The Business Case for Audio

We all know audio has been growing in importance for publishers in recent years, but this growth has been seen most heavily in the US and other English-speaking countries. This year we expect to see European publishers catch up with their Anglophone peers. That’s why we are launching the first of our dedicated series on specific topics important for publishers in 2019. Join us through out the year as we take a deep dive into audio, subscribe to receive our monthly updates and get in touch with any questions or ideas for further exploration!

The first article in our series on audio looks at the business case for podcasts for publishers. In future articles we will cover additional topics such as the non-podcast ways publishers are using audio, how local publishers specifically are utilizing audio, and more.

Advertising comeback

While we have heard before about the dramatic declines in advertising revenue publishers are facing, audio advertising is still growing. Audio ads are less likely to be skipped or blocked than other digital ads, and listeners are more likely to engage with audio ads — 65% of people say podcast ads increase their purchase intent.

Due to this, audio ads can fetch a high price — The New York Times charges $290,000 for brands to enter their rotating list of monthly sponsors for The Daily  (a strategy which brought in revenue in the low eight figures in 2018). Slate charges a higher ad-rate for podcasts than for any of its other content, while The Economist saw monthly revenue revenue from podcasts ads increase 50% over 2018.

“The demand from brands and agencies is higher than ever; pricing is at a premium. Even the advent of programmatic won’t decrease the pricing. They are quality brands in safe environments with engaged, loyal audiences.” – Susie Warhurst, global head of content at podcasting platform Acast

The IAB predicts global advertising revenue for podcasts will reach $1.6 billion in 2022. This large number is still just a portion of the annual revenue brought in by radio ($17.6 billion in the US alone), and if legacy publishers are able to tap into this market with new audio initiatives we will only continue to see dramatic increases in revenues.

Still, audio advertisements have limitations, such as a lack of standardized measurement and tracking. When more exact measurements are developed, we can expect to see an even larger explosion of growth.

Premium audio content

Just as we see 2019 being the year of reader revenues, publishers can focus on listener revenues in their audio strategies. This can be either through giving subscribers early-access/subscriber-only content, or allowing listeners to pay for ad-free listening experiences. An initial review of Patreon finds nearly 100 podcasts with at least 1,000 paying listeners, averaging around $5 per subscriber per month.

Both The New York Times and Slate offer early/exclusive audio content to subscribers, although the challenge with this strategy is the limited ability to truly place a paywall around the content while still being user-friendly. Subscriber-only access is not easily done through either Apple or Google, the two dominant podcast platforms. Instead publishers must share their content with subscribers in other ways, such as standalone apps, new RSS feeds, or embedded players on hidden websites.

For Slate especially, these methods create a large “customer service challenge” that their sole customer service rep for Slate Plus spends most of her day helping listeners overcome. Still, Slate recognises the value in developing subscriber-only audio content, with their subscriber-only Slow Burn episodes yielding 2.5x-3x the daily conversion rates of an average day.

Even when publishers have already existing standalone audio apps, if they were not created with the intent to offer content specific to subscribers, it can be difficult to add-in the ability later on. When The New York Times decided to give subscribers early access to their Caliphate podcast, their engineering team then had to spend time to figure out a plug-in that would be able to detect if an app user was a subscriber.

Just as we see more and more consumers paying for ad-free reading experiences, we see more listeners willing to pay for ad-free audio experiences. Currently startups such as PodcastOne, Acast, and Stitcher offer subscription access to audio, while Luminary Media aims to become the “Netflix of podcasting” with their launch later this year. The company raised a $40 million funding round last year for their promised plan to develop a “better Podcommunity for all”.

Driver for subscriptions

Publishers also recognise how useful podcasts are in making their journalism part of listeners’ daily routines, in turn building habits that make it more likely they will convert to paying subscribers. (Habit formation is another topic we are examining in-depth this year, sign-up to receive all of our latest research findings).

“When you listen to a podcast every week, it inevitably becomes a real presence in your mind, in the way that reading a writer’s articles does not. There’s an intimacy with podcasts that makes people interested in getting more.” – Gabriel Roth, Slate Plus editorial director

With The New York Times planning to grow to 10 million digital subscribers, their daily news podcast The Daily is a key force in their conversion strategy. Now Michael Barbaro, host of The Daily, reaches more people every day than their print product ever did. That’s why assistant managing editor Sam Dolnick calls The Daily “the new front page”, with some readers having their first-ever encounter with The New York Times through the podcast.

The Financial Times also uses its 12 podcasts to convert paying subscribers, especially focusing on a younger audience than its text products currently reach. In the second half of 2018, the Financial Times ramped up its marketing of subscriptions to its podcast audiences, 60% of whom are aged between 22 and 37 years old. While it is not easy to find numbers on audio’s impact on conversion for subscribers, having 12 podcasts is a major sign of the importance The Financial Times places on audio.

“The majority of listeners to our current podcasts are not subscribers, but they are taking the time to spend 20 to 30 minutes a day on FT content. There is a big opportunity in using it to drive subscriptions.” – Alastair Mackie, head of audio for commercial at the Financial Times

The Economist also has a full audio edition, which is a word-for-word audio recording of the print edition. It’s available for download for subscribers via either the Economist apps or website. While only 10% of the The Economist’s app users listen to audio, these are the consumers who are the most loyal. In the next articles in this series on audio, we will continue to dig into how audio can help deepen engagement with your readers so make sure to subscribe to receive all of our audio updates.

Mary-Katharine Phillips
Mary-Katharine Phillips
Media innovation analyst @ Twipe
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