is genuine, new data reveal how any growth was relative and that we’re nowhere near reaching podcasting’s full potential, both in readership and revenue. According to a new fact sheet released by Pew, the percentage of Americans who have listened to a podcast within the last month sits at 17 percent, a mere two points above where it was in 2014. As Nick Quah wrote in his podcast newsletter Hot Pod, “the gains in podcasting over the past several months were significant in relative terms, but are really a drop in bucket in absolutes, particularly in the more significant metrics: listenership, brand awareness, so on and so forth.”
A new analysis from FiveThirtyEight shows that major advertisers are only beginning to dip their toes into the podcasting waters. A data journalist there listened to the top 100 most popular podcasts and recorded what types of ads populated these shows. Her most significant finding? Roughly a third of the top 100 podcasts didn’t contain a single ad. So while we keep hearing of podcasts fetching north of $20 CPM ad rates, relatively few podcasts have the kind of scale that attracts advertisers at all.
And the kind of companies who currently advertise on podcasts are still relatively small fry. Roughly 87 percent of ads were for web-based companies, most of which aren’t even publicly traded (anyone who listens to podcasts has likely heard ads for Squarespace, Stamps.com, and MailChimp, none of which are Fortune 100 material). Most of these are also of the direct response variety, meaning that a user is given a specific URL to go make purchases, thereby ensuring that the ad is measurable. This is a far cry from the much more lucrative brand advertising you’ll see from major consumer companies like Coke, McDonalds, and Samsung.
It can be argued, however, that Serial only just concluded in December, and it’s unrealistic to think that Madison Avenue would shift all its advertising budgets in a mere few months. And one data point in the FiveThirtyEight analysis pointed to why podcast advertising has nowhere to go but up: almost 100 percent of ads are read by the host or a producer for the show. As Andy Bowers, senior producer at Slate, told me recently, podcasting is the most “intimate medium,” with hosts speaking directly into your iPhone earbuds in what is almost perceived to be a one-on-one conversation. This is why their ads have been reported to be so effective, and it’s only a matter of time before larger brands latch on to this efficacy.
The question is whether this intimacy will transfer over into brand advertising. Most podcast advertisers are relatively small companies that haven’t accumulated any negative baggage. What happens when Walmart wants to sponsor a podcast — will the host be able to heartily endorse the company, and if he does, will it erode listener trust? And if we see the emergence of the polished, scripted ads typical on FM radio, will that taint what before felt like an un-commercialized medium?
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Either way, with market penetration still relatively low and the continued growth in smartphone use, as well as the introduction of bluetooth technology in newer automobiles (which makes it easier to listen to podcasts while driving), I think it’s safe to say that we’ve only seen the tip of the iceberg when it comes to podcast adoption. With annual industry revenue at a paltry $34 million, it’s hard to blame podcasters for looking at the $44 billion annual radio industry and considering it an untapped goldmine, a revenue source that is nowhere near having reached its full potential.
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The Serial Spoiler Special, the Slate podcast that, each week, analyzed the most recent Serial episode, was Slate’s quickest podcast launch when you measure the time between its ideation and debut. “Four weeks after [Serial] launched everyone at Slate was talking about it,” said Andy Bowers, the executive producer for the magazine’s podcasts. “And I got a call from an editor who said, ‘Why don’t we just record these discussions we’re having and do a podcast about the podcast?’ And I was like, ‘That’s a great idea.’ And two days later we launched it.”
Some found the idea of a podcast about a podcast to be a little too meta and absurd. A funny video uploaded to YouTube poked fun at Serial fans for their level of obsession and willingness to travel ever deeper down that rabbit hole. “Dude, don’t tell me about that Slate podcast, I love that podcast,” says one character in the video. “I’ve listened to every episode. In fact I’ve even started listening to a podcast that’s about the Slate podcast, so every week when the Slate podcast comes out, this podcast also comes out and talks about what they’re talking about on the Slate podcast.”
