After ‘Serial,’ sponsors pour money into podcasts
It’s hard to miss the buzz about “Serial,” the true-life murder mystery podcast that became a national phenomenon last fall. At home, online, and at work, engrossed listeners endlessly debated the details of the case — and shared laughs over the quirky sponsorship message from e-mail marketing company MailChimp that preceded each episode.
Now, with the medium exploding in popularity, businesses want in. Brokers say demand for sponsorship spots on popular podcasts has soared since Serial’s debut in 2014. And companies that already advertise on podcasts are amping up their spending.
“Our budget for [podcast] sponsorships this year is four times what it was last year,” said Femi Wasserman, vice president of communications at DraftKings Inc., a fantasy-sports website based in Boston. “We’ve been doing them for a while, but ‘Serial’ really made it clear how influential podcasts are.”
Podcasts sponsorships are typically sold by the number of listeners who hear the spot. Advertising figures for the nascent industry are imprecise, but specialists estimate companies are spending tens of millions of dollars a year on ads and expect that figure to soon reach $100 million.
The audience for podcasts is growing quickly. In the Apple iTunes store alone, subscriptions surpassed 1 billion in 2013, the company has said, while “Serial” averaged more than 1.5 million listeners per episode. Meantime, the share of listening time Americans spent on podcasts grew 18 percent from May to October last year, according to Edison Research.
Podcast listeners are also voracious: Another Edison study showed podcast regulars spend a lot of time listening to all sorts of audio — more than six hours a day compared to around four hours for Americans overall.
While the market for podcast sponsorships was steadily maturing before “Serial,” the show’s meteoric rise has prompted many more companies to shift ad dollars into the red-hot medium. Call it the “Serial effect.”
“Suddenly, you could talk about podcasts in polite company,” said Erik Diehn, vice president of business development at Midroll Media LLC, a brokerage that matches sponsors with podcasts. “Young people at ad agencies could go to their bosses and say, ‘hey, there’s this thing going on with a real audience.’ ”
Midroll’s sponsorship business has doubled over the last year, Diehn said. The company represents about 200 shows, some with audiences that top 500,000, and has sold spots to Hulu, HBO, Squarespace, and other companies. And more than 95 percent of Midroll’s clients renew sponsorship buys, Diehn said, an indication advertisers are happy with their return.
“We see a lot of content companies and tech startups,” Diehn said. “They’re very quantitative and results-driven, so podcasts are a natural fit.”
Because the shows are mostly streamed online, podcasters can tell sponsors exactly who is listening and how many times a spot was heard. That gives the medium an edge over radio, which “sprays” ads over the airwaves and has a looser demographic focus.
The relative ease of creating and distributing podcasts means there’s one for every niche, allowing companies to find audiences whose interests dovetail with their products.
“The ability to target a specific demographic or interest through podcasts is almost unrivaled,” Wasserman said. “It means your marketing dollars are way more efficient.”
DraftKings, for example, pays a fantasy basketball podcast to have its host read copy touting the company’s fantasy basketball league. That audience may be modest, but it is loyal and tightly focused, making each listener more valuable. That’s why sponsorship spots on established podcasts command between $18 and $25 per one thousand listens, compared with about $8 to $15 for traditional radio.
Podcasts are so popular that some companies are launching their own. HubSpot, the Cambridge marketing and sales software firm, recently hired Dave Gerhardt, who produces the “Tech in Boston” podcast, to work full time on “The Growth Show,” which features interviews with technology and business leaders.
“We liken it to blogs seven years ago when they were about to take off,” said Joe Chernov, HubSpot vice president of content. “The beauty of ‘Serial’ is that it got a lot of people to open the podcast app on their smartphone for the first time.”
Podcasts date to the early 2000s, taking their name from the Apple iPod music player. But it took the advent of widespread smartphone use, user-friendly downloading, and “Serial” for the format to really take off.
“The fundamentals have been there for a while, but ‘Serial’ has finally put a spotlight on it,” said Jake Shapiro, the chief executive of the Cambridge-based Public Radio Exchange, or PRX, which produces Radiotopia, a collective of 10 different podcasts.
When PRX launched a Kickstarter fund-raising campaign last year seeking $250,000 for Radiotopia, it ended up netting more than $620,000.
Public radio stations are also producing original podcasts, in addition to republishing their broadcast programs as podcasts. In January, WBUR launched “Dear Sugar Radio,” a relationship advice podcast sponsored by Amazon’s Audible.com. More than 60,000 people downloaded the first episode.
“It’s the kind of show we couldn’t put on the radio because of the candid advice and subject matter,” said WBUR station manager Corey Lewis.
“This is the next generation of civil discourse,” Lewis said, “and we want to be there.”