Nieman Foundation at Harvard
Welcome to Hot Pod, a newsletter about podcasts. This is issue eighty-seven, published September 13, 2016.
Just out this morning: Audible Channels now comes bundled with the Amazon Prime membership. The new offering is only available for U.S. members.
Three quick things:
Doctor closed his first post with a wonderful series of guiding questions, to which I’d like to add one more: Is it possible for podcasting to grow rapidly while maintaining its openness for independents?
I should’ve taken a vacation this week. But we’ve got some guidelines to talk about.
Your handy guide to the IAB’s guidelines. This is going to be a long one, and a poor sequel to some of what I’ve written before.
Ahead of its second annual podcast upfront event last week, the Interactive Advertising Bureau Tech Lab published its Podcast Ad Metrics Guidelines, a document seeking to assist in the resolution of what has commonly been asserted as the medium’s defining problem: measurability. Given that these guidelines were issued from an ostensibly independent third-party like the IAB, they were much anticipated. In some circles, it’s thought to be just the kind of stuff the industry needs to get its house in order.
Time will tell, of course, whether the document will have some sort of impact. But for what it’s worth, I’m bearish.
Let’s consider the problem. The real issue here is less about podcast measurability than it is about the verification of podcast ad impressions. Specifically, advertisers want to effectively track the delivery of the spots they’re paying for.
And to be even more specific, this issue principally pertains to brand advertisers. The space has long operated on a healthy stream of direct advertisers (your MailChimps, your Audibles, your Blue Aprons, and so on) whose ad buying operations are primarily driven by a focus on promo-code conversions. Their assessments would definitely benefit from better ad verification, but they’re ultimately not dependent on them, because direct advertisers can bypass the black-box nature1 of current podcast tracking practices by making their own return-on-investment calculations, based on how many listeners end up using a promo code. In contrast, brand advertisers need to know how many people they are reaching as a way to justify their ad buys, because their advertising initiatives are driven by intangible concepts like mindshare, influence, and brand identity — more fluid factors meant to influence buying decisions over the long term.
From the perspective of advertisers, the problem is that “downloads” don’t mean the same thing across different podcast publishers. Sarah van Mosel, Acast’s chief commercial officer, once phrased the problem to me this way: “Buyers just need to know that when they’re spending $100K on one podcast, they’re getting the same amount of ‘stuff’ as if they spend $100K on another podcast.” The IAB’s goal with this report, then, is to provide a publicly available technical framework that the industry can use as a common language, so that brand advertisers can engage with podcast publishers off a baseline layer of trust. (Implicit in this idea is that the actual accuracy of the technical specs is besides the point — so long as everyone is incorrect in the exact same way.)
If this all sounds extremely familiar to you, it’s because we’ve been here before. Back in February, a consortium of public radio organizations banded together to publish their own set of guidelines on podcast metric measurements. My analysis then (which you can read here) saw the publication of that document as a political move by that consortium to accelerate the IAB’s production of its own report. I was also skeptical about the report’s capacity for impact, and a lot of my thinking then can be directly applied to this situation.
Two chunks on why I’m bearish on the new report:
1. The IAB’s guidelines merely serve as a best practices document — there is no formal enforcement of these standards. To state the obvious, best practices are only as strong as the number of people who adopt them, and as a result, we’re left in a situation where, for the standards to be useful, a critical mass of industry participants must be achieved on their own accord.
But the reason podcast downloads have historically been fluffy is that various players in the space aren’t incentivized right now to speak to advertisers in the same language…or to challenge the narrative of their current reporting systems. Why? A relevant quote in an Observer article from Midroll’s now-CEO Erik Diehn, responding to the public radio guidelines in February: “If everybody adopted these standards today, some shows might come down a little bit in size and some might come down pretty dramatically.” It’s an irrational, but understandable, collective psychology: Though measurement standards in some form or another will benefit companies in the long-term, some are hesitant to suffer in the short-term, and as a consequence, the lesser status quo is favored.
There are few possible paths to a future where the IAB’s guidelines can mean something. For one thing, we could see a future in which a critical mass of podcast publishers — all occupying a solid enough position to sustain whatever corrections the guidelines may bring onto their reporting structures — voluntarily bite the metaphorical bullet, adopt the standards, and collusively enforce those standards by convention. And for another, it’s also possible to see a future in which advertisers would use the mere existence of these guidelines as a “cudgel” (to quote a source) to pressure publishers into being more aggressive about refining their measurement capabilities.
