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Every podcaster can make money
Podcasts have long ceased to be niche products. They are now important marketing instruments for many creative professionals and companies, based on elaborated business models, and more and more advertisers are discovering the podcast medium for their own purposes. Julep’s managing director, Steffen Hopf, tells us in an interview what it is like to do pioneering work on the forefront of podcast commercialization and why small podcasts are particularly exciting for advertisers.
Podcasts are currently experiencing a huge surge with new titles and formats constantly coming onto the market. Are there enough users for this huge variety? How can podcasters earn money?
Steffen Hopf: Today, podcasts are part of our society. There are approximately 30,000 German titles on the market. The user numbers over the past two years show that this medium is experiencing exponential growth. Every third German regularly listens to podcasts for several hours per week. How to make money with podcasts? As a marketer, I clearly have to say that this is only possible via advertising. Good content should be available without charge and advertising seems to be a legitimate source of financing it.
"In terms of monetization, I believe that every podcaster has a chance to make money, because there is a target audience and customers for every content."
Many media professionals compare the target groups and coverage of podcasts with classic media like radio or TV. From this point of view podcasts are less successful. What kind of advertisers are even interested in podcasts?
Hopf: The interest in podcasts is very high, but there is no special customer segmentation. No matter what industry, product, or topic – every advertiser we have talked to so far thinks that podcasts are an interesting advertising platform. Even though only a few podcasts achieve high coverage, medium-sized podcasts with a couple of thousand listeners are still interesting for the advertising market. The solution is called aggregation. Julep aggregates a lot of small and medium-sized podcasts and verticalizes them under certain topics. In this way, ten podcasts, each with 10,000 listeners, very quickly reach a size of 100,000 listeners or more, which then becomes exciting in terms of coverage. We should be aware of the fact that certain target groups can be reached in a very precise way with the right topic. Podcasters are audio influencers. In addition, micro influencers (people who produce relevant content on very specific topics and thus reach a top target group) make smaller podcasts very interesting for advertisers.
Advertisers tend to avoid experiments when it comes to new platforms. In what way does Julep have to do pioneering work on the forefront of podcast commercialization?
Hopf: The entire podcast market is still in its infancy. We are currently seeing the same phenomenon as in the early 2000s with display advertising and later with video advertising. There is a high degree of fragmentation in the market and a lot of content cannot yet be treated in a uniformly aggregated way. However, users are more and more interested in podcasts and advertisers will have to invest more in this area if they want to reach specific target groups. At the same time, we see that advertisers are becoming much more open-minded. However, there is still a lot of skepticism and the need for advice is high. How do you make good podcast advertising? What are the right environments? In Germany, we don’t have enough case studies and experience yet.
There is no official coverage currency in this field. How can this be a problem for classic advertising customers?
Hopf: Coverage measurements, studies on the impact of advertising, and standardization are three key factors that we definitely have to solve in the short and medium term. In this way customers and agencies can compare us with other advertising platforms. We also need to work on these points to make podcast advertising scalable and to get budgets that are comparable to radio, for example.
What are typical misperceptions when advertisers are learning about podcasts?
Hopf: On the one hand they often compare coverage with the audio, TV, or print sector. On the other hand, there is the comparison of the CPM (cost per mile) metric. A 30-second-long radio spot cannot be compared to native integration in a podcast where the host talks about a product – which can also last four to six minutes. This is of course more expensive. Another key factor are briefings. If customers want to advertise via podcasts, they should be more open-minded. We often work with customers who send us strict briefings and want the host to read exactly what they have written. This doesn’t work because native advertising via podcasts is based mainly on authenticity.
Customers should send us open briefings with key messages that they find most important about the product. The rest should be up to the host and they should also let the host talk in a funny, sarcastic, and ironic way about the brand or the product.
"A radio spot is something completely different than a native integration into a podcast, where the host may talk about a product for up to six minutes."
People often say that Germany is three to four years behind the US market when it comes to podcast production. Apparently, the German market will develop differently from the US market. What do you think of that?
Hopf: I agree that we are three to four years behind the US market. The Americans have a much more developed content sector and they are on the forefront when it comes to acceptance and modulation of programmatic advertising. It is hard to say how big the German market could become. The podcast advertising market should generate a turnover of 10 to 12 million Euro in 2020. Under specific circumstances, the market could grow even faster. One option is called Dynamic Ad Insertion, where an ad server places advertising in podcasts. This has several positive effects. In terms of scaling, there would immediately be much more marketable volume available because we’re not talking about baked-in advertising in one episode, but we can also capitalize on the back catalogue of previous episodes. On the other hand, we expect a growth in marketable impressions and a decrease of CPMs – customers won’t pay 80 Euro for a 30-second-long spot that has been implemented by an Ad server. I’m talking about the platform effect – higher coverage and better liquidity on the market are linked to a decrease of CPMs. But the sell through rate as a whole will increase and by the end of the day there will be a higher turnover.
In which direction will the market go? We think that he will pass the threshold of 100 million Euro of turnover in the coming years. This is mainly based on automation and Dynamic Ad Insertion. If this all works well and we collaborate with many podcasters, the market can only win. The only sticking point is the podcasters themselves because they can always refuse advertising. If most of them do so, this could be problematic.