Why Podcasts Are A (Performance) Marketing Black Hole
Why Podcasts Are A (Performance) Marketing Black Hole
And Why Brand Marketers Love Them
Americans spend more time listening to podcasts and radio than actually working each day.
(That stat is true— (3h:05m) and (2h:53m) respectively.)
Naturally marketers have already declared ‘sonic branding’ the wave of the future—a world where jingles are as important as the colors a brand uses.
Advertisers jockey for adspace on big podcasts.
Book publishers rush to force audiobooks onto consumers’ phones.
[Podcasts are] a fast-growing medium, it doesn’t scream to us that advertisers are holding back investment or that there’s concerns at all.
On a very logical level, it must be delivering for them as they continue to invest in it and as the opportunities to do different things become more varied and more complex.1
The audio-mania is almost all-consuming. And few marketers have stopped and asked if the new channel is as valuable as it’s said to be.
In this post, we’ll discuss:
If podcasts are a good financial investment
Why they differ from other channels
Why advertisers buy adspace from them
1: Are podcasts a good financial investment?
Let’s start with the financials. We’ll compare podcasts against YouTube because they are both targeting mainly a mostly male2, entertainment oriented crowd.
How much do podcast ads cost?
A 30 second host-read podcast ad can cost up to $40 / 1000 listens.3
A 6 second pre-roll YouTube ad costs about $10 / 1000 views.
Do people buy more from podcast ads?
1.2%: The average podcast ad conversion rate
1.4%: The average YouTube ad conversion rate
In summary, the average podcast ad both costs more and returns less than the average YouTube Ad.
So far, it’s not looking so great for podcasts from a financial perspective.
Note: This is using ‘average’ ads across both channels. A well-structured, well-targeted ad will almost always be more effective than the average.
Check out these previous articles about how to segment your audience and target them for communications for a deeper dive.
2: Why are podcasts different than other channels?
For performance marketers, who love to track every click and conversion, podcast ads can be a bit of a headache.
The same reason that podcasts are popular is the same reason that their ads are different—you can passively listen to them.
Unlike a book—where if your mind wonders too far, you have to re-read—podcasts’ format encourages passive consumption.
“Listen in the car”
“Listen while you cook”
“Stay entertained while you work”
The language used when people recommend podcasts hints at the passive nature.
This means they might have a podcast on in the background while they’re doing other things so they’re not fully focused on the content or the ads.
Even if they hear an ad for something interesting, they might not stop what they’re doing to look it up right away.
This passive listening makes it harder for marketers to grab listeners’ attention and get immediate action, which is something performance marketers really look for.
The double edged sword of passive listening causes the podcast paradox: Podcasts now make up a disproportionately large amount of airtime AND a disproportionately small amount of attention
Another challenge is how tough it can be to correctly attribute podcast-generated leads.
Unlike digital ads, where you can use UTM tracking to see exactly how someone found your website, tracking how someone came from a podcast ad to your product is trickier.
Podcast ads can mention a unique promo code or a specific URL to help track listeners who decide to check out a product.
But not all listeners will remember to use these codes, or they might visit the site much later, making it hard to connect the dots back to the podcast ad.
These issues are similar to the ones seen in Direct Mail. Check out this previous article for a deeper dive into those solutions:
For performance marketers, who thrive on analyzing detailed data to optimize their campaigns, this lack of precise tracking can be frustrating.
3: Why do companies pay for podcast adspace?
Brand marketers love buying ads on podcasts. Podcasts have an unusual way of creating the feeling of a unique community or group.
When you listen to your favorite podcast, it’s like being in a club where everyone shares the same interests and passions.
This feeling of belonging is really strong because podcasts often focus on very specific topics, whether it’s cooking, video games, or anything else.
Marketers see this as a great opportunity.
On a podcast, they’re speaking directly to people who are already interested in similar things—which means listeners might be more likely to check out what they’re selling.
Podcasts offer a way for brands to tell their story in a more detailed and engaging way.
Unlike quick ads on TV or the radio, a podcast ad can take its time, allowing the brand to share a story that connects with the listeners on a deeper level.
This storytelling aspect is crucial because it helps listeners understand and remember the brand better.
When a favorite podcast host shares these stories or talks about a product, it feels more genuine, encouraging listeners to support the brand.
So, through the strong sense of community, personal connection, and storytelling, podcasts have become a valuable space for marketers to reach out to potential customers in a meaningful way.
Conclusion: Are podcast ads worth it?
The question remains: Are podcast ads worth the investment (right now)?
No, podcast ad spaces are currently overvalued because marketers have bandwagon-ed into the space and are pushing up auction prices.
This shift towards audio consumption presents an attractive frontier for marketers, but it’s accompanied by challenges that can’t be overlooked.
Cons: Podcasts are a passive activity and hard(er) to track.
The passive nature of listening coupled with the difficulty in tracking direct leads from podcasts presents hurdles for performance marketers.
Pros: Podcasts are opportunities for brand growth.
The personal connection listeners feel with hosts and the unique storytelling capabilities of podcasts offer an opportunity for brands to spread their messages in a way that feels genuine and engaging.
Podcast ads have a lower return on investment compared to similar digital entertainment platforms like YouTube.
Although the value of advertising can be worth more than direct conversions, ad prices need to reflect the financial reality of the return they produce.
The ability to forge a deep connection with an engaged audience is worth a lot, but brand marketing should be oriented towards channels—at prices—that produce a meaningful return.
As marketing trends towards more authentic and personalized experiences, podcasts offer a channel that, despite its challenges, holds potential for brands willing to navigate its complexities.
For those seeking to build lasting brand affinity and loyalty, podcasts are worth exploring—especially as they mature and reach a stable equilibrium
It’s a bad assumption that marketers are acting rationally in aggregate. An entire generation of marketers has forgotten what really moves the needle.
With the true crime podcast popularity, I’m also surprised.
To be fair, this is one of the most expensive ads. However, host-read ads are by far the most common kinds.