Audio is booming! Podcasts are growing, Smart Speakers are everywhere and there is constant talk about the 'Golden Era' for digital audio. Kantar’s latest 2021:1 report, reports that in Sweden, weekly and monthly podcasting reach with 16–44-year-olds is now higher than that of commercial radio, a trend that may well follow in other regions.
Whilst listening patterns and timings changed over lockdown the volume of listening overall increased and 88% of podcast listeners will listen more or continue listening to the same amount once restrictions ease.
Obviously, with a growing audience comes growing interest from people keen to cash in on the increasing popularity, but is it just the lure of more potential listeners than before that is tempting the big (and small) players into action?
There is a fairly simple answer here. An increasing number of listeners across the medium creates a bigger audience to whom you can sell products and services. It's a logical step that the increased audience has more potential value and invites more interest. You don't need me to tell you that.
Making money from audiences consuming audio is nothing new either. For generations "audio" has largely been consumed via radio and making cash from that consumption has been a fairly simple and unchanged process: You leverage your audience numbers to bring in revenue. The bigger the audience the bigger the revenue. With that model, there should be no surprise that a quickly growing "digital audio" audience would see an equally fast-growing number of marketers keen to reach new ears. But, could it be that there is far greater potential in the world of digital audio than just selling products to an engaged audience?
Podcasts listeners are great to sell to! Podcast One's research into the "Super Listener" has shown the value in advertising targeted products to podcast audiences who's greater level of engagement increases the impact of said advertisements but, the recent interest from the big players suggests there is something more to play for here.
Outside of straight B2C advertising, one of the common beliefs when it comes to an increased interest in digital audio (especially podcasting) is that some creators will look to leverage content for cash. Several big players in audio are already positioning themselves as the "Netflix of Podcasting" seeking to create high-quality, must-listen-to audio that will, in turn, drive subscriptions and generate revenue.
It's a sound idea. Although I can foresee some resistance from podcast listeners who are used to consuming content for free, there is no reason that a pay-to-listen model wouldn't work for audio. We've already seen it work in the video world with services like Amazon Prime and Netflix and for a while now, there has been some movement towards "subscription" podcasts with some creators experiencing success in this area (especially when it comes to charging super-fans for bonus/extra content). If we look to the US (who are ahead of the game when it comes to charging for audio content) publications like The Slate and The Athletic have used premium audio as a way to build subscriptions to their channels with some success.
As long as the audio quality is high enough, I can see this approach working. A combination of attracting popular names to create new podcasts and moving popular shows, with established audiences, to a pay-to-listen model should lead to success for some providers. However, as with video, we will likely see a few select providers flourish whilst others fall away - after all, how many "podcast subscriptions" will the average listener be willing to pay each month?
Investment in the podcast market has been significant so far this year with Sony Music Entertainment entering into a Global partnership with podcast publisher Somethin’ Else and Acast’s recent move to become a public company, listed on the Nasdaq First North Premier Growth Market.
Another key indicator of how lucrative this market could be is the significant investment Spotify have made with the launch of Spotify Exclusive Podcasts In May 2020 they signed a deal reported to be worth $100 million dollars with The Joe Rogan Experience which moved 10+ years worth of podcast content exclusively onto Spotify, removing them even from his YouTube channel. Other deals signed in 2020 included podcasts headlined by A-listers like Michelle Obama, Brené Brown, Michelle Obama and Kim Kardashian.
According to a Feb 2021 article by The Guardian about Spotify: “A quarter of all users engaged with podcast content in the final three months of 2020 in what Spotify sees as validation of its decision to spend millions on a roster of new talent in a strategic shift beyond music.” (Source: The Drum). From a financial perspective Spotify benefits from increased streaming numbers, increased subscriptions and also the fact that even on premium subscriptions podcasts are not ad free allowing Spotify to double up potential revenue from subscribers.
It feels like there is something bigger here though.
Spotify's interest COULD be explained by the desire to create a subscription network and drive more users to their platform but the level of interest from the likes of Google suggests a bigger opportunity for digital audio as a whole.... and that opportunity is audience data.
We already know a lot about our podcast listeners. Exact numbers, locations, age, sex... it’s a far deeper, and more accurate level of audience data than say, something like a radio which in the UK relies on the antiquated RAJAR system. The depth of that data is growing all the time, and this creates an interesting layer of added value.
Audio analytics tools are starting to provide information not only on what file/show a user listens to but what specific content they enjoy, how long they listen, optimum times of day for consumption and even topical turn-offs. Spotify can already target adverts based on categories such as age/location of their audience but with even more big data they could create a hugely powerful advertising formula. By applying information on-trend and behaviour patterns to their wider listener base they can serve far more focused, impactful promotions to their entire portfolio both music and podcast.
Digital Audio does indeed seem to be entering a golden era but it's down to much more than more ears on the product. More information on individual listeners and better tracking of audience behaviour means that not only can platforms tempt their listeners to listen for longer but they can also serve them hugely targeted, personalized adverts whilst they do so.
We know from Facebook how powerful targeted adverts inserted into a content stream can be - why shouldn't audio harness the same power?