Either outcome would be constructive, but they would be so in spite of the IAB’s guidelines — because the document itself isn’t very good in the first place.
2. Put simply: The IAB’s guidelines appear to be a compromised product. Compared to February’s public radio guidelines document, the IAB’s report is significantly less technically rigorous, with key fundamental definitions still half-heartedly defined. One of several red-flags: a “partial download” is still defined as “a unique file request that was less that 100% downloaded” — which means that a podcast file that’s, say, 1 percent downloaded is still valued as equal to a podcast file that’s, say, 99 percent downloaded.
The report’s lack of a punch might well have something to do with its long drafting process, which stretched well beyond a year. (I’ve been hearing gossip about it since Q2 of 2015, and a lot of that involved talk about internal tensions.) And looking at the eclectic list of volunteer participants involved the process — 23 strong, including representation from new and old podcast companies, public radio institutions, tech companies, legacy media types, and Nielsen — one imagines, given everyone’s possibly clashing incentives, that the fact we even saw a report at all is itself a miracle. One presumes that the process was agonized.
But in the scale of things, I don’t think the report’s miss — or any future fumbles — is going to matter very much. Indeed, I suspect it’s entirely possible that individual companies can secure the interest and trust brand advertisers on their own, converting them for the rest of the industry’s benefit. In Ken Doctor’s Hot Pod-beating column yesterday, National Public Media’s Bryan Moffett cited getting business from Fortune 100 brands brands like Wells Fargo, Dell, and Target. Doctor would further note that “six-figure ad buys, rare until recently, are now more commonplace.”
The question, of course, is whether those dollars, six figures and all, will stay in the industry over time.
Broader considerations. When I’ve written about this topic previously, I’ve often been asked: Why do podcast companies want brand advertisers in the first place? Generally speaking, brand advertising dollars tend to be much bigger and more reliably scheduled across a longer period in time than direct advertising dollars. That kind of money stabilizes — and catalyzes — advertising-driven media businesses. There’s also an element of prestige involved here, and the professionalizing layer of podcast companies are principally driven at this point in time to be accepted as part of the upper echelons of the media industry.
A followup question/thought experiment: Does the podcast ecosystem actually need brand advertisers to function as a legit industry? It’s worth some debate, but I’d argue they aren’t that essential. There’s an entirely plausible future where the podcast ecosystem runs on a rich marketplace of direct and local advertisers powered by dynamic ad insertion technology. That’s provided, of course, that more efficient ad marketplaces will develop somewhere down the line in order to facilitate greater transaction volumes. (And that don’t fully corrupt the advertising experience, preferably.)
There will always be products, services, and people looking for attention, and as such, there will likely always be potential (if hard-fought) dollars for podcast ad slots, whose unique value proposition in the advertising marketplace is that intimacy thing everybody talks about. (Unless, of course, Facebook continues to grow its power and scale as the attention-monster it is beyond all counterargument, in which case we should all just give up and go to welding school.)
But I will say that I think brand advertising dollars would make it substantially easier for podcast companies who aspire to be massive triple-A upper echelon institutions — equivalent to the Big Three labels in the music industry and the major studios in the film industry. Which we should probably follow by asking whether we actually want podcast companies that big in the first place — which is a fair question.
Talking Points Memo now has a podcast offering of its own. The influential left-leaning political news website is attempting the paywalled podcast method. Episodes of the interview-based podcast, called The Josh Marshall Show (named for the site’s founder), are automatically available to the site’s paying TPM Prime members; non-paying readers can buy individual episodes for $1 each off Podbean. A free version, which will feature highlights from the full interviews, will be available to non-members.
I’m personally not that much of a TPM consumer, but the rollout strategy is one that I think fits well with the way the site’s system of offerings is already set up: It increases the value of the membership system in a way that matches the podcast format’s capacity for depth with the paying subscriber’s demand for depth. Square peg, meet square hole.
A financial snapshot of an independent podcast. “I’d always heard that new restaurants take five years to show a profit. I have no idea if that’s true, but this was kind of the attitude we went into it with,” said Scott Philbrook. “From day one, we approached it like a business and not a hobby, but we had absolutely zero information on whether or not a podcast that wasn’t backed by a major network or some other corporation could be a viable business model.”
Philbrook is cohost of Astonishing Legends, a California-based podcast that bills itself as the “Click and Clack of esoterica,” its programming focus being strange historical events. Extensively researched, lovingly produced, and presented with the requisite amount of kitsch, the two-year-old show comes out of a rich tradition of podcasts — and media in general, I suppose — that trade in creepiness and pulp, finding kindred spirits in the Pacific Northwest Stories programs and Lore, plus whatever’s going on over at SyFy and the History channel.
