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Spotify beckons indie podcasters with the promise of $$
Another day, another set of Spotify stories. Yesterday, the company made a series of big ad-related announcements meant to bolster its ability to sell and serve ads for podcasters of all sizes. We have much to discuss.
There’s a lot, but let’s start with the meaty announcement: the one in which Spotify is allowing any Anchor podcaster to apply to be part of its Spotify Audience Network. Before I dive in, let’s cover our context bases. For the unfamiliar, SAN launched in April and serves as Spotify’s podcast ad network. It’s essentially a rebranded and built-out version of Megaphone’s ad marketplace that leverages Spotify’s data to target ads. This platform is the key to unlocking Spotify’s bigger podcast ambitions and also relates to its Anchor acquisition. Anchor’s bet has always been that it could help the little podcasters monetize. So long as they have some listeners, they could possibly have ads inserted, and, in the aggregate, these small podcasters create larger inventory to fill Spotify’s guaranteed ad impressions.
To accomplish this, Anchor first launched its Sponsorships feature. This was like a host-read ad sold at scale — podcasters would be matched with a brand, given copy to read, and the advertiser would reach their desired impressions through many small podcasts rather than a single massive one. However, reporting of mine from January found that Spotify itself was buoying the tool, spending tens of thousands of dollars on sponsorships for these smaller creators.
Anyway, fast forward to now, and Spotify is breaking its Anchor monetization options up into three tiers depending on a podcast’s size: Sponsorships (which have now been rebranded as Ambassador ads), participating in the SAN (this news from yesterday), and, for the top podcasts, direct connections made to advertisers through Spotify’s sales team. Spotify is not publicizing how big a show needs to be to become part of its ad network, nor is it sharing how big one needs to be to receive hands-on sales team support. (If you have an idea, let me know!) Spotify also says the CPM, which it’s calling RPM for Revenue Per Mille, is currently $13 for SAN-using Anchor podcasters, which is lower than Advertisecast’s estimate of an industry-wide $18 CPM average for 30-second ad spots. Spotify isn’t taking a cut of the revenue right now, a spokesperson says, without elaborating on whether or when it might start to do so.
For its part, Spotify says since launching SAN in April, “4X more advertisers are running ads,” and as of June 2021, “opted-in Megaphone podcast publishers have seen fill rates increase by over +10%, CPMs increase by over +40%, while the number of unique advertisers in their content is increasing, with some publishers seeing that number double.” Of course, percentage increases mean nothing without a baseline, which Spotify is unsurprisingly not providing. I expect Spotify will help decently sized shows monetize — other ad networks are doing that now — what I don’t know is whether it can pull off Anchor’s grand vision of allowing even tiny podcasters to participate in the podcast advertising world.
Now real quick, I want to note the other news bits. Advertisers can now target by additional details, like topics of the content, and they can exclude their ads from “sensitive” topics, including podcast episodes about tobacco, weapons, and gambling. To save both myself and you time, the content targeting and sensitive topics implementation are both based on work from the Interactive Advertising Bureau, which is publicly available. I’m linking to it here. Interestingly, these features can happen now because Spotify is transcribing podcasts on its backend, allowing it to detect sensitive content on a per-episode basis, according to a spokesperson. (I wish these transcripts were public, but apparently not!) Podcasters won’t, at least right now, be told an episode is considered sensitive and therefore possibly not monetizable. They will be given the guidelines, however, so they should have an idea.
And finally: US podcast ad buying will become partially self-serve. Another important asterisk to note about the self-service announcement: although advertisers can sign themselves up for Spotify’s ad portal and decide whether they want to advertise on the free music tier or in podcasts, they cannot supply the actual audio ad that runs in podcasts. Spotify will collaborate and make these ads for them, a spokesperson says. I don’t have a reason as to why this is the case, but I’m going to guess Spotify is being protective of the podcast ad space — it’s a new but critical business it wants to develop, so the bar is high for what people hear. A few bad ads could turn listeners off completely, as well as the hosts, especially given that these ads are inserted automatically without any sign-off from the podcasters.
So can Spotify build the YouTube of podcasting? I’m not seeing proof of that yet, but if any smaller podcasters want to tell me about how Anchor and SAN change their lives in the coming months, I’m all ears.
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