programmatic advertising has made a huge increase in the last couple of years. So I did a little bit of research. I looked into some stats on the growth that it has made. And I want to share that with you.
I can go on and on all day about how important and influential host-read endorsement ads are, but the reality is we need programmatic ads in podcasting for various reasons.
Today, I want to share the research I have done because I think that programmatic ads have a place in podcasting and will help the industry continue to grow.
I will cover topics like:
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[00:00:17] Heather Osgood: Hello, and welcome to the podcast to advertising playbook. I'm your host, Heather Osgood. And today, on the show, I will be talking about programmatic ads for podcasts. Now on the show, I talk a lot about those hosts-read endorsement ads and how important they are. I like to talk about how those endorsement ads are really influencer marketing. This message must continue to get out into the space.
[00:00:44] Heather Osgood: When you have the host of a podcast talking about a specific product or service and how it edifies a person's life - that is absolutely influencer marketing. And we need to make sure that, as an industry, we continue to push for that type of advertisement to be classified as influencer marketing because it comes with so much power.
[00:01:09] Heather Osgood: When you listen to a show, and you know, like, and trust that host. And when the host talks about a product, it's really easy for us to get excited about potentially purchasing that product. Now, I have to tell you a quick story. I am interviewing to fill an operations position, and I had an interview with the candidate today.
[00:01:29] Heather Osgood: And she, I asked her about podcast advertising, and she's like, "Oh yeah, I listen to podcasts all the time. And I love the ads. But, what I can't figure out is how is it that all of the ads that I hear on the podcast are products that I'm actually really interested in buying." And I really had to laugh because we have all been cyber-stalked by-products that we are interested in.
[00:01:54] Heather Osgood: From either our smart speaker, listening to us, our phone listening to us as, or searching something on the internet. And then suddenly, we've got all of these ads in our social feed and websites that we visit. Currently, there is no way to do these ads in podcasting.
[00:02:14] Heather Osgood: If you were listening to a podcast and all the products or services or products that you would genuinely be interested in, that is a total coincidence. There is no software out there that can say, oh, this person is listening or talking about this product, let me go ahead and target them.
[00:02:30] Heather Osgood: So I thought that was ironic because she talked about host-read endorsement ads. I tell this story to show the power of these host-read endorsement ads. There is a ton of power in what can be created with influencer marketing.
[00:02:53] Heather Osgood: We do not want to get away from that. However, I started the episode by saying that I would talk about programmatic advertising, as it has made a huge increase in the last couple of years. So I did a little bit of research and looked into some stats on the growth that it has made.
[00:03:13] Heather Osgood: Before we dive into those stats, let's talk about programmatic advertising. It frequently happens when we confuse the technology of dynamic ad insertion with programmatic advertising and are very different.
[00:03:37] Heather Osgood: So let's just set the stage real quick and talk about the three different kinds of ads in this space. So there are three different delivery methods. So the first delivery method is embedded or a baked-in. An embedded or baked-in ad is in one specific single episode. So you have an ad that is published in episode 100. And it is going to stay in episode 100 until that ad is physically removed. If the publisher of that podcast downloads that file, extracts the ad and then uploads a new one, then the ad can come out. But it is a very manual process. So that's why we call them embedded or baked-in because they're in that episode indefinitely.
[00:04:26] Heather Osgood: Next, we have dynamically inserted ads. So dynamically inserted ads are digitally inserted into a podcast at specific break where we decide to put in an ad. So we all have watched YouTube at one time in our lives and had that experience where we're watching YouTube, and suddenly, an ad starts playing. Those are dynamically inserted into that YouTube video, and in the same way, ads can be inserted into podcasts.
[00:04:58] Heather Osgood: Now, the big difference when I make that comparison, I always like to kind of preface that by saying, we know where we're putting these insertion points, just like I'm sure they do in YouTube as well, but it doesn't have to interrupt the content and it shouldn't interrupt the content. So a dynamically inserted ad can be placed wherever we want it to be placed within an episode. And there can be multiple ads that are placed within that episode.
[00:05:22] Heather Osgood: And those can be host-read endorsement ads. They could be anything that the technology simply inserts an audio file into another audio file. So we can take those dynamically inserted ads and use them for host read endorsement ads.
