We did our initial research paper on Podcasting in late 2005 for a private high level industry symposium (its now reprinted whole in the book
Mobile Web 2.0), and one of the issues then - as now -was whether podcasting will ever make money from direct Advertising (as opposed to sponsorship). We were unconvinced in the main - the "what you had to believe" was just too hard in our view.
Throughout 2005 / 2006 / 2007 we have been doing work for clients on developing interactive advertising propositions, releasing some of our work for public consumption this year in
a report written under the auspices of the 3GSM and co-authored with STL Partners.
Throughout this time, we have been fairly dubious that Podcasting would make much money from direct ads. So, it comes as no surprise to see this
article today, where podcasters are banding together to make it work:
...about 15 companies, including Apple and NPR, announced last week the formation of a new industry group, the Association for Downloadable Media, that will help executives improve methods for creating, distributing and tracking advertisements in podcasts.
“The idea of creating an association to focus on this is great,” said Brian Haven, an analyst with Forrester Research. “It’s going to help companies monetize all this content.”
According to a recent Forrester survey, slightly more than 10 percent of all Internet users have listened to a podcast. e-Marketer, another online research firm, said that advertising on podcasts reached just $80 million last year. Mr. Haven said a lot of growth is possible.
An aside - $80 million sounds high to us as a US only number, never mind the $300 odd they project by 2010 - though we don't have access to
the entire report we assume that it includes all advertising including sponsorship plus some generous treatment of other spends?
Using their own numbers, if you assume a c $5 CPM (high in our view going forward), thats 16 trillion ad equivalents served, which - if we assume a 10% total audience - people who have actually downloaded a podcast (c 10m in the US), that implies each of those people must consume c 1,600 podcast ads a year - or (assuming 3 ads per podcast - again high) at least c 1.5 ad driven podcasts a day (that ignores non ad supported podcasts by the way). We submit that as a mean - or a median - across a 10% who are defined as those who have "ever downloaded a podcast", that is a "hard to believe" number.
Anyway, the issues are those that have plagued Podcasting (and other new media) from the get go:
...technology companies, marketers and publishers need to agree on standard methods for packaging and delivering advertisements, and tracking the number of times an advertisement is heard. Also, there is no consensus on how best to design an advertisement within a podcast. As a result, marketers, advertising agencies and publishers cannot efficiently implement big campaigns across multiple sites.
No change there then...there is still experimentation with pre-rolls, post rolls, mid rolls etc etc - but clearly no consensus has emerged, thus forcing this coalition play.
So.....mid 2007, are we any more +ve about commercial podcasting than we were 2 years ago?
Good news is more people with broadband, MP3 devices, used to sideloading etc. The major difference between now and 2005, however, is that today the market is increasingly becoming a Video game, so audio (the original) podcasting is losing early potential advertisers who will be more attracted to making video work - in essence a mapping to the Olde Media Audio / Video structure.
(Strictly speaking we differentiate between audio podcasting (for the original iPod / MP3 device ) and video vodcasting, but not everyone is this precise.)
However, before one shouts hallelujah, the other thing about Podcasting (audio certainly, and increasingly video) is, like blogging and unlike radio (and video/TV to a larger extent), it has got to the point where the economics make it a good medium for user generated content, so there is a lot of potential for "freecasting" via enthusiastic amateurs, as well as businesses funding the podcasts/vodcasts from other revenue sources (or for e.g. the BBC just repurposing its huge range of content as a public service).
