Podcast Networks Are Coming into Bloom

Those with a scholarly bent probably got tipped that podcasting was big-time in December, when the New Oxford American Dictionary named “podcast” as the 2005 Word of the Year. Others might have decided there was something to this podcast thing when the Guinness Book of World Records said it would include a “Most Downloaded Podcast” category in its 2007 edition. (Current front-runner is “The Ricky Gervais Show”, averaging 260,000 downloads a week in its first month and with more than 2 million total downloads in its three-month lifespan.)

For the rest of us, the realization that podcasting was moving up fast in the technology sweepstakes might have come in mid-January, when two podcasting ad networks, PodTrac and Kiptronics, launched within 24 hours of each other.

Right now, both podcasting and podcast marketing are the wildest of wild-West markets—even more so than blogs and blogging. The two media share a lot of similarities, both in content and culture. Like blogs, podcasts are files of content delivered over the Internet primarily via PSS syndication; that means subscribers can sign up for automatic file delivery to their computers, and then often to their mobile devices. Unlike blogs, podcasts send video or audio files. Also unlike blogs, which can be read either directly from a Web site or through a feed that collects all your blogs in one place, most users employ an aggregator to keep watch over the podcasts they’re interested in and let them know when a new edition appears.

And the podcasters are just as varied a group as the bloggers, ranging from the archetypal teenager in a garage producing programming only his high-school classmates want to hear to large content providers such as CNET and Business Week, and large corporations, too. (Microsoft offers several.) A recent survey at a conference of the U.K Association of Online Publishers found that 52% of delegates said their businesses planned to launch a podcast in the coming year; 35% said they had already done so.

Podcasts seem to be tapping into the same desire among consumers for controllable media consumption. Just as with video on demand and TiVo’d TV, they want to access podcasting’s talk-show-like content when and where they find it most convenient.

From the advertiser perspective, podcasting presents some major reach opportunities (for example, buying ads at radio prices, or even lower, that can be heard around the globe) and some truly impressive metrics challenges. Chief among the latter are how to buy and place the ads themselves, and how to determine what kind and size audience you’re buying, and whether they even heard your ad.

Those are problems that PodTrac and Kiptronics hope to remedy, each in its own way. Measuring and studying podcast audiences, for example, will be crucial if the form is to compete with other forms of mass advertising. And yet the technology is so new that many podcasters have very little idea who their listeners or viewers might be.

As Mark McCrery, CEO of PodTrac, points out, there are more than 25,000 podcasts on the Web today, compared to 10,000 six months ago. That makes for a lot of newbie podcasters who are still preoccupied with getting their content up each week and who probably haven’t given a lot of thought to audience metrics.

Both PodTrac and Kiptronics are taking a stab at solving that problem by offering podcasters online surveys that they can ask their downloaders to fill out. One popular podcast, TikiBarTV.com, went from 10,000 viewers to 60,000 right after Steve Jobs mentioned them in a speech last October. The site now uses a PodTrac survey to gather information about those reams of new fans.

While its ad network opened for business in January, McCrery says, PodTrac started last November to compile podcast audience data using online surveys. He says his company has now amassed 25,000 surveys on podcast listeners/viewers. Of course, since there are by some counts currently more than 28,000 podcasts, that’s still barely scratching the surface. But it’s a start. Kiptronics has hooked up with podcast host Liberated Syndication (a/k/a LibSyn) to roll similar surveys out to their podcasting clients and formulate their own picture of who’s listening or watching what.

But it’s one thing to look at how many people have downloaded a podcast, and another to say how many actually listened to those downloads. About 60% of the audience opens a podcast on their PC, according to McCrery; the rest transfer it to a mobile device, further complicating the technology needed to register opens. While the problem may find its tech solution in the future, podcast advertisers today have to be content with using downloads as a proxy and knowing the general demographic outline of an audience. Amassing subscriber figures from the major podcast aggregators could also give advertisers a better look at the true audience for a show.

