Consolidation and acquisitions have become commonplace in podcasting since... well, honestly, since the beginning of podcasting. But the pace has picked up big time in the last three to four years. And with the looming recession (or the one that's already here, depending on your experience), you can expect that pace to accelerate even faster. Companies that are flush with cash will swoop in and grab overleveraged companies or media properties seeking upfront payments or revenue guarantees to help them weather the uncertain times ahead.
Just this week, we've seen Team Coco, Conan O'Brien's podcast production company, be acquired by SXM or SiriusXM. WTF with Marc Maron has signed an agreement to let Acast handle ad sales and distribution exclusively starting this summer. Both of those deals, one an acquisition and the other a strategic partnership of sorts, probably went for eye-watering sums of money, as both parties were betting on even more envious piles of cash flowing out the other end, further enriching the parties involved.
That spells really good news for other shows that get 10s or 100s of millions of annual downloads, all of which offer multiple opportunities for ad impressions to be sold against.
But what if your show is not seeing annual downloads in the range of millions? What if you're just in the thousands, which means your show is more than a thousand times smaller than those really big shows? Will the changing economic climate mean more opportunities for your show to be acquired? Will you suddenly get people sniffing around your show looking for a strategic partnership?
Those deals, as you know already, happen because shows at that size already have huge audiences that can be even more monetized. And they can be grown further to rake in even more cash. Seen from that perspective, acquiring huge podcasts is a relatively safe bet if you can add in more efficient ad buying, expand the network effect, or create more packaged deals and bundles that can lead to single ad buys in the multiple millions.
Big advertisers like to spend money on big shows simply because it's easier than spending money on smaller shows. Look at it from the perspective of an ad buyer with a huge media budget to spend on podcast advertising. Magellan AI tells us the top 15 advertisers are spending more than $1.3 million on podcast ads each month. At an average CPM of $25, that's a lot of M's to manage. About 52 million impressions, in fact.
If you're that ad buyer, how many podcasts do you want to spread your money around? The answer is as few as possible.
Let's use a more modest ad spend for a moment; $500,000. Or roughly a third of what the top advertisers are spending today. The ad buyer with that budget is responsible not just for vetting and placing those ads, but also for tracking and reporting on the efficacy of the overall campaign. All of those steps (and more I glossed over because this is already long enough) are lots of work, I assure you.
Do you want to spend your $500K one thousand dollars at a time, across 500 shows? Oh, hell no. That's way too much work! It's better on you to spread $50,000 across 10 shows. Or even better, $100,000 across just five shows. Because in reality, you're going to see the same return. So why not make it easier on yourself?
That's not good news for shows that aren't generating millions of downloads per episode. How are shows with more modest audiences supposed to compete?
By not competing, actually.
Stop Selling Ads
I recently read an article from Digiday that explained the disconnect between scrappy podcasters who want to run ads more creative than just run host-read or programmatic, pre-produced ad units on their podcast and then the ad buyers who, as I just mentioned, are kinda lazy. The bottom line is that ad buyers, at least at that level, aren't interested in creativity. They're interested in spending money as efficiently and effectively as they can. And sure, showing a positive ROAS (return on ad spend) is important. Or at least being able to tell their bosses a story they can interpret as a positive ROAS is important.
But creativity? Where does that fit on a spreadsheet?
And that's where smaller shows, mid-level and below, can really shine. Seriously big spenders may not care about ad creativity, but the smaller spenders certainly might.
But only if we—and by we I mean you—stop trying to sell ads on your smaller podcast the way ads are sold by the big players. That's almost always a losing proposition that immediately puts you in a defensive position. Good luck trying to justify why spending $500 on your show is worth some insanely high CPM of $50 to $200 or more because that's a fight you're going to lose nine times out of 10.
Instead, reframe the conversation. Don't even talk about CPM. It's not worth it. And don't even talk about "running ads". Again, it's not worth it. The way we think about ads today: pre-rolls, mid-rolls, post-rolls, dynamically inserted, or host read... those are all words to describe ads, which means you're automatically competing against other bigger shows who can run ads way more effectively and efficiently than you can.
Change the narrative by offering something different. Instead of advertising, offer custom sponsorships that are unlike anything an ad buyer has heard before on podcasts.
I'm talking about custom, highly creative deals and concepts that would be extremely cost-prohibitive to convince a big show to try out. But a smaller, more nimble show like yours could seriously lean into something cool and beneficial to both parties. And your audience!
How about a branded segment during your episode. Three to five minutes of sponsored, but highly valuable content that your audience will still love. No, not just an extra-long long host-read. That's just an ad. Get creative, turning your sponsor into a partner, and craft a segment with them that sounds like content in your episode because it is content in your episode.
Or maybe offer to create a completely branded episode or series of episodes that you produce in conjunction with the sponsor? No, not an infomercial. That's just an ad and you're falling back into the trap. Once again, I'm talking about solid content that you can only make because of the involvement of that sponsor. More than just spending their money. Really working with them to create something jointly. Again, that your audience will love.
Smaller companies are often looking for ways to outdo (but not outspend) their bigger competitors. They're used to being scrappy and are often looking for interesting ways to parlay their brand and their more modest marketing dollars into creative executions that their big competitors just don't have the time or need for.
I think it's going to get tougher out there for the mid-sized and smaller podcasts as more marketing dollars will be reallocated to a smaller number of larger podcasts. Trying to get some of that probably just isn't worth your time.
But getting creative and providing real value through clever partnering and sponsorships that only your show can deliver? That's something worth trying.
I shall be back next week with yet another Podcast Pontifications.