Programmatic Advertising: Is Automating Media Purchase To Target Audience Worth Its Cost?

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Hey, everyone. Welcome to Feed you'd brand. I'm Tom Hazard, your host, and today I want to talk about a subject that a lot of you existing podcasters and even aspiring podcasters have probably heard this buzzword that's been going around the podcast industry a lot in the last, I would say, six months to a year. Because more and more podcast hosting platforms are offering this option for you to choose, and they're called Programmatic Ads. And really my topic today is to not only share with you what programmatic ads are, but I want to talk about programmatic ads. Audience cost, meaning the cost to your audience, the cost to you as a podcaster. A lot of people offering this, and they say, hey, you can monetize your podcast from day one, and you can, but I want to break this down and provide some information, sort of peel back the curtain a little bit on programmatic ads, what they really mean, what the pros and cons are, so you can make a decision if this is something you really want to participate in. Because I think you might be surprised, it's not really all as rosy as it may seem when you first read about it. So what are programmatic Ads? Well, I think the easiest way to explain this might be from a listener perspective and one platform that I think a lot of podcasters are interested to be a part of. And if you already have a show, your show is probably on there is Spotify. Now, Spotify is a little different because they're a listening app. They're a listener destination. And this is. I'm going to explain, there's a distinction here. There's a couple facets or different kinds of programmatic ads. And Spotify, if you do not have a paid account, if you have a free account, whether you're listening to music or podcasts, and I see this a lot on podcast shows that people use the Spotify app all the time, they're not paying for a paid account. When they click play to listen to an episode, they will hear an ad before that podcast is played for them. And this is true of any of you podcasters that have Podcasts that are available to be listened to on Spotify, you have no control over this. You don't get paid any money for it. This is something Spotify does. And it's their way that they're trying to motivate listeners to sign up and pay for a Spotify account so that they don't have to listen to those ads. So Spotify's gotta monetize the listener one way or another. You're gonna pay them to a monthly amount to not have any ads served to you, or they're going to get paid by an advertiser to serve ads to any listener who wants to listen to their content on their platform because they're not paying well, then the advertiser is going to pay and the listener has to listen to some ads before they get the content. So by Programmatic Ad, what I'm talking about here is ads that run usually there are some rare exceptions, but I'm going to say usually at the very beginning before anybody ever listens or is able to listen to the content that they have clicked and chosen to listen to. So Spotify is one good example from a listener perspective. Now, there are also other platforms that are podcast hosting platforms. Now, any of you that are existing podcasters know what I'm talking about. I'm going to, just for those of you that may be listening to feed your brand as a new listener, if you don't already know, every podcast has to be hosted on the Internet somewhere because the vast majority of listening apps don't keep your MP3 files in their servers to make them available to their customers, like Apple, Google, Podcast, Stitcher. I mean, there's tune in so many different listening apps out there. There's more coming online all the time and you can be available on all of them. But for the vast majority of them, they are just a directory and a middleman. And you need to have a podcast media host to serve your MP3 files to that listener, to upload it to them, or what they're doing is downloading it or streaming it to their device. So the podcast hosting platforms, of which Poditize is one in full transparency, we're a state of the art media host with advanced analytics, the best out there in my opinion. But there are others out there as well, and in particular ones that are participating and have programmatic ad programs would be anchor, who's owned by Spotify. By the way, Megaphone, also owned by Spotify, Libsyn and others have options for you as a podcaster at the host level to opt into their programmatic ad program. Now, I want to make sure you understand programmatic ads are just like that word says programmed. So I want to talk for a minute about the relevance or lack of relevance is more often what you would experience as a listener for the ads that are being put on the front of your show. So we've experienced many customers coming to Poditize from other platforms like Megaphone and Anchor. And one of the complaints we often hear is people that are unhappy with the ads being run on the beginning of their show. Before anybody ever hears anything from them as the host, their message to the world is delayed until some ads are served. So let's talk about the relevance though. Programmatic ads, they're very random and trying to appeal to a wide variety of potential listeners out there. They're not very targeted. And what I mean by relevance is if you have a show on real estate investing most often, in fact, I would say pretty much always, those programmatic ads are not going to be something related to real estate investing. Or if you've got a show on business consulting, those ads are probably not going to be relevant to business consulting. Well, I've experienced some ads just personally from customers coming from other platforms where they have a show that's on health and wellness and they're hearing ads on the front of their show for HP Digital Inc. I personally don't even know what HP Digital Inc. Is, but if I'm trying to listen to content for health and wellness, chances are I'm probably not really there and interested in hearing about something from HP Digital Inc. Or Google AdWords. There are lots of different Google Ads out there and it's not for people to go use Google as a search engine. I think Google pretty well has that covered. I mean, we all use the term go Google it, right? But Google has other kinds of services and things they provide and they're advertising those to just the widest audience they can find. These are the types of ads that are national brands and maybe more brand awareness campaigns or new products, things like that that get run in these programmatic ads. They are not going to be relevant to what your show is about.