[00:05:40] Heather Osgood: We can use those pre-produced announcer-read ads and insert them into a podcast. And that's where programmatic ads come into play. So programmatic ads use dynamic ad insertion technology to insert that prerecorded ad into a podcast. And why that's so important for us to understand is because there is not usually a distinction between the fact that a dynamically inserted ad can be host-read. It is presumed that a host-read ad is baked-in or embedded.
[00:06:21] Heather Osgood: So those are really important things for us to understand that we're using the dynamic ad insertion technology to insert either a host-read ad or a pre-produced ad.
[00:06:34] Heather Osgood: Now, when we're talking about programmatic, though, just like in any other form of digital marketing, what's so powerful about programmatic advertising is that we are taking the content that we want in our ad, this pre-produced ad. And we're saying, who do we want to hear this? And we are looking at the age of the person. So we're looking at the person's location, and we are targeting [00:07:00] that demographic instead of a specific show.
[00:07:04] Heather Osgood: If you just love the podcast, let's say, On Being. That's like your favorite show, and you really, really want to advertise on that podcast. You can't really programmatically do that. So when we're doing programmatic ad insertion, we were just targeting based on who we are trying to reach and not based on the actual show.
[00:07:27] Heather Osgood: Now, there have been advancements in contextual targeting. And getting back to the story I shared of the gal that I was interviewing, when she was talking about the advertisers she liked, she was talking about them because those podcasts that she's listened to, she really likes those podcasts. And so chances are because she likes the podcast. She also really likes the advertisers that are going to come along with it. And that's why they felt so important and so special to her.
[00:08:01] Heather Osgood: So when we look at programmatic advertising, if we want to reach females in New York City over the age of 25, then that's who we're targeting. But that contextual piece is really, really important. So I know companies like Adswhizz and Podsights have recently announced that they are working on contextual targeting and that contextual targeting will increase the efficiency of programmatic ads significantly. So not only can we target the person we know is going to purchase, but we can align our message with the content. This will make a big difference in our ability to really get success with campaigns.
[00:08:50] Heather Osgood: So let's talk about how much programmatic ad placements are growing within this space.
[00:08:56] Heather Osgood: So according to e-marketer. In 2021, there was $31 million spent on programmatic ads. And in 2022, they're estimating that it will be $106 million. That's considering that they're going from a tiny percentage of the overall podcast ad buying to an 8%. So when you look at all of the ads in the podcast space, 8% of them will be those programmatic ads, which is what they're predicting for 2022.
[00:09:45] Heather Osgood: The other thing that is so nice about programmatic is the ease of purchasing. Something that is talked about frequently is that it's not super easy to buy podcasts ads. And if you think about making further advancements within programmatic ad buying. We can make it so much easier for the person who wants to purchase ads to buy ads. So I think that there is undoubtedly a lot that we can say about the value of programmatic ads.
[00:10:18] Heather Osgood: Now, let's talk about why programmatic ads have not been widely accepted and why they haven't grown more quickly. I think one of the things for us to definitely consider is that each podcast has its own hosting provider. There are hundred-plus different hosting providers out there, with 10 or 15 top hosting providers that most people use, but there are a lot of choices. Suppose you do not have the right hosting provider that can do dynamic ad insertion and can sell programmatic ads. In that case, you're not going to get those programmatic ads. And I think that it's important for us to realize you can have a hosting provider that allows you to do dynamic ad insertion. But if that hosting provider isn't connected, like I mentioned, with a service that then injects those ads from an AdsWizz or a platform like that, you're not going to get them. So it's really important to look at the hosting provider. Until more podcasts are willing to upgrade their hosting services to allow dynamic insertion, we will not see an increase in programmatic ads.
[00:11:41] Heather Osgood: The other thing for us to consider is that my guess is, is that most of the very large shows are headed toward dynamic ad insertion. I know I've said it here once, and I am sure I will continue to say it. But, my prediction is that the entire industry will go completely to dynamic ad insertion.