As absurd as it may have sounded to non-Serial fans, the Serial Spoiler Special was a huge hit, generating hundreds of thousands of downloads per episode. “A ton of people who were Serial fans started listening to it and so it brought a whole new set of listeners into the Slate podcasting orbit, which was terrific,” said Julia Turner, Slate’s editor in chief.
That orbit of which she speaks has grown substantially in recent years. According to Bowers, Slate’s 14 or so podcast shows get about 6 million downloads a month, and its audience has tripled in just the last year. Sure, part of that’s due to Serial and its success bringing millions of new listeners to the podcasting medium. But Slate made a very early bet, long before the mainstream adoption of podcasting was a forgone conclusion, by investing heavily in the audio format, positioning itself to ride the wave as millions of new consumers purchased smartphones and eventually realized that they could download audio files for on-demand listening.
It made that bet while many of its news media competitors shifted much of their focus to online video. Tempted by the high CPM ad rates on pre-roll ads, several print media stalwarts have invested significantly in beefing up their video staffs. In 2013, both Meredith and Scripps launched several original web series, and that same year the New York Times hired Rebecca Howard, a former VP at 20th Century Fox, to head up and expand its video department. But perhaps no company has staked more on video than BuzzFeed, which just accepted $50 million in VC investment, largely to expand its BuzzFeed Motion Pictures division, which racked up a stunning 4.5 billion views in 2014.
While Slate certainly hasn’t ignored video (in fact, it produces some of its own original programming and regularly aggregates viral videos from around the web), its podcast offerings are much more substantial, having developed fervent, almost fanatical followings from listeners, many of whom are willing to line up around the block just to attend a live recording. So why did Slate see so much success while other news outlets, like the New York Times and Boston Globe, scaled back their audio offerings in favor of video?
To hear about Slate’s entry into podcasts is to learn about the genesis of the medium itself, because the magazine was a participant almost from the very beginning, entering the scene not long after Dannie Gregoire first coined the word “podcasting.” Bowers had been working for nearly a decade as a correspondent for NPR, serving on beats ranging from the London bureau to the White House, when, in 2003, he was brought on to work on a collaboration between Slate and NPR — a news magazine show called Day to Day. “I joined Slate as their person on the staff of Day to Day,” said Bowers. “So I actually kept the same desk at NPR but changed employers. And as part of that, my job was to get the Slate people caught up about how to do radio, to build studios at our various bureaus at Slate so they could appear on NPR.”
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This put Bowers in the perfect position to usher Slate into podcasting. He began experimenting with the platform by just simply reading out Slate articles so readers could listen to them on-the-go. Even with this rudimentary offering the publication was able to amass about 10,000 regular listeners. He also hosted a weekly discussion with John Dickerson, Slate’s political correspondent, but Bowers’s real insight came while listening in on weekly editorial meetings. “John and his colleagues in Washington had hilarious conversations that sounded like how I was used to hearing reporters talk at the bar or after they appeared on the Sunday talk shows,” he said. “And I thought, ‘If I just put microphones in the conference room, this would be really entertaining. People would hear the honest conversation that reporters have.’” That insight eventually became the Political Gabfest, an hour-long show — hosted by Dickerson, former editor David Plotz, and Emily Bazelon — that’s among Slate’s most popular podcasts.
The adoption was so swift that when NPR decided to end Day to Day, Bowers was in a position to shift all his efforts to growing Slate’s podcast network. What astonished him was the level of intimacy inherent in the form. After spending a decade in radio he had assumed that it was the most intimate medium, but he found podcasting to be one step deeper, in that listeners actively subscribe to a show and in doing so feel like they’re joining a club. At no point was this more evident than at the first recording of Political Gabfest that Slate opened up to a live audience. “I believe the first one was right around the inauguration of Obama in 2009,” he recalled. “We decided to do a live show thinking there would be a lot of people in town for the inauguration. So we booked a venue and we literally had no idea if 10 people or 100 people would show up. It ended up having a line around the block.”
