It is inevitable that there will one day be a major podcast series on “The Rise and Rise of the Podcast”, such is the rate at which the podcast industry has grown. Apple’s 2005 integration of podcasts as part of the iTunes portfolio can be marked as the format’s genesis in the wider audiosphere, though established formats such as commercial radio and broadcast television have continued to dominate media market shares through and beyond the following decade.
However, shifts in digital consumption trends, particularly amongst younger demographics - median age of podcast listeners (34) vs. broadcast radio (47) vs. network TV (57) - have led to the podcast industry enjoying widespread growth in listener share and revenue. Statista projects the US podcast market to reach 160 million listeners in 2024, more than double the corresponding 2020 figure. This does not include the “cousin” format of the podcast, the vodcast: a video version of a podcast published online to watch in another alternative format.
In no small part, this growth was - and has been - accelerated by the Covid-19 pandemic. Unable to socially interact, and overwhelmed by grim daily news provided by traditional outlets, it seems people simply wanted to hear other people talk at length about subjects other than the coronavirus. A transition to a fully-remote world meant it was exponentially easier for people to both consume and provide this content.
Spotify reported that podcast content consumption on the platform doubled during the first three months of the pandemic, and it reinforced its commitment to the industry in Q3 2020 with the acquisitions of Joe Rogan and Michelle Obama as marquee content creators.
Joe me the money
Where the listeners and creators have flocked, the money has followed. PwC analysis in 2021 showed the US podcast industry’s massive growth in advertising revenue: the figure rising from $479 billion (2019) to $1.5 billion (2021) and projected to reach $4.2 billion by 2024.
Similar projections for the UK market anticipate annual ad revenue within podcasts to reach £64 million in 2025, a 16-fold increase on 2016.
With no signs of slowing, podcasts thus represent an exciting area of enormous potential growth for publications in the entertainment and news spaces and beyond.
First party people
The foremost growth opportunity for publications and media companies lies in successfully leveraging the format’s inherent capability to provide first party data. Spotify for Podcasters and Apple Podcasts utilise integrated CRM data collection software to provide content creators with a wide range of listener data such as locations, age, and engagement over the course of an episode. This draws parallels with the New York Times’ approach to collecting and utilising first party data as a mechanism to grow content engagement and capitalise on a user’s signs of interest. Further, the Times has been able to leverage first party data towards its cross-pollination strategy across its portfolio, itself a case study that could be used by podcasters and brands looking to diversify their content offerings.
The sheer volume of first party data assets available through podcasts represents a great opportunity for content creators to leverage data and host advertising that maximises the revenue potential for podcast episodes. The intimate nature of a podcast gives the listener a feeling that they are part of a personal conversation, as if they are the sole attendee of a seminar or lecture.
What’s more, virtually all advertisements in podcasts are host-read. When done properly as a form of dynamic ad insertion (DAI), this gives the listener a feeling that the advert is part of the personal conversation. Creators and brands can utilise this to develop user profiles and tailor advertising to optimally target its core user base.
Furthermore, certain creators can leverage their public profiles to capitalise on their personal brand images. Conan O’Brien Needs A Friend is a salient example of a podcast host being able to successfully leverage listener loyalty built up over a 30-year career and translating such loyalty into a success for brand advertisers. Indeed, the show itself is a marked case study of the transition in format production trends within the entertainment industry over the course of O’Brien’s own career.
Capitalising on listeners’ affinity for podcast hosts is a crucial opportunity for advertisers. Acast research shows that 76% of users act on ads they hear in podcasts, a figure driven by listeners’ loyalty and trust in the hosts and podcasts themselves, with 55% of leads generating purchases (per a 2020 Pinkston Institute survey).
Build a brand
While advertisements represent a highly useful source of third-party revenue available to podcast producers, there are also opportunities to leverage podcasts as drivers of first-party direct revenue. Podcasts represent a channel for product diversification that remain aligned with a company’s core value proposition. Branded podcasts can leverage a company’s ability to provide long-form content for listeners whom they already know will be more interested in certain topics but wish for them to be discussed in more depth.
