Once in a while—once in a great while—new content avenues take off in unexpected ways for advertisers. Would it surprise you to know that nearly a quarter of the US population listens to podcasts regularly? Or that there are some 700,000 podcast titles in production today? Or that the average podcast listener skews young, educated and is likely to have a decent disposable income? How about the fact that podcast listeners tend to devote hours a week to listening and are likely to be very dedicated to the podcasts they follow?

If you didn’t know any of that, you probably haven’t thought much about adopting podcasts as one of your digital ad channels. If you did know it, then you’ve probably thought about or even added podcasting to your advertising portfolio. Certainly the audience size and demographics sound great, and with nearly three quarters of a million channels to pursue it seems highly likely that you can find the right avenue for your message.

Dig a little further and you’ll discover the fabulous success advertisers have had using podcasts. And this leads us to our next quiz question. What do Ronald Regan, Hank Aaron, Lucile Ball, Rita Hayworth, Spencer Tracy and Jimmy Stewart all have in common?

If you’re under 40, you probably said, ‘famous people who are now dead,’ and you wouldn’t be wrong. But they each were also A-list celebrities who lent their name to cigarette ads in the heyday of tobacco advertising. The salaries within their professions were high, but the royalties for advertising were much higher.

In much the same way, the success in podcast advertising has had to do with endorsements by the hosts of podcasts. They’ve established deep trust with their audience, much like sports and movie stars had in the ‘40s and ‘50s. When they talk about the food delivery service they use, it’s sometimes because they’re too busy to cook, and that sounds relatable. When they extol the virtues of the latest electronic gizmo they like, their audience pays attention.

And so, in the early days (perhaps golden days) of podcast advertising, rates were low and conversion was high. Facebook saw the same sort of phenomenon in its early days, but now rates are higher and the audience now recognizes Facebook ads similar to the way they do on other platforms. It’s the path new advertising mediums tend to follow. What made podcasts really shine was the fact that hosts and advertisers picked each other and thus established that hosts had real affinity for the products the advertiser was marketing. The host actually talked about their experience and love for the product. As you’d expect, the more genuine the connection, the better the ad performance. Better yet, agencies were often not the instigator of these conversations, or if they were, they did so in a way that was less about programmatic inclusion and more about trying something new and unique.

With Podcasting, it’s Personal
That’s getting harder to do as podcast advertising heads mainstream. Also, without that intimate relationship with hosts, advertisers and the agencies that guide them are wary of letting the host do the pitch. For their part, hosts are well aware of the value of their personal brand. They may not even know about the connection between the stars of 70 years ago and tobacco and how the connection ultimately came to tarnish a celebrity's credibility. But they are still careful about what products they endorse, directly or indirectly. Consequently, ad spots within podcasts have moved into canned recorded messages that let ad buyers feel secure that their message is communicated properly, albeit without capitalizing on the personal brand of the podcast host. Without a host endorsement, podcasting loses some of its magic as an advertising medium.

All of this might lead you to think that you’ve missed the boat on podcast advertising. We put that question to Dan Granger, the founder and CEO of Oxford Road, an ad agency that prides itself on its ability to capitalize on bleeding-edge advertising channels, particularly in the audio space. We asked his view on podcasting and he told us what we just told you.

He believes the medium is still a great part of an ad portfolio, but not the silver bullet it used to be, and that it certainly shouldn’t be viewed as the sole way to go to market. He points out that advertising spot rates have seen a 50-fold increase as the owners of successful podcasts have come to realize their power with buyers.

There’s data to back up the value, but Granger also points out that you can’t track the performance of podcast advertising as well as you can in other mediums (aka, the “attribution” problem). That’s because you’re reliant on listeners to use the vanity URLs or promo codes a host mentions in the ad spot. The listener can’t just simply click on the ad. Just looking at promo code attribution will lead you to undervalue the overall effect of podcast ads.

The diagram below illustrates this: the problem is that it’s almost impossible to say how big those circles should be relative to one another.

Podcast Ad Effectiveness

Granger also points out that attempting to get very specific about the demographics of podcast ad recipients (and thus precisely finding your target audience) isn’t useful the way it is with Google of Facebook. Just like with other forms of online advertising, you align your message with content as much as you do the touted demographics of the media property. As a result, podcast efforts tend to work better for top and mid-funnel efforts (awareness, driving independent research) rather than for driving leads directly. Performance marketers will find a good place for podcasts in their ad portfolio, but it’s really just one piece.

By The Numbers
Indeed, if cost per lead is your measurement of choice, you’ll quickly lose interest. Just measuring those leads alone means that you need to build models for, and otherwise understand the complex path a podcast-sourced buyer takes before ending up in the qualified lead basket, especially compared to other avenues.

Costs per thousand listeners (CPMs) are pretty well worked out, although as with anything in advertising, rates can be all over the place, differing by a factor of 50 or depending on the audience you’re trying to reach and the popularity of the show.

CPM infographic

*ad rates are highly variable within each medium—rates shown here are industry averages gathered from various reporting sources.

If you look at metrics for directly attributable leads (excluding any conversion metrics), we’re talking about potentially thousands of dollars (per lead) rather than the hundreds of dollars from more reliable and attributable lead sources. Your mileage may vary.

Moving from Impressions to Actions
As marketers adopt podcasting, Granger says that shaping the message is critical and different than for most other mediums. Listeners tend to be more intent about their podcasts than they are with other audio content, like music or even sports. Oxford Road has used its experience to develop a system for evaluating audio messaging that it calls Audiolytics. The process evaluates messaging on over 70 criteria in nine categories.

Audiolytics Evaluation

This list is a pretty good starting point for any ad campaign, so it’s the criteria within each that makes the evaluation specific to audio messaging.

When it comes to evaluating the effectiveness of your campaign, that small fraction of listeners who took exactly the action you prescribed doesn’t tell you much about the success of your campaign.

Granger admits that the tools here are pretty basic and that you probably can’t know the effect of your podcast ad but that you can understand its relative effect. The ad agency can’t always, for example, look at the timing of the ad placement and correlate it with activity on your website or use campaign codes to see who clicked what. Part of what attracts listeners is the asynchronous nature of podcasts: you listen when you want. Your ad could be heard in days, weeks and months after a podcast episode first airs. And when listeners do hear it, they may take any number of actions, including doing some research before engaging further with your product and offer. None of that activity is easily attributable to your podcast ad.

In the end, evaluating whether customers came to you through your podcast ads or were at least influenced to explore can only be learned through surveys of new customers and prospects, something you won’t be able to do too regularly since such surveys can be off-putting. And yet this data, combined with direct use of vanity URLs and promo codes and some other more ephemeral analysis, like looking at search terms used to get to your site, can all be knit together into an assessment of podcast ad performance.

In other words, podcast advertising can be an important, if imperfect part of a sophisticated digital ad portfolio. And clearly it wouldn’t be wise to use podcasts exclusively or as a primary means of advertising.

Oxford Road prides itself on knowing the next up and coming medium, so we asked Dan what’s got his attention. He’s intrigued by the growing adoption of smart speakers and voice interaction with digital assistants. We’ll explore that with him in a future article.