This fervent fandom is why Slate and other podcast networks are able to charge such high advertising rates, much higher than what you could typically demand for online display advertising. Because the ads are often read out by the hosts themselves, often in some creative way, listeners don’t feel the urge to skip ahead. “During one of our earliest live shows that had been sponsored by Audible.com, David Plotz was doing the Audible ad in front of the audience,” said Bowers. “He said , ‘Political Gabfest is sponsored by … well you know who it’s sponsored by,’ and the whole audience yelled ‘Audible.com!’ When that happened I was like, OK, that’s pretty effective advertising.”
Because Slate doesn’t have to deal with the constraints of traditional radio broadcasting, it’s been able to experiment with the form over the past decade. In addition to its regular shows, it also tried unofficial audio tours of popular tourist attractions. One was recorded by an art critic in the MET. “I was listening to it the other day because I’m here in New York,” said Bowers. “And it still makes me crack up, like when he starts talking about how worthless a particular Picasso is. We got emails from people saying they were standing at the museum cracking up and the guards were looking at them like they’re crazy.” Slate even experimented with a one-to-one connection between hosts and fans; with the success of the live shows, it started selling tickets to private cocktail meetings with the hosts that take place prior to the recordings. They now sell out within minutes.
Still, even while being open to experimentation, Slate has limited resources and so must be choosey when deciding to devote staff to a new show. I wondered whether the magazine makes calculations about the potential audience size of a particular niche and whether that audience would attract advertisers. “There isn’t nearly as much pre-podcast audience analysis as your question suggests,” said Slate editor Julia Turner, who also co-hosts the magazine’s Culture Gabfest. “A big part of the success of the Serial podcast was because we’re all podcast listeners, and so we all think about what we like and less so in a strategic way, and that helps us determine what would be a fun podcast to listen to.”
One of its most recent show launches is the magazine’s most ambitious yet. In February 2014, Mike Pesca, a longtime NPR correspondent who once reported for Day to Day, announced he was leaving public radio to start a daily Slate podcast called The Gist. “As soon as I met him I had the same conclusion that many in public radio had, which is that this guy was a unique talent behind the microphone and should have his own show,” said Bowers. “And for some reason NPR didn’t give him a show.” The Gist is a sort of daily news magazine, one on which Pesca displays a unique talent for language play while poring over current events. Aided in part by an excerpt in This American Life, The Gist has quickly become Slate’s most popular podcast.
Any consistent listener of podcasts has likely noticed that most podcast sponsors are direct-response advertisers — it’s easy to track the ROI of their sponsorships because listeners are encouraged to plug in a special promo code to receive discounts. The challenge Slate has now is to lure brand advertisers — the kind that are trying to raise brand awareness rather than direct sales. According to Bowers, Slate is in a unique position to attract these companies because, unlike other podcast networks, Slate’s is affiliated with a magazine. “Because we’re connected to a larger website, for many years we have had advertisers who were on the Slate site and on the podcasts.” For instance, Acura sponsored a recent live tour of Gabfest, in some cases offering test drives to audience members. Another podcast hosted by Plotz was sponsored by Delta.
There’s another way that Slate benefits from being both a podcast network and an online magazine — cross pollination of two audiences. This has allowed it to both widen its reach and also strengthen its brand, converting casual readers into hardcore fans that will follow it into almost any medium. “I’ve definitely gotten emails from people who say, ‘Hey, I’ve been listening to your podcast for years and I’ve finally clicked over to the site to read an article you talked about, and there’s so much good stuff here and I’m going to come back every day,’” said Turner. “And I also get letters from people who say, ‘Oh my gosh I’ve been reading the site every day and you’re always talking about podcasts and I finally listened to one and I’m a convert.’”
In a world where advertisers are less interested in pageviews and more focused on audience loyalty, it’s hard to imagine a more loyal audience than that.
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