Now let's talk about the cost to you, the podcaster, not monetary cost. Now I'm talking the cost to you in audience loss by participating in such a program. We have experienced very real, just real world cases of some of our customers because we produce episodes of Palletize for lots of different customers and they don't have to be hosted on pelletize. Most of them are, but there are some that are hosted on Libsyn, on Megaphone, on anchor. It happens. Customers come to us and say, hey, you produced my episode. Why are there all these ads? Why are people having to listen to two or three, three or more minutes of random ads from all these companies before they ever hear me and my content? Why is that happening? Well, you're participating in for one reason or another, and maybe you realized or didn't realize what you were getting into. Maybe you signed up for something, you thought it might be a little different. They said, hey, you can make some money, and you can. We're going to talk about the scale of that amount of money in a minute. But where people are hearing all this random stuff for two, three or more minutes before ever hearing my stuff. And really what you're doing is selling out your audience to these other advertisers and annoying them because they click to listen to your show. They're not getting it right away. They're having to listen to this ad first. Now, yeah, you're going to make a share of money at some point. So let's talk about the monetary reality of that, is that most of these programs, and I'm sure by the time some of you are listening to this programs, have changed a little bit. But what I've seen in checking them out before recording this episode is that you'll find on average, people are going to make somewhere between 12 to $20 per thousand downloads of their show, sometimes even less. But I've seen most often somewhere in that range for participating in a programmatic ad program. So that means for your episode, if you get 1,000 downloads, you're going to make 12 bucks, maybe less, maybe as much as 20. And you need to decide, is that really worth it to you to inconvenience your audience and make them listen to these ads? Because ultimately, it's your choice. Now, not on Spotify, that's different. Spotify will do that to everybody's show no matter where you're hosted. So that's different. But on all the other apps, it's your choice to participate in these programmatic ad programs to make some money. Now, if you've got a show that's got a hundred thousand downloads and you make, let's just say on the high side, you make $20 and you've got a hundred thousand. So that's $20 times 100. So you'd make about $2,000. Now, that's a good chunk of change, and that may very well cover your production cost of your Podcast and be worth it to you. But if you don't have tens of thousands of downloads, the amount of money here is so small it may not be worth it to you. The ending up the audience cost to you, the loss of audience for people being annoyed because they wanted to listen to you, your content, not these ads, they may leave you. Now, it's very different. They may unsubscribe, listen to somebody else, just give up on your show. Now it's very different. If you're gonna be putting a different kind of ad within your episodes, that's more relevant, that's different, but that's a subject for another episode. We're talking about programmatic ads, programmatic ad costs. So I'm gonna stay focused on that because a programmatic ad, it's like the easiest program to opt into and every different. Most podcast platforms are inviting people and enticing them to sign up. But I want you to consider why they're enticing you to sign up. Because you're not the only one making money on that. The podcast hosting platform is making money and in reality making a lot more money than you because they're doing this across and thousands of shows. So the money's more meaningful to them than it may be to you. And it's really not going to set the world on fire in terms of making you a lot of money unless you have built a really large audience. But I would suspect, I would invite you to consider that what I would call the shotgun approach of programmatic ads that are ads that are not really focused on your topic and are being done across many shows at the same time are paying less for that opportunity because they know it's a bit of a shotgun approach. It's random. Whether people are going to be interested to take advantage of that call to action to go to that brand to look into whether that product or service is so they're going to pay less for it. If you've got a lot of downloads and you have audience that is pretty well defined, it's pretty obvious why people are listening. You can likely make a lot more money with an advertiser that it's looking to reach your specific audience, they'll pay a lot more for the same downloads than a programmatic ad program will.

