Why Podcasting Industry Matters in USA 2020 and beyond
The Podcast industry is slated to be a 1-Billion-dollar industry by revenue by the end of the year in 2020 according to new a report by Interactive Advertising Bureau (IAB) and PwC. That is from less than 500 Million in revenue for 2018 a gigantic increase when you consider the base. Another metric to consider is NPR which is a large production house with Broadcasting, Events and Podcast business as their main revenue sources have announced that for 2019 their Podcasting revenue at 55 Million plus would exceed their Broadcasting and Events revenue at 52 Million.
The future looks even brighter, if we go on the same trajectory, podcasts could be a US$3.3 billion-plus business by 2025. There are about 800K shows out there which have been put out and around 3 Million episodes and the juggernaut of new shows being announced don’t seem to be slowing down.
Podcasting is picking up and so is the rush to see how you would monetize your podcast and how brands can use a podcast to reach an audience. Podcasts can, in theory, have multiple revenue streams: advertising and sponsorships, subscriptions, events, merchandise, content marketing, contracts for branded podcasts, and individual listener donations. Of these, advertising and sponsorships are by far the largest, although exact splits by revenue stream are not publicly available.
But is it any easier to monetize a Podcast in 2020 compared to what it was in the preceding years, the answer is a resounding no. The problems are many and we will list some of them here to make sure we are on the same page, but we should also talk about some of the solutions.
It is freely available, why pay for it?
This is an inherent nature of the industry we are in that podcasts are free to the general public to listen to. There was an experiment done by Tim Ferris where he suspended ads on his highly rated and long-running Podcast in lieu of building a subscriber base using a pay to listen model. Suffice to say that, the experiment was ended quickly, and he returned to the Ads model. The reason was the audience was primed to get a podcast free of cost every week from Tim, so even die-hard Tim Ferris fans baulked at having to pay anything. If in the same parlance Tim Ferris would have released an audiobook and talked about the same content in the audiobook the same audience would have gladly paid for the audiobook. So, it neither the content nor the rating of host it’s the medium which is causing the monetization hole for podcasts.
I don’t think there is an industry-wide solution for this, and we will have to wait while the audience is educated and then sold into a subscriber-based model for the Podcasts.
Is Sponsorship or Ads the only way to go?
Sponsorship or Ads one of the ways in which we can continue to generate revenue and is still the most robust monetization mechanism. Sponsorships pay more depending on how many people listen to your show. As the number of people who listen to your show increase, so will your revenue. But that also means this is a tough way to make money if you don’t have many listeners. But as a corollary to that please don’t spoil your podcast by playing 3-4 ads pre-roll and 2-3 ads mid-roll as it destroys the listening experience. Again, it robs the audience of an authentic experience and undermines your effort of building the trust of your audiences you and your podcast.
Here the thing to do before you go for Sponsorship either directly or through your broker is to understand your audience in as much detail as you can. This is where the Podcasts where we have worked with have had issues. Trying to get a sponsorship deal without understanding the nuances of the audience who listen to you each episode. Just like every web publisher has a Media Kit every podcaster should have audience numbers as a “Caster Kit” ready to be disclosed based on the conversation with brands or agencies for Ad placements. Also, even at places where this was done, it was not maintained regularly. This is a living document and needs to be updated regularly at least once as soon as you have a spike in the audience in either direction
How to grow an audience seems to be the question most often asked?
The very cliched answer to that question is that it depends and other than it being the truthful answer it also signifies that no one knows. You have to understand deeply your own audience and experiment frequently with that audience to understand how to answer the question. The other fact is also about differentiating the podcast. Many newer podcasts are interview-style podcasts that are insufficiently differentiated to compete in an already overcrowded market, and industry experts are predicting that many of these, having failed to attract audiences or advertisers, will simply stop being updated.
The long-drawn answer to that simple question is to engage with your audience, whether its on social media, through email, on your website, on your podcasts page on the various platform, in real life in events or any other thinkable channel. No one has the answer to that question other than your audience.
Direct vs Indirect revenue through podcasts?
We talked about some of the direct forms of monetization let’s talk about indirect monetization as well. When we talk about podcasts and the reasons, they are made they are manifold but one of the most common things we hear is the host trying to upsell another product or service. Of course, the product in question needs to be closely related to the podcast topic being discussed.
But as the industry has matured it is becoming harder and harder to stay true to be the podcast host as a content generator as well as sell a different product. Duplicity is picked up very easily by the audience and you will lose your audience in droves if they suspect the podcast is just a sales channel for you and nothing more. So again, cultivate the audience and genuinely upsell your product or service in a non-intrusive way to make sure you are not abusing the audience liberty.