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June 13, 2007
Downloadable Media and Advertising

Consumers have been downloading audio and video content in large numbers since the advent of peer-to-peer networks. A 2005 study by CacheLogic found peer-to-peer traffic in 2004 was 60 percent of all Internet traffic and rising. While much of this download traffic is pirated music and video, a new form of downloading audio and video has become established over the last 24 months. It is called podcasting. Podcast downloads are largely legitimate content distributed directly by the content owners—big and small. Podcasting is a medium that represents an important opportunity for advertisers. Why? For two reasons: it is growing very rapidly and it reaches a young audience that is found less and less via broadcast TV. With more and more premium podcasts becoming available, we are at the beginning of a growing phenomenon.

Where are the viewers/listeners?
Consumers care about content and convenience. Give them the content they care about, when and where they want it, and they will be there. Podcasting gives consumers the ultimate control—they can listen to or view podcasts whenever and wherever they want. Podcasts become their personal media library delivered directly to them.

What will drive even more listeners to podcasting? The broad availability of premium content and derivatives of popular shows such as American Idol, Lost, Desperate Housewives, etc. gives listeners content that’s already in huge demand, on devices that are wildly popular. The availability of premium podcast content is a growing trend with almost every major media company from newspapers, magazines, local TV, radio stations and network TV offering content.

Where’s the money?
Where the audience goes, the ad money follows. For the industry-at-large, that means advertising dollars will continue to move into the Internet and other related mediums like podcasting—where audiences are growing. According to Arbitron, 11 percent of Americans say they have listened to an audio podcast; that’s 27 million people. And in a more recent study by Nielsen/NetRating, researchers found that 14.8 million people had downloaded an audio or video podcast during a 30-day period this summer: a clear indication that adoption of the technology is growing.

This makes podcasts attractive to advertisers—but a key component that has been missing is effective audience measurement enabling advertisers to properly assess the medium based on real performance. Similar to early Web advertising, initial podcast advertising was pretty rudimentary. Yet it has been steadily winning over advertisers.

How to monetize podcasts
Step One: Metrics
Know who is listening, or viewing in the case of video podcasts. Advertisers need information on the number of downloads and plays, as well as accurate audience demographic information. They need to know their message has really gotten through to the target audience.

Step Two: Targeting
Provide the ability to target ads to different segments of your audience. Segmentation is the key to getting the most value out of any CPM-based advertising, since being able to target ads increases their effectiveness. For example, inserting regional advertisements to local listeners in that region—or, only reach women who listen. Targeting helps advertisers reach the right audience at the right time.

Step Three: Scale
Provide access to a large number of consumers. Large advertisers need to reach many potential consumers; podcast networks can aggregate audiences for them.

So, how can advertisers get behind podcasts?
Many large radio and TV advertisers, in addition to Internet advertisers, are already using podcasts. You can find messages from top brands such as Lexus, Acura, Microsoft and Best Buy in podcasts today. Many popular podcast properties are sold out, and premium podcast content is selling out as it becomes available.

Advertisers are currently paying on a per-podcast download basis, but downloads don’t ensure that podcasts are actually consumed. Typically, consumers download more podcast content than they can listen to or watch.

Advertisers are beginning to demand greater accountability, as technologies such as those provided by Podbridge make available accurate metrics, including downloads, plays and audience demographics. In the end, brand advertisers need to be convinced factors such as recall, favorability and intent have been affected by the campaign.

Why should media buyers recommend podcasts?
Podcasting represents an opportunity to connect with the hard-to-reach youth demographic. While podcasting is new and media buyers still lack experience with it, they will find it a fast-growing opportunity to effectively reach consumers. Content providers and companies such as ours can provide further guidance on how to start out. Media buyers should not be afraid to try podcasting—it offers the kind of value advertisers are seeking.

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As founder and CEO, Podbridge, Inc.Murgesh Navar is a committed entrepreneur with a relentless drive to build an innovative company based on IP delivery of audio and video content. Murgesh also worked both the technical and business sides of companies, leading product development for a billion-dollar line of workstations at Silicon Graphics, spearheading business development of Liberate Technologies' penetration of the Asia-Pacific and European markets, and launching AudioFeast's consumer audio service.

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