What’s Happening with Programmatic Buying in Podcast Advertising

Right Side Up’s Head of Offline, Krystina Rubino, led two panels earlier this year on the state of programmatic buying in podcast advertising at 2022 Podcast Movement Evolutions and this year’s NAB Show. Watch (or listen to) Krystina’s NAB panel and check out the full video of her Podcast Movement discussion below, as well as a recap of what she’s learned living through the programmatic rush to the bottom in digital display media and why she’s wary of seeing the same fate befall the podcast industry.

Podcast advertising investment has exploded in recent years, and as more marketing dollars flood the podcast ad space, some of the industry has a seemingly insatiable appetite for adapting programmatic technology for buying and placing ad content in the channel. But this isn’t our first time at the rodeo—digital display marketing followed an incredibly similar path in the race toward programmatic buying more than a decade ago. That sprint was messy, chaotic, and made life more difficult for marketers, which is why we’re sounding the alarm before podcast advertising falls into that same trap.

The Basics of Programmatic Buying

Programmatic advertising, simply put, is the automated process of buying and selling digital advertisements. It allows us to serve ads with a greater degree of specificity than what has traditionally been available in the history of advertising.

Advertisers are able to originate campaigns through a Demand Side Platform (DSP) and sellers make inventory available via Seller Side Platforms, or SSPs. Ad exchanges centralize these transactions and make inventory available across publishers. DSPs ultimately simplify the ad buying process by providing advertisers with access to ad exchanges, where they can place ads across many different inventory sources without using multiple sales representatives as intermediaries. This exchange of inventory eliminates manual negotiations and has evolved into auction-based, real-time bidding (RTB), meaning that prices are not pre-negotiated, and instead fluctuate due to factors like available inventory, advertiser demand, etc.

RTB unlocks insights for advertisers in key metrics in real time, like impressions served, viewable impressions, and clicks, while also allowing advertisers to serve ads and track delivery via third-party ad servers, so that there is an unbiased source of delivery. RTB also helps advertisers hone in on their target audience by purchasing against not only demographics, but psychographics, device usage, behavioral triggers and intent, retargeting, niche contextual interests, and more.

What Can We Learn from How Digital Ads Evolved?

To better understand how programmatic will impact offline advertisers, we can look at what we learned from the evolution of programmatic in the digital ad landscape. 

• 2001–2003: Digital display started off similarly to how podcast ad buying works today; advertisers purchased most ads directly through direct relationships and manual, private marketplaces. At this time, networks began to aggregate inventory across publishers.
• 2005–2007: Next, behavioral targeting and advanced data started being used as a basis for targeting specific audiences.
• 2007–2009ish: Ad exchanges were created, allowing sellers and buyers to transact while eliminating marketplace inefficiencies (this probably sounds familiar if you work in offline advertising today)
• 2008–2011ish: Demand side platforms (DSPs), agency trading desks, and data management platforms (DMPs) emerged, and this shift eliminated manual negotiations, drastically reduced the legwork involved in buying ads.
• 2012+: This exchange of inventory evolved into auction-based real-time bidding (RTB) as technology and data converged. RTB accounts for over 95% of how we buy digital media today.

Less work and more insights—sounds like a great thing, right? Not so fast…

Programmatic Buying in Podcast Advertising

Programmatic buying is still in its infancy stage for most offline channels, including podcasting. In terms of what tools are acceptable for advertisers and what standards need to be upheld across the industry, it’s still the wild west out there.

Similar to what we saw with digital advertising, podcast ads required some serious manual work in its early stages and then slowly adopted aggregation and automation systems to increase efficiencies:

• 2010: Most podcast ads were purchased by advertisers directly from shows.
• 2012–2016+: Networks gained popularity and began aggregating inventory across multiple publishers.
• 2018: The industry-leading network Panoply became Megaphone and created expanded buying opportunities by serving ads against audiences and across publishers and shows.
• 2021: The Spotify Audience Network launched and included Originals, Megaphone, and Achor, along with ad-supported music. 

In the current podcasting ecosystem, most ads are still transacted manually, and ads are delivered to listeners either by being embedded into the actual audio file, or dynamically, through ad-serving tech. Strides have been made in the delivery of the ads via dynamic ad insertion (DAI), where ads are stitched into the podcast episode file at the time of download. DAI also allows media sellers to transact at the impression level and serve different creative to different listeners. Unfortunately, at this time, third party adserving by advertisers isn’t widely accepted, meaning the only way to serve creative dynamically is via the publisher, without origination and oversight from Google Campaign Manager or similar platforms. 

True programmatic buying for podcast ads can’t happen until RTB occurs and advertisers are able to access inventory transparently across exchanges. Some providers, like Spotify Audience Network and Megaphone, are working to give advertisers inventory to buy, but there are some significant challenges, like:

• Most available impressions are from music streaming
• Frequency reporting isn’t standardized
• Impressions aren’t expected to drive conversions
• Lack of differentiation between metrics from music and podcasts
• Limited ability to pick specific shows
• Transparency issues, e.g. not knowing what shows spots run on, no reporting after the fact, no exclusion/inclusion opportunities

Impression-based buying has its pros for podcast advertising…

If it’s done correctly, the ability to buy audiences by prioritizing audience targeting (instead of show targeting) can lead to less media waste and more precise targeting on demographics and psychographics. There are some promising moves toward programmatic opportunities, like Red Circle, Headgum, and Advertisecast, but they operate under more of a DSP model with a platform and individual sales reps. 

Programmatic increases our buying reach and allows us to touch consumers across shows and publishers while minimizing paperwork and separating the sometimes complicated buying relationships seen in 1:1 sales. This offers hope for a future in which creators can transact on a more open marketplace, without relying on network representation for monetization.

…but programmatic buying also poses problems for podcast advertising

One huge point of concern is the lack of transparency and advertiser control for things like determining the CPM within a set budget, knowing when spots run and on which shows, and limited access to post-run reporting. And another is the possible decline in the prevalence  of the host-read spot, widely regarded as the gold standard. If we no longer prioritize show targeting, host reads—which are currently the primary method of monetization for the channel—become less meaningful. This can lead to weaker host-audience connections and could greatly impact creative customization and performance. Other pain points include:

• Lack of third-party ad server for delivery verification
• Expensive pricing that will eventually bottom out
• Less accurate audience targeting due to cookie depreciation and third-party data degradation 

And then there’s also the question of who’s in control. Is it networks? Hosting platforms? Depending on who’s pulling the strings, there are serious implications for shows that move between networks or housing platforms, due to the inevitable difference in norms, rules, pricing, etc.

We also can’t ignore the influx of digital marketing natives that may have a solid understanding of the programmatic tools and methods of use, but lack the offline awareness for measurement, which could lead to misreads on this notoriously tricky-to-measure channel.

So…Now What?

We’ll likely continue to see a rise in the prominence of programmatic ad buying in the offline advertising space in the near future. And that’s not necessarily a bad thing. As we covered, it can lead to better audience targeting, greater insights, and less work for podcast ad buyers. But as we saw in the rush to programmatic in the digital display channel, there are legitimate concerns about who’s in control, what standards are used across the industry, and how RTB affects budgets and pricing. 

If we take the time to adopt programmatic buying transparently and intentionally, we can ensure that this channel remains profitable and effective, while maintaining the integrity of the unique listener-host relationship.

Are you interested in stepping up your offline advertising strategy? Our team is full of experts who understand how to make the most of this growing channel. Drop us a line at growth@rightsideup.co to get started.