In the meantime, many marketers find lots of interest in the broad demographics of the podcast audience. In general, they are younger, better educated and more affluent that either mass-media audiences or even Web audiences as a whole. They’re mostly 18-34, heavy tech users and digital media consumers (of course), and although studies have suggested that they skew largely male, McCrery says PodTrac data indicates that the audience group who say they’ve listened to a podcast in the last week is reaching a 50% female mark. All in all, an attractive market, and one that’s becoming increasingly hard to reach through broadcast channels, either TV or radio.

In terms of ad formats, both Kiptronics and PodTrac offer 10-second ads and 30-second spots and to allow these either as read by the podcast host or as creative produced by the advertiser. The choice is really up to the host. Podcasters who worry that playing third-party content might hurt their credibility with their audiences can choose instead to read advertiser-approved copy, usually right after they introduce their podcast’s theme of the day. Kiptronics gives advertisers some control by allowing them to approve one of a menu of different readings.

Both ad networks also offer a 30-second spot that is most often run at the end of the podcast. According to CEO Jonathan Cobb, Kiptronics will soon offer podcasters a tool that will let them mark a point in the middle of the program where an ad can be placed without breaking up the flow of the content.

Kiptronics’ ad-insertion platform allows ads to be inserted dynamically at the moment the program is downloaded. “That lets us defer the decision about which ad to place until the very point of download,” Cobb says. “That lets us rotate three different ads in a podcast slot. So an advertiser could go half the length of a campaign with a certain ad, then try a different one, and evaluate which one was most effective.

Cobb says Kiptronics’ insertion technology also gives it the advantage of being able to geo-target podcast ads for a state or major metro, and to custom-design a targeted campaign for area codes, ZIP codes or DMA codes.

“When you look at terrestrial radio advertising, it’s about a 50-50 split between local and national advertisers,” he says. “We knew from the start that the ability to tap into those local ad markets would be very important.”

With no ads to test when Kiptronics was developing that insertion platform last year, the company took the novel approach of offering podcasters free promos for their content on other programs. “The promo exchange allowed podcasters to upload clips for their podcasts and cross-promote, and that allowed us to grow the network of content before we had advertisers,” Cobb says. “It also allowed us to flesh out the underlying insertion technologies in our system. People are tolerant of beta-quality stuff when they’re getting it free, but once the ad system is rolling, it’s got to work.”

As to how advertisers can buy ads on podcasts, PodTrac gives marketers an option—some straight media buys, and a handful of opportunities to bid for slots on three podcasts ranked high among iTunes’ Top 100 downloads: “This Week in Technology”, “MuggleCast” and “Josh & Japan”.

The auction option is meant to help gauge a fair market rate for podcast advertising. “Right now, there isn’t one,” McCrery says. “I’ve seen a huge range for podcast deals, as low as $3 and as high as $500 per mill. The auction is our effort to lend some predictability to costs on the advertiser side and revenue on the podcaster side.” PodTrac’s online auction for spots on the three podcasts will run until March 31.

PodTrac also announced it has signed partnerships with three of the largest podcast networks: the Association of Music Podcasting, the Technology Podcast Network, and the Teen Podcast Network. Right now, advertisers can buy straight into that programming, with no auctions.

Kiptronics’s prices are open market-based, in the sense that the network serves as an online central exchange for advertisers and podcasters. Podcasters are free to set their ad prices and post those on Kiptronics’ member Web site; advertisers can then send offers above or below those prices, and the two sides can come to some agreement on costs. “At some future point, once we’ve had sufficient deals go through, we may offer podcasters the option to say, ‘Just get me the best market price possible,’” Cobb says. “And since we will know roughly that podcasts that look like this sell for this much, we’ll be able to get a good read on it” and make a more frictionless ad market.

Finally, the same tracking difficulties that make it difficult to depict a podcast audience also constrain its ability to measure its effects, since there’s nothing for users to click on to indicate an ad has converted to anything, either a sale or a sign-up. Whether marketers will put money into a medium they can’t measure is an open question.

“We are working on ways to close that loop, but it’s difficult,” Cobb says. “For the short term, advertisers interested in a cost-per-action model will do it in the traditional ways, offering a 10% discount with a promo code unique to that ad, or a special phone number or Web address. That will help them tell how many people came back around after they heard the ad.”

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