There are opportunities for brands to produce original podcast content that leverages existing consumer data and provides both new and existing users with alternative channels for content consumption in line with their value proposition. One is serialisation, and the FT’s own “Hot Money” series - a deep dive investigation into the business of the porn industry - is a strong example of this.
“Hot Money” has proven successful in leveraging the FT’s legacy of informative investigative financial journalism while presenting it in an innovative format that communicates the FT’s value proposition in a new digital age. Crucially, this has been aided by the series format of the show. Episodes are between 30 and 45 minutes long, allowing the hosts - and listeners - to go far more in depth during their discussions than they would be able to in a comparable long article that would risk diminishing engagement against length.
Segments and leads
The format also lends itself towards segmentation; discussions can be broken up and shared as videos or short snippets that can be published online and widely circulated on social media as additional lead generators which build on existing content and do not require additional creation.
That is not to say that media companies face an either/or choice when it comes to content production based on formats. Indeed, podcasts can co-exist alongside articles hosted locally when used as supplementary drivers of longer content. As in the entertainment business, journalists can take advantage of reader/listener loyalty with the brands they write for. Interview episodes with the hosts or subjects of specific episodes can be valuable lead generators for longer-form written content published behind a paywall on websites. In this sense, podcasts provide a mechanism for a form of content sampling that seeks to take advantage of the massive reach provided by audio hosting platforms like Spotify or Apple Podcasts.
Organic lead generation can be a useful form of in-house advertising that does not rely on third-party services or the hosting platforms themselves which retain the distribution facilities. A well-engineered access model with this structure in mind allows media publishers and companies to utilise the versatility of the podcast format as a tool centred around discussion while driving reader revenue as an ultimate goal.
Content without borders
Of course, there are challenges that content creators must consider when looking to diversify into the competitive podcast marketspace. One is deciding whether to produce overtly topical content versus more evergreen but less-specific programming. Particularly in the journalism industry, producers face a choice between creating content that will be highly relevant but only for a limited amount of time and creating content with less obvious immediate relevance but which has more consumer value over its complete lifespan.
Similarly, questions of reach apply in producing content that crosses borders. A widespread shift towards audio consumption is reflected in the growth of podcasts in highly digitally-enabled countries such as Spain and South Korea where over half of the population regularly listens to podcasts (per 2020 data). When choosing topics to explore in their podcasts, creators and publishers must consider how to manage potential over-reach of topics that cater for their core audience while also having enough broad appeal to realise the wider growth opportunity at hand.
The next episode?
Diversification into the podcast production space is a massive opportunity for brands and publications looking to develop both internal and third-party revenue streams while also offering followers new formats with which they can consume valued content. Potential new entrants into the competitive podcasting marketplace must be able to manage the challenges of a diversified portfolio alongside a consumer-centric approach that remains true to their value proposition.
Media companies and publications should recognise how to utilise podcasts as alternative revenue drivers while optimising their approach to handling greater levels of first party data that are available because of the expansion into the podcasting realm.
How FT Strategies can help
FT Strategies is a consultancy with access to financial thought leadership from one of the world’s leading business news organisations. We have first-hand experience helping clients worldwide define their purpose, create alternative revenue models and use data to deepen their relationships with, and understanding of, their customer base. Whether you’re a business looking to implement a refreshed subscription access model or you’re hoping to boost retention figures through higher engagement, FT Strategies is vastly experienced and would be delighted to help you along this journey.
Aaron is a Consultant at FT Strategies with previous industrial experience at PwC including audit, public sector advisory, work with the Office of General Counsel. He studied BA International Development and MA International Political Economy, both at King's College London. He has worked on multiple projects with the Google News Initiative, including Subs Academy in India and Data & Insights Launchpad in South East Asia. Please feel free to get in touch via [email protected].