Podcast Network Wondery Nears Audience Milestone, But How Does It Size Up?

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Wondery CEO Hernan Lopez
Wondery CEO Hernan Lopez Credit: Wondery
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Hernan Lopez, the former Fox International Channels executive who launched podcast network Wondery earlier this year, says he is pleased with the company's growth.

Wondery is on pace to hit 10 million episode downloads for the month of October.

Mr. Lopez, who received investment from 20th Century Fox in launching Wondery, said his business proposition is already being borne out.

Wondery will "definitely" be a several million dollar business next year, he said, noting that the company is about two years away from being in the "tens of millions of dollars" in revenue.

Generally, though, it's challenging to size up the financial health of podcast networks. Most are privately owned, and those that are owned by public companies, such as the Scripps-owned Midroll Media, don't break out revenue for individual digital units.

Wondery, though, is clearly behind Midroll Media in the race between networks to ink the most high-quality program partners and bring in advertising revenue. According to an individual with knowledge of the company, Midroll Media did "in the ballpark" of $20 million in sales last year, and is on pace to bring in more than $30 million this year. (Midroll declined to comment on finances, because it is part of a larger publicly held company.)

The podcast space has gotten a lot more competitive, as the market is saturated with more high-quality programming by the day.

"There's something of a content glut going on," said Erik Diehn, chief executive of Midroll Media, which includes podcast network Earwolf and podcast platform Stitcher, which Scripps acquired in June.

Gimlet Media is another marquee name in the podcast network space. In a recent episode of the "StartUp" podcast, the company admitted to having a "paranoid moment" as the audience numbers for the company's shows plateaued.

Gimlet set a revenue goal of $7 million for the year, and VP-finance Jim Grau said the company is "on track" to hit that number. Company investment, though, was predicted to be $9 million for the year and is now "probably" going to be about $10 million, so the ad revenue is about $3 million short of making that up. "That doesn't feel much worse, overall, than the picture we projected in the beginning," Mr. Grau said on the show.

The growth potential for these podcast networks relies in part on convincing major advertisers and agencies that podcasting is a worthy investment, despite some challenges faced by a platform that still doesn't have a way to measure whether a downloaded podcast episode was actually listened to.

Mr. Diehn said podcast advertising is "a square peg in a round hole of planning and buying" for agencies, and that "it's taken a long time to convince larger advertisers and brands that it's worth the trouble."

Some progress seems to have been made on that front, though. According to a study released in September, 21% of the advertiser and agency executives surveyed said in July said that they advertise on podcasts, up from the 15% who said so in September 2015.

Mr. Lopez said Wondery is being included in RFPs "from more and more agencies and brand advertisers," as marketers start to look toward 2017.

"There's definitely going to be a share shift toward podcasting," he said. "The advertising marketplace is really rooting for a new medium to emerge."

Midroll has focused on diversifying its pool of advertisers beyond the staples of the platform, companies like Squarespace, Audible, and Casper, which have advertised early and often.

"We have hundreds of other advertisers," Mr. Diehn said. "And many of them are reaching a spend that traditional advertisers are spending in the space. ... If those major advertisers disappear, we'll be fine, but I suspect there are smaller [podcasting] operations that are much more dependent on these traditional ad buyers that would go away."

Midroll is also intent on growing the company's direct-to-consumer business, in the same way that many digital media companies are looking to consumer revenue as a hedge against uncertainty in the advertising business. The company offers a subscription podcast service called Howl Premium.

Marshall Williams, CEO of the Texas-based agency Ad Results Media, said he's starting to see buy-in on podcasting from traditional marketers like AT&T.

"Up until quite recently, they felt like podcasting didn't have enough scale," he said. "Now there's scale. That's a great thing. That means the financials could get a lot better for the podcast universe, with the larger, more traditional branded advertisements with Ford, Procter & Gamble, things like that."

In the early days, Mr. Williams' company was focused on endorsement-based advertising on radio, but has shifted to focus more on the podcast industry, which said he's bullish on. "I think the expansion levels on it are going to be tremenous," he said.

"The medium is financially viable and sustainable," Mr. Diehn said. "So while there may be shakeout down the road, the industry is in a pretty healthy place, and will grow for years to come."