Five years ago, as the tide turned against top digital publishers like BuzzFeed, Vice and HuffPost, there was a minor renaissance of one-person or very small publishers.
Unlike larger digital publishers, which relied on search and social platforms to drive site traffic, this new crop of independent writers embraced podcasting and newsletters as their publishing channels of choice.
Meanwhile, even before the pandemic boosted engagement across the internet, Substack was in serious growth mode, adding big-name writers and notching subscribers. Podcasting was the apple of the media industry’s eye and, well, Apple’s eye. Apple reached into its deep pockets to buy podcasts and audio ad tech, and Spotify went on an acquisition spree for podcast ad tech and original content.
The “money was flowing and deals were getting done that weren’t exactly rooted in the ability to make a profit,” said Dave Hanley, CRO at AdvertiseCast, the ad network owned by podcast-hosting service Libsyn. Hanley was speaking on a webinar last month hosted by Simon Owens, a newsletter and podcast producer who covers new media.
But now comes the hard part for the scrappy independents who went big on these buzzy channels: proving that they made the right move.
Perhaps not, with the benefit of hindsight.
The pro-and-con problem
Newsletter and podcasting media startups have reached an inflection point. Which is to say, they’re asking themselves: “Shouldn’t we be making real money with this by now?”
But the need to monetize and the easy availability of more ad formats and more data is coming into conflict with what made small podcasters and newsletter writers popular to begin with, like their carefully curated editorial style and the sense of intimacy.
Podcasting in particular suffers from an incentive problem – an issue nearly everyone in digital publishing is familiar with: To get more money from advertisers, one often has to sacrifice user experience.
These days, many podcast producers are placing more ads per podcast rather than relying on the standard host-read spot in the middle. AdvertiseCast has heard from some small publishers that other podcast monetization services promise a certain amount of money per show – but only by running, say, eight ad segments in a 40-minute episode.
Many podcasters are now placing pre-rolls, which can be served more dynamically (i.e., programmatically) since they aren’t embedded in the content. Vox Media and The Ringer, a sports pub owned by The New York Times, are big on podcasting, and both have added pre-rolls, Owens said.
“I have my thumb ready to start skipping ahead of those,” he added.
Growth opps or growth traps?
Podcast and newsletter ad revenue has surfed some pretty tumultuous waves. That’s what happens when your biggest early advertisers are DTC brands and other VC-backed tech companies.
“If you look back two years ago, a lot of the companies that were advertising were VC-backed unicorns, and a lot of those companies are struggling [now],” Hanley said.
Crypto advertisers were also big spenders for a while, according to Kelly Dorogy, business development manager at Paved, a newsletter and podcast sponsorship marketplace, during the webinar. But that revenue has dried up as regulations sprouted up and crypto currency valuations plummeted.
A new ad revenue avenue for podcasts and newsletters is now coming from companies selling AI-related products or personal finance tools, Dorogy said.
In short, podcast and newsletter producers must carefully read the winds of change and find something new to pick up the slack once a gust passes.
In terms of new ad sales opportunities, two of the most lucrative promotional options for podcast and newsletter producers right now are sponsored email blasts and what Amazon refers to as “Feed Drops,” which is when one podcast releases an episode or a partial episode of a different podcast, often in the same category.
Amazon is one of the biggest advertisers in the podcast space since it has its own streaming audio service and podcasting library. It also pays handsomely for those Feed Drops, Hanley said. But many podcasters are reticent to seize the opportunity, he said, and risk alienating their audience. Listeners are there for the show they know, not sponsored aggregation.
Another option is to send a dedicated email to a newsletter audience, which can be extremely effective for a brand, particularly one that’s already a podcast sponsor, Dorogy said. Which makes sense: Even when a host-read ad is effective, people can’t click a link to engage with it. But an email blast from the podcast host to that host’s newsletter audience creates an attributable click to conversion with strong recall of the brand.
The return on email sponsorships can generate as much as 10 times the ROAS of the podcast-only campaign, said Jesse Watkins, co-founder of Who Sponsors Stuff, a newsletter sponsorship database, and another webinar attendee.
The strategy requires caution, though, Watkins said. “You don’t want to burn your audience.”
