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A Word in Your Ear

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By: NMK Created on: February 19th, 2007
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Podcasting is becoming an attractive business proposition, both as a revenue-generator and a medium to promote existing businesses. Cynthia O'Murchu reports.

Podcasting is becoming an attractive business proposition, both as a revenue-generator and a medium to promote existing businesses. Cynthia O'Murchu reports.

old radioThough market penetration is still low compared to other media, huge numbers of podcasts are being created every day, with exponential growth. Podcasting syndicator Feedburner currently offers over 90,000 podcast and videocast feeds. Podcast showcase site PodShow boasts a global audience of tens-of-millions. Co-owned by Adam Curry of MTV fame, PodShow secured $15mn of VC funding in September and announced its intention to become a major media player. The message is clear: some serious money is streaming into the podcasting industry.

For most of content creators, making a full-time living off their podcasts is still a somewhat distant dream. But increasingly podcasters - who often start as enthusiasts - are looking to monetise their content. Currently about 20 per cent of UK podcasters generate either some or all of their income from podcasting, says the UK Podcaster's Association (UKPA), up from about 8 per cent in early 2006.

Some of the most common money-generating models include content syndication, embedded advertising and sponsorships. While there are ways to get paid that don't involve advertisers, such as selling merchandise, using paypal tip jars or asking listeners to pay for subscriptions, these are the exception rather than the rule, industry experts say. Largely, revenue from podcasting comes from advertisers and sponsors.

Advertising for podcasting is certainly poised to grow. Ad spends on podcasting are projected to increase five-fold from its 2006 levels to $400 million in 2011, according to a report to be released by eMarketer this week.

No Easy Path

But as big brands and big budget advertisers venture into podcasting, both podcasters and advertisers are facing obstacles.

"The biggest challenge is understanding," says Jamie Riddell from Cheeze, a digital direct marketing agency. "Most of the bigger advertisers don't consume podcasts and don't know what they are." Advertisers also need enough volume to make planning podcast advertising as part of their marketing mix a viable proposition. Networks such as Feedburner and Podtrac or directories such as the UK's Podcast Nation facilitate finding relevant content for advertisers to sponsor, but nonetheless a lot of research is involved in matching up a potential sponsor with the right target audience.

But for some, the most prominent challenge is the perceived lack of comprehensive, reliable metrics to help measure return-on-investment. While podcasters have access to statistics, such as the number of downloads, simply having the number of downloads does not guarantee that a podcast has actually been listened to. And given the measurability of all things internet, advertisers have come to expect detailed metrics.

Several companies have begun to find ways around these issues. US-based company Podbridge for example offers advertisers both information about listener demographics and the ability to measure not just downloads, but also 'plays' using software that allows them to compile aggregate numbers on how many times a podcast has been listened to. In addition, their technology enables them to dynamically insert and switch out time-sensitive ads in podcasts that have already been downloaded.

But despite the potential pitfalls and teething problems, advocates point out significant upsides for advertisers sponsoring podcasts. "You're reaching a savvy audience that is consuming when you usually can't get them," Riddell says, referring to the time-and-place shift possibilities of podcasts. Unlike watching TV or reading online newspapers or blogs, podcasts can be listened to on the go, while driving to and from work and once downloaded they can be consumed multiple times.

Podcasting also gives advertisers and sponsors the ability to micro-target listeners. "You have the opportunity to get really close to your audience," Riddell points out. Given the roots of podcasting as consumer-generated communication, rather than a purely commercial proposition, podcasters have 'traditionally' catered to niche audiences, often out of the direct reach of advertisers through other media. In addition, podcasters tend to interact with their audiences through their websites and blogs, giving them a good sense of what appeals to that audience.

In the Marketing Toolkit

Brands can also reach into their own content vaults and create podcasts to promote their existing businesses. But content remains key, experts warn. "Companies need to think seriously about who their customers and listeners are and what is of interest to them," says Mike O'Hara of Voices In Business, a company offering production services to businesses creating podcasts. "Listeners will only listen to podcast content if it is informative, relevant and entertaining."

Sun Microsystems for example has used podcasting to help position themselves as a thought leader. Instead of advertising their services in a 30 second ad, Sun is sponsoring a series of podcasts about the new MiFID banking regulation. "Sun are not directly making money from podcasting, but are placing themselves into a situation where anyone who is looking to make MiFID-related changes will come across them on search engines," O'Hara explains.

On the other side of the spectrum is Wiggly Wigglers, a UK-based garden products company that has become a poster child for the small-business podcasting space. Wiggly Wigglers started their gardening podcast in 2005 and since reduced their traditional advertising spend close to zero, relying on their podcast and website to promote their products. In November last year, 20,000 listeners from all over the world downloaded the Wiggly Wiggler podcast.

Video podcasting or "vodcasting" has been subject to a lot of hype in the past few months, despite the fact that the penetration of video podcasting and video iPods is still small. A recent Nielsen report showed that only 2.2% of files played by video iPod users were videos. Nonetheless many advertisers are keen to produce them. Dean Whitbread from Talking Voices and the UKPA credits the upsurge in video podcasting for businesses both to the fact that businesses can tap into existing content, but also because it's a prestige issue. "With a minimum outlay you can make good audio, but you can't make good video without a lot of money," says Whitbread. "The trick is to make them work in both audio and visual form." But some remain skeptical. "The only time a video podcast comes into its own is when there is a strong visual side," argues O'Hara. Unlike audio podcasts, video podcasts are not always suitable to be consumed on the go, nor while multi-tasking and it requires more bandwith and diskspace.

Whichever format medium businesses and independent podcasters choose, they'll need to plan their strategy carefully to ensure they don't 'podfade' - in other words - start a podcast and stop producing it once the initial excitement has worn off. With this budding industry still in flux, companies will no doubt experiment. Some will be successful and some will fail. But overall, advocates see only one direction for podcasting. Says O'Hara: "I see nothing but growth in podcasting. We're nowhere near a saturation point."

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