I also want to make a distinction here and share with you something about a different kind of programmatic ad that can be have some more relevance. It's another example a lot of us are familiar with and I just want to share this to draw a distinction between the Podcast hosting platform and the podcast industry, programmatic ads and YouTube. So I think many of us are familiar with YouTube, and whether we're big YouTube watchers or occasional YouTube viewers, we've all seen these ads that stream on the beginning, and if you watch along on a video, they'll pause it and interrupt it and play an ad in the middle of it. We've all seen this sort of thing. Well, on YouTube that is programmatic to an extent. Although when you advertise on YouTube, as an advertiser, you can say, hey, I want to have my ad featured in videos about these topics. That's keyword based. I could say, for Poditize, I want to have my video on the front of any video that's talking about launching a podcast. And maybe there's a lot of different phrases in a way that's worded and I can be on those, so it's more relevant. But what I want you to understand as a podcaster or a aspiring podcaster is that the viewing experience for those ads is very different from a podcast listening experience. It's really important to understand when we're watching a video on YouTube and then the ad is served, it'll say, you can skip this ad in so many seconds, or your video will play after so many seconds. So you have a feedback loop that's telling you what to expect, what's coming next. When you're listening to a podcast, you don't have that kind of feedback loop, and it's not so easy to skip. Now, different listening apps will let you skip ahead 30 seconds. I'm listening when I'm driving in the car, and it's not so easy as I'm concentrating on driving to go and push that. Or I'm at the gym, I'm exercising, and I'm sure not going to do it then. But I'm enjoying listening to content while I'm doing those things. It's a very different experience. And so I just want you to understand as a content creator, as a podcaster, if you do your episodes, record them as video and publish them on YouTube. But you may, if you have enough of a listening audience, want to opt into monetizing your YouTube videos. But it's a very different experience because at least the ads that you're going to play there are usually a bit more in alignment with the content and you have a visual feedback loop, whereas in audio, your listener really doesn't. And it's very frustrating as a podcast listener that, oh my gosh, how many ads am I going to have to listen to before I get to my content. And very often people will say, forget it, and they skip out and they don't finish listening to the ads and ever get to your content. That's why I'm really not a fan, in case that isn't obvious yet, of programmatic ads. I really don't think they serve the listener well. I don't think they serve you, the podcast host, very well unless you have an awful lot of downloads. And maybe there is a monetary reward that's worth it to you, but I still think the audience cost to you. That negative experience people have, that listening experience, the reality of the fact that these are random things that they didn't really sign up for when opting in to listen to your show. It's probably not worth whatever amount of money you will make on your show unless your show is a very general random topic. I mean, if you've got subject matter that's very broad and your audience is not very well defined as to who they are because your subject matter has such wide appeal, maybe programmatic ads are fine for you, but for most shows that are niche topics, just the misalignment between the random ads that are gonna play and your content is usually not worth it. And that audio experience, it's a little more intimate than a visual experience.

Well, the other thing actually I wanna share is some programmatic ads that are not just put at the beginning, like are done. There are a lot of these sort of radio networks that are also syndicating their ads through podcasts or syndicating their shows rather through podcast platforms. And a lot of times those radio networks will randomly, like YouTube does, interrupt the content and just play an ad. And they're not being careful about it. It'll interrupt in the middle of a word. They're not being very discerning or careful about what's a good place to put an ad. They're just 15 minutes in. Boom, they're going to run an ad and that's it. Now again, in YouTube, when you're and it's a visual experience, a lot of times you'll have a warning saying your video will continue after an ad that's going to play in 3, 2, 1. And then it shows you the ad so you know it's coming. It's less frustrating. At least you have a little warning and a feedback loop. But in podcasting, it doesn't do that. If you're not in control of where your ads are placed and choosing the exact locations where ads will go, that are after a thought is complete, maybe after a question before an answer is given. That's a logical place where there's you gotta wait for the question so or sorry, wait for the answer after the question. So people will likely hang on because they want to hear the answer to the question. But if you're interrupting the middle of a word, it's really disruptive, frustrates people and probably not going to keep especially new listeners. So that's their first experience. Coming back for more One last sort of tip or recommendation if you're an aspiring podcaster, somebody who's planning to launch a show but you haven't launched yet, you may want to consider even if you're going to opt into one of these programmatic ad systems offers that you may get, you may not want to do it from day one because you really haven't built an audience yet. You haven't earned the right to monetize your show. That's something we talk about on feed. You'd brand a lot is you really need to build rapport with the audience. You need to serve that audience a while first and earn the right to serve them up some ads, promotions, calls to action that you hope or think that they may be interested in. If you do that from day one on your show, it really says that it makes listeners question what's in it for them. By listening, I'm going to hear a lot of these ads. I don't even know if I really want to listen to this show yet. We highly recommend you get your show established, at least start to build an audience and then work in some ads. Over time, the more relevant they can be to your subject matter and topics, the better. But even if they're not going to be, if they're going to be programmatic, think you've got to build some history of episodes and topics so people can at least go through that list and see, oh, there's some really good stuff they're talking about here. I want to hear that. And at least they're willing to put up with those programmatic ads in order to get that content. They can see a lot of what they're going to get. Doing it from day one is very challenging. So that's really what I wanted to share with you today, is to just raise awareness about what are programmatic ads? What does it really mean? What are some of the pros and cons? Obviously pros are, yeah, you can earn some money some, but how much? It's definitely proportional to the number of downloads you have of your show. And so if you don't have a lot of downloads, you're not going to get a whole lot of money. And so the cons are, is it worth it to sell out your audience? Because I think that's how listeners quite honestly would feel about it, that they're not really trying to provide me value as a listener. They're trying to make money from these advertisers. And that's just an unfortunate situation that may make it a bit of a tougher hill to climb for you to build that audience that hopefully you're wanting to serve and maybe benefit from in the future. There just may be a better way to do it. Okay, so that's what I wanted to share with you today. Hope that was helpful. There'll be a future episode where we talk about different kinds of advertising and monetary opportunities. So hang on for that in the future, but for that today, that's what I'm to share with you. You can find the blog post for this episode with details and links to things I discussed@politize.com so please go and check that out under feed your brand in the top menu and we'll be back next week with another great episode. Until then, this is Tom signing off on feed.

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