Zucker on the opportunity & Schrage on its measurement
Welcome! If you're getting this, it means you're receiving the beta edition of Brattle Media — an email newsletter examining the state of media and where it's heading. You won't find the "news of the day" in our newsletter. Instead, we hope to use the past to inform the future. Each newsletter will be focused on a singular topic and we will both write our own takes.
We hope to do this newsletter with you. So, as excited as we are to share our own ideas, we'd love to hear your own. Feel free to send us feedback, ideas, think pieces, and more by replying to this email. Plus, if there's anyone else you think should be on the list, please let us know.
We hope you enjoy the first newsletter!
-Matt Schrage and Andrew Zucker
P.S. The hope is that it comes out every Sunday!
The Next Great Media Company Will Be in Podcasting
During the spring of my junior year of high school, I spent a week touring colleges across America. I was most struck by Northwestern University. It’s a world-renowned school, but neither its academics nor facilities left an impact on me. Rather, its sidewalks did.
Whereas every other school I visited featured posters plastered upon walls jockeying for the student body’s attention, Northwestern students went right to the focus of the eyes of students: sidewalks. After all, students were busy texting, playing games, and using Facebook on their mobile devices. We were staring downwards.
At the time, Spotify had less than a third of the monthly active users it has today. The podcast Serial had just led to a podcast explosion. And Apple’s dedicated Podcasts app was less than three years old.
Suffice to say, Northwestern students’ marketing techniques were early and relied upon the oldest trick in the advertising world: go where your customers are.
However, I’m no longer convinced the sidewalk is the market inefficiency for advertisers. Today, our ears are.
While U.S. advertisers’ spent 53% more on podcasting in 2018 than they did the year before, spending on podcasts still accounts for less than 1% of the total ad dollars spend in the U.S. Investing in a podcast network now could be like investing in a cable network in the early 1980s.
In the same way any content company makes money through intellectual property outside of advertising, podcasting presents similar opportunities. Books, documentaries, television shows, and live events are just a few of the ways podcasts have been adapted into other mediums.
The nascent advertising and IP revenue streams don’t even account for the potential of paywalls. Today, nearly every podcast is free. New companies, such as Luminary, are testing the waters and seeing consumers’ willingness to pay for exclusive content. Analysts now speculate Spotify and Apple may enter a content race for the exclusive rights to podcasts.
As Wondery’s Hernan Lopez noted on LionTree’s KindredCast podcast, just a decade ago, consumers expected premium news from the New York Times and others to be free. It took conditioning, but, today, online subscription revenue for the Times last year reached $400 million.
Plus, there’s the international component that should excite the industry. Right now, many of the top podcasts are only delivered in English. While that may sell in big markets, podcasts from daily news to true crime are ripe for adaptations in languages and countries across the globe.
So, just as Spotify scooped up Gimlet for nearly a quarter of a billion dollars, old-school media companies ought to look for similar podcast networks to buy in order to fuel growth and ensure they don’t miss out on the next big wave. — AJZ
The Invisible Podcast Audience
It was late afternoon on August 28, 1922 when, for a 10 minute period, the New York radio waves were filled with the first sponsored broadcast. The Queensbourgh Corporation paid $50 to advertise its Jackson Heights apartments to an unseen, unquantified audience and, in doing so, ushered in the era of commercial broadcast media.
The subsequent decade was marked by the slow but steady adoption of the medium by corporations and advertisers. The National Broadcast Service (NBC) was formed in November 1926, followed by Columbia Broadcast Service (CBS) in 1928. And although it remained uncertain exactly how many people tuned in to listen, scores of advertisers clamored to promote their brands to the emerging national audience. The number of advertisers that contracted with NBC doubled in 1929 to 200 from the previous year and by 1930 the network's gross sales figures had reached $22 million.
But despite the dramatic growth, many potential advertisers recoiled from the lack of hard numbers: there was no way for to determine the size of the audience delivered by the networks. In comparison with print media where the circulation numbers vetted by the Audit Bureau of Circulations made buying placement a conventional transaction, the purchase of radio time had to "be made on faith".
And in an increasingly scientific age, appeals to faith were insufficient. In March of 1930, Archibald Crossley introduced a system for measuring the radio audiences of national radio networks. Crossley, with the endorsement of the Association of National Advertisers (ANA), began a 12-month study of 50 major cities across the country which produced the first systematic reports of the radio audience and its listening habits.
The radio audience was sampled by selecting numbers at random from telephone directories. Their listening habits were determined by a polling technique known as 'telephone recall,' where Crossley's researchers called each number in the sample and asked "when sets were used, who listened, what programs and stations were heard, and what programs preferred". Each telephone call cost about 37 cents. By repeating the procedure regularly, Crossley was able to provide advertisers with a standardized measure of the radio audience for given time segments and programs across different geographies.
Interim reports, which measured the listening habits of a sample of 17,000 radio families, were released every four months and provided a rating for radio programs. Programs began with a rating of about 5 but depending on their success could approach 20 or 25 within six months. The highest rated program "Amos 'n' Andy" had a Crossley rating of 38. The survey estimated that with a single evening network program, an advertiser could reach between 3 million and 8 million listeners. The previously invisible radio audience materialized in these reports and the market for radio advertising was invigorated.
What's Old is New Again
Podcasting — despite the increasing metrification of the media industry — remains relatively unquantified. In a charming way, the space recalls the early days of broadcast radio before ratings and professionalization. And podcasters are similarly clueless about their audience. Every week they put out a show with only a foggy idea of how many people tune in to listen. Viewership is estimated by the number of unique downloads of the
.mp3 file — but beyond that listening habits remain unknown.
Today, there are an around 700k podcasts available with another thousand or so added every month. The podcast industry is growing too quickly for advertisers to ignore, yet audience measurement has lagged behind. Ads are sold on a CPM basis and their efficacy measured with direct response techniques (“Visit this
squarespace.com/THISPODCAST”). For a certain type of advertiser that needs access to a large general audience and doesn't require more granular targeting, this is sufficient. But many more reject the medium due to its lack of metrics.
There is a need for standard measurement in podcasting. At WWDC 2017, Apple announced its own podcast analytics tool. Spotify certainly has internal numbers through its first party app. Other like Podmetrix or Midroll (which owns the podcast app Stitcher) are also well positioned. An efficient advertising requires a consensus between publishers and advertisers: an externally validated metric that both can agree upon. Podcasting will continue to grow, but until better metrics are developed, advertising dollars are unlikely to keep pace. — MWS
Thanks for reading! If you’ve made it this far, you should consider subscribing…