It’s also an independent creative operation figuring out its terms of existence. Philbrook and Forrest Burgess, his creative partner and cohost, took some time in a recent episode to discuss the current state of their business:
We’re so grateful to have several hundred patrons pledging amounts from $1 a month all the way to $25, and we’re currently bringing in around $1,500 monthly from that. We’ve also managed to attract the attention of several sponsors and they are testing the waters with us to see if we’re a good investment for their advertising dollars. When you guys support them, they feel good about sponsoring the show. So with three to a max of four sponsors per episode and at the support we have from you on Patreon, our gross income has currently become roughly equivalent to a single person working an entry-level part-time job.
At a time when the more well-financed elements of the industry seek to earn legitimacy and scale from the top-down, Philbrook and Burgess’ discussion provides a window into the conditions of operators on the ground level. Curious, I reached out for more details, and Philbrook was kind enough to spent some time discussing the show’s approach and current financial makeup.
The note Philbrook sent was long and rich with detail, but this newsletter has some serious space constraints (ha), so I’m going to break this out into chunks focusing on the stuff that you can most tangibly use.
1. While the show is currently testing advertising possibilities (more on that in a bit), Patreon plays a huge role in the business. “It’s such a great way to connect with listeners and a lot of listeners really want to help the show out and that’s a way that’s convenient for them,” Philbrook said. All of that Patreon money, which adds up to about $1,500 a month, goes to paying their editor and sound designer. Their editor, Sarah Vorhees, is hired on a per-episode basis, and she charges the team an hourly rate.
“And we’re finally start getting some funds out to our sound designer as well, who’s been working for free from the beginning,” he added. “The money we’ve paid both of them is insulting, but they continue to be available for us for their own reasons. We are within striking distance of getting them their full rates, however.”
2. The show currently has an exclusive sponsorship representation deal with Audioboom, the U.K.-based podcast services company, to cover ad sales. Philbrook noted that they initially attempted to handle advertising directly by themselves, but eventually decided to outsource it, given their production workload. They’ve been represented by Audioboom for almost exactly a year now, and they also host their episodes on Audioboom’s platform.
While Philbrook declined to disclose specifics, he tells me that the show’s advertising revenue outpaces its Patreon haul. But he maintains that their advertising arrangements have been largely experimental, illustrating the difficulty of longer-term planning at this point in time. “We are so grateful to have advertisers, but the thing is when you start out, they are all testing their return on investment, so the sponsorship fees you’re collecting are not necessarily commensurate with your downloads or listens,” he said. “The idea is that if your sponsors see people responding to the live reads you’re doing on your show, and it proves to be a good investment for them, then they come back and you get closer to appropriate rates.”
3. The show currently averages 115,000 downloads per episode across its initial 45 days, the standard Audioboom uses to negotiate advertising. They report having over 4.8 million downloads across the whole catalog since moving over to Audioboom, with an additional 600,000 back when they were hosted on Libsyn.
4. The team also deals with a little merchandising, but they view it more as a way to connect with their listeners than an actual profit center. For one thing, Philbrook tells me, they’re not trading in high volumes, and what little profit they’re able to accrue is often canceled out by the amount of time they put into fulfillment.
5. Philbrook, a former editor of TV commercials, is the only person working on the show full-time, while his cohost Burgess still works a day-job. The production also involves work from a volunteer research group that involves over two dozen people and which formed organically out of the show’s fanbase.
“Our overall experience so far with podcasting has been absolutely amazing,” Philbrook said. “Will we survive indefinitely? It’s hard to know. We’re currently netting about 10 percent of what we think we’d need to be making to both be full time employees of Astonishing Legends and be able to pay members of our team fair rates for what they do for us. Can we get the other 90 percent? I guess we’ll find out.” (Hat tip to Erin M. for inspiring this segment.)
Bites:
@nwquah Struggling to think of many pods asking for anything close to a $100 (let alone $200) CPM pic.twitter.com/KgI3TunkxJ
— Will Flaherty (@flahertyiv) September 10, 2016
This version of Hot Pod has been adapted for Nieman Lab, where it appears each Tuesday. You can subscribe to the full newsletter here. You can also support Hot Pod by becoming a member, which gets you more news, deeper analysis, and exclusive interviews; more information on the website.