[00:12:03] Heather Osgood: I need to think about that and talk about that because we need to be selling ad impressions based on who is listening. So if I am listening to a podcast today, it doesn't matter if it was produced five years ago. I am still a potential customer today, and I should be served up an ad.
[00:12:26] Heather Osgood: The other thing that is so important is that we can create so much more frequency with dynamic ad insertion than embedded ad reads. And I could go on and on, but I really do believe that dynamic ad insertion will become more prominent. And as dynamic ad insertion and that technology are set up on more and more podcasts, then programmatic will have the ability to grow faster.
[00:12:53] Heather Osgood: The other thing we must consider with programmatic ads is that CPMs in podcast advertising is extremely high. So if you look at the CPMs in podcasts and compare them to others, especially traditional media is like radio or things of that nature.
[00:13:13] Heather Osgood: Our CPMs really are very high. The concern is that with programmatic, the prices might decrease. Because suddenly we're saying like, "Hey, you know, we're going to just get it out there. And we don't know which podcast the ads are gonna be on, but we're okay with that."
[00:13:33] Heather Osgood: And now, suddenly, it becomes very commoditized. Right now, we are very, as an industry, we are looking into particular podcasts. We like this particular show and host. We want them to talk about our product. So pricing could really be an issue.
[00:13:57] Heather Osgood: When we look at programmatic representing potentially 8% of the ad spend in 2022, that is a high number. We should be happy that it's growing because it opens the door to different types of advertisers and more spending within this space, which is undoubtedly essential for the development of the industry. But it's still only 8%. So if you're really looking to do a big push in podcast ads, are you really going to be okay not reaching the bulk of the market? Probably, no. Now, some advertisers out there, I will use Audible because I myself have experienced this.
[00:15:00] Heather Osgood: But Audible runs many host-read endorsement ads, but they also run programmatic ads. So ther eis potential for advertisers to capitalize on both as they have different values and audience acceptance. And I don't really believe that it's a matter of what is right or wrong.
[00:15:26] Heather Osgood: Which ad is best? I do really believe that host-read endorsement ads are compelling. And I feel like from a consumer perspective if my friend comes over and says, "Oh my gosh, Heather, I started taking these vitamins. I feel like a different person." I'm probably gonna listen much more than if I see a TV ad; for instance. If I see a TV ad for vitamins, I might not be nearly as interested in running out and purchasing them. But that doesn't mean I am not aware and may buy if I have an opportunity to do so. Advertising is effective in all variations. And I do believe again that hosts-read endorsement ads, have the power, just like a friend recommending a product that is not the same as an announcer-read ad. It might not come with the same level of maybe overall results, let's say. Still, as an industry, there really is such a big move toward how do we create automation and scalability around podcasts ads?
[00:16:43] Heather Osgood: And that does come with programmatic ad buying and contextual targeting, which is being developed. All of those things pave a path to reaching much more significant numbers in terms of ad dollars in the future.
[00:16:59] Heather Osgood: So that is my summary of programmatic ads.
I hope that that has been helpful for you. There are definitely ways that you can go about taking advantage of programmatic ad buying. And so I do recommend that you research that and that you if that is something that you're interested in, you definitely check it out. I would say, though, that programmatic ad buying is typically going to be done in a higher dollar capacity. I don't think that you're going to be able to spend small, small amounts.
[00:17:30] Heather Osgood: Certainly, Spotify has opened up some ad buying in an automated fashion for smaller buyers. So if you are looking to go toward programmatic and you have a smaller budget, I would recommend checking out Spotify; if not, it's probably all going to be done through an agency that can do that for you.
[00:17:51] Heather Osgood: So, thank you so much for listening today, and I hope you'll come back to our next episodes. I'm super excited. We have some really great guests coming up in the next few weeks. Charlene, my sidekick, and I have worked hard to get some really great guests on for you.
[00:18:10] Heather Osgood: So, looking forward to that, and if you are interested in learning more about podcast advertising, we're always happy to help. Please go to our website to download our marketer's guide for podcast advertising.
[00:18:23] Heather Osgood: It really lays out how we recommend that you buy podcasts ads, and you can find that at truenativemedia.com. Thanks so much. And I will talk to you at the next show.