Are Podcasts Poised to Break Into Advertising Mainstream?

Popular Crime Show 'Serial' Has Piqued Interest, But Measurement Is Hurdle

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This fall, one of the most talked-about shows on Thursday has been a podcast.

The show, called "Serial," tells the story of a reporter named Sarah Koenig trying to make sense of the case of Adnan Syed, a second-generation immigrant serving a life sentence after being convicted of murdering his ex-girlfriend while still in high school.

Since launching just over two months ago, "Serial" has been written up everywhere from The New Yorker to The Guardian. It has spawned a parody podcast, "The Serial Serial" and two separate podcasts devoted solely to analyzing and discussing the action that unfolds on each episode. More importantly, the hubbub surrounding "Serial" has been driving advertiser interest in the medium it was made for.

Once regarded as a fringe add-on to large digital campaigns, podcasts are now regarded a play for brands seeking to reach well-educated, tech-savvy consumers.

"It's five times as effective as buying one website," said Mike McLaughlin, the director-digital at Palisades MediaGroup. "In the past, we'd buy NPR and maybe they'd throw in a podcast. Now we go and say, 'We want five of your best podcasts, and we'll take one of your websites as a throw-in.'"

Though podcast stars have been blips on the mainstream-media radar before–Marc Maron, the host of a popular podcast called "WTF," garnered some media attention when cable channel IFC gave him his own scripted show several years ago – agency players like Mr. McLaughlin say that "Serial" is getting a level of attention no show has since.

"I'd say it's a gamechanger," Mr. McLaughlin said of the show's surging popularity. "I hate using that word, but it really is."

A big hit with direct response
Direct-response marketers have been aware of the power of podcasts for years. Podcast advertising companies like Midroll Media first attracted the interest of direct-response brands like Stamps.com and Warby Parker. Show hosts would read ads that included show-specific promotional codes, and sponsors would measure results in customers acquired or sales generated.

"The return was immediate and measurable," said Adam Sachs, CEO of Midroll.

Finally hitting scale
But mainstream attention and direct-response success are just part of the equation. After many years of steady growth, podcasting is finally able to offer opportunities at scale to advertisers. Just nine episodes into its existence, "Serial" has been downloaded more than five million times from the iTunes Store, the fastest any podcast has hit this mark, according to a statement released by Apple. Established shows, like Leo Laporte's "This Week in Tech," are downloaded more than five million times a month.

Mr. Sachs said his company has been getting more and more RFPs from major media agencies in the past few months. Midroll offers more than 150 podcasts exclusively, including shows like "WTF," Slate.com's Gabfests and Dan Savage's "Savage Lovecast," and the company said users will download more than 900 million episodes of its shows this year.

Over the summer, Edison Research conducted a "Share of Ear" study that concluded nearly 13 million Americans listen to a podcast every day, and more than 39 million listen to at least one per month. Those listeners, Edison Research concluded, spend nearly as much time listening to podcasts as they do terrestrial radio.

"Some of these shows have these rabid audiences," Mr. Sachs said.

A near-native format
Podcast ads differ from the ads typically found in other digital media. Unlike video ads, which can be inserted at various junctures by third parties, podcast ads are embedded in the sound files themselves, which users tend to download onto their phones rather than stream in real time.

"We don't yet have the same data that Pandora has for their listeners," Mr. Sachs said. "The industry as a whole understands that it's a shortcoming."

That lack of laser precision, however, is countered by qualities not found in most ad formats. Companies like Midroll and Archer Avenue sell ads that hosts read in the middle of the shows, often working from scripts that show hosts create themselves. Alex Blumberg, a former reporter on "This American Life" and the host of a podcast called "Startup," interviews representatives from the companies sponsoring his show. Roger Bennett and Michael Davis, the co-hosts of a popular soccer podcast called "Men in Blazers," spent the summer cracking open cans of Guinness before settling in to recap top soccer matches.

"It's not this annoying thing that a lot of advertising has become or has this perception of being," Palisades' Mr. McLaughlin said. "Many times it's actually entertaining. I've read many a tweet about people actually being sure to hear the ad."

One hindrance is the lack of measurement. Midroll's CEO Mr. Sachs says he's in talks with Nielsen and the Interactive Advertising Bureau about the prospect of setting industry standards. That will likely involve working with third parties including Apple, which now offers podcasting software preloaded on the latest version of iOS, and a number of other podcasting apps.

"If the IAB could bless a set of standards, that would go a long way for us," said Mr. Sachs.

But until that next step is taken, advertisers may be listening closely for a new opportunity. "It may be less measurable," Mr. McLaughlin said, "but I'm willing to accept less accountability on some level knowing there's all these other benefits."

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CORRECTION: An earlier version of this article referred to the group IAB as the Internet Advertising Bureau. It is the Interactive Advertising Bureau.