What podcasters get wrong about advertising

While there's lots of innovation in technology, there's not much innovation in how businesses make money.

Regardless of whether you're running a podcast, a newspaper, or a YouTube channel, there are really only two revenue models:

  1. Sell advertising to sponsors who want to sell to your audience
  2. Sell a product / service to your audience

If you want to sell ads, this history is instructive:

The decline of newspaper advertising and what it means for podcasts

This is from Thomas Baekdal's article, and it's worth a read. Specifically his distinction between "high purchase intent advertising" (Google) and "low intent advertising" (newspapers and Facebook).

The challenge for podcasters:

  • There aren't that many companies interested in "low intent advertising." These are usually branding plays: MailChimp, Ford, Squarespace, GoDaddy. They're the same companies that advertise on the Super Bowl. It's a small pool, who have an increasing number of options.
  • A podcast's competition in the "low intent" space isn't just other podcasts. It's also Facebook, radio, and television.
  • Podcasts' biggest threat is Facebook's targeting & conversion tracking. On Facebook, an advertiser can pay per conversion and specify what demographic they want to target (geography, interests, gender, age, income). They also get instant feedback (stats start appearing within hours of starting a campaign).
  • Advertisers in this space are always looking for the channel with the biggest reach. In the beginning, a small indie podcast with 10,000 downloads per month could get sponsorship. But as some shows developed bigger and bigger audiences, brand advertisers naturally began to expect more reach. That trend will continue.

Even Alex Blaumberg, of Gimlet, is feeling this squeeze:

There's one more problem with advertising, and it's a business problem. I'm not sure the money will keep flowing. Right now advertising rates are high. But historically they've fluctuated quite a bit. The companies lining up to advertise on our shows right now might evaporate. Or, decide they're willing to pay us, just a lot less. You need to diversify your revenue base.

Given this environment, it's going to get increasingly difficult for small indie shows to make a living through advertising.

Published on September 24th, 2016
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