Directo Consumer Ads - A Look at the Future of Directo Advertising

This week: Podcast ad spending goes strong despite recession fears, YouTube and Twitter launched dedicated podcast spaces, advertising questions what to do if premium users choose not to see ads, and a look into why DTC ads haven’t fallen off as expected.
Podcast Ad Spend isn’t Slowing as a Recession Potentially Looms. Manuela: Marketing Brew’s Alyssa Meyers brought good news last Wednesday. Things are looking up for the podcast ad spending despite, shall we say, less than ideal economic conditions.  Over on the general advertising side of things, it’s a bit bleak. On August 18th  Daniel Konstantinovic, writing for Insider Intelligence, covered the worst month of ad spending in two years.  “July saw ad spending go through its worst monthly decline since July 2020. Ad spending contracted 12.7% year over year in July, per MediaPost and Standard Media Index’s US Ad Market Tracker.”  Several potential causes of this dip are proposed, most of which are interlinked to some degree. Relaxing of pandemic restrictions and the return of larger social gatherings has increased commuting and free time away from screens. Meanwhile, even while the jury’s out on whether we’re technically in a recession, Konstantinovic points out a Brand Keys statistic showing 70% of consumers believe they’re in a recession and thus are cutting back on spending.  Perhaps spending wasn’t great in the general advertising space, but podcast ad spending continues to boom regardless.  “Some of the biggest audio companies reported growth in podcast ad revenue for Q2 despite a softening ad market, and buyers responsible for major audio budgets told us they’ve yet to see a significant retreat from podcasting, indicating that the sector could continue growing regardless of the state of the economy.”  It’s also worth keeping in mind which data we’re looking at and how we’re looking at it, as Magellan AI’s Sean Russo explains:  “We took a look through a few different lenses. When you look at year-over-year spend in July in podcasts, we’re seeing a 19% increase.  If we look at Q2 YoY we’re seeing a 48% increase. Worth noting that looking at month-over-month June to July we saw a 7% decrease. So, the bottom line on what we’re seeing is that podcast ad spend continues to grow at a healthy clip YoY, though we did see a minor pullback from June to July.” YouTube and Twitter Launch Dedicated Podcast Sections Shreya: It’s time to follow up on two developing stories we’ve covered in recent weeks, as two giant social media platforms have now rolled out sections dedicated to podcasting.  Last Thursday Twitter started the rollout of the new dedicated Spaces tab.  “Integrating podcasts into Spaces, where audio conversations happen on Twitter, is another way we’re continuing to invest in audio creators. To do this in a simple and intuitive way that allows listeners to simply hit play and go, we started with a redesigned audio experience in the Spaces Tab.”  Twitter remains an important space for podcasters to both promote and network. With the addition of podcast functionality that’s native to the app they’ve removed some of the friction between the promotion of a podcast and the potential audience member actually listening.  On that same note: last Monday YouTube launched a dedicated page for podcasts, though only for users in the United States. As covered by Sarah Perez in TechCrunch, the url for the new page was discovered ahead of formal announcement. Despite their thunder being partly stolen, YouTube’s shown a promising amount of dedication to the industry.  “Last year, YouTube hired a podcast executive, Kai Chuk, to lead its efforts in the space and has been offering cash to popular podcasters to film their shows, reports said. This March, a site called Podnews leaked an 84-page presentation that detailed YouTube’s podcast roadmap. In the document, YouTube revealed it had plans to pilot the feature by ingesting RSS feeds. It also mentioned a new URL, YouTube.com/podcasts, but the link didn’t work at the time.” A quick note from script writer Gavin: yes, that bit of the quote with the phrase “a site called Podnews” hurt me too.  In addition to what Perez covered in the quote, it’s also worth remembering YouTube has recently announced a partnership with NPR to bring their shows to the platform. It’s safe to say YouTube is one of the big companies that is taking the podcasting industry and its potential seriously.  What happens when high-income households opt out of ads? Manuela: Last Monday Kelsey Sutton, writing for Marketing Brew, approached an important question: what if the people certain brands wish to market to are also the demographic most likely to pay a premium specifically to avoid ads?  “The people that advertisers most want to target are hiding from the advertisers,” said Eric Schmitt, research director and analyst on the Gartner for Marketing Leaders. “It really is going to have some interesting knock-on effects for the ad business over time.” Podcasting is not specifically name-checked in the piece, but it is a growing phenomenon to keep in mind. Current data tells us most listeners are comfortable with ads as they currently exist in podcasting. Stick around for our Quick Hits section this week if you want a link to some extremely relevant data from a certain study Sounds Profitable published last week. Sutton’s article points to multi-tired subscriptions to streaming services as the biggest example of the popularization of a premium ad-free option. While these are worth thinking about, there’s ample room for nuance in the discussion, up to and including services like Paramount+ and Hulu, who have baked-in preroll ads before every television episode or movie regardless of subscription level.  “Schimtt hypothesized that the shift may eventually spell larger challenges for traditional ad-supported media channels, including TV, as marketers look elsewhere to reach higher-income consumers or spend more resources marketing to past customers.” Ad-free listening is a relatively new invention in podcasting, especially on a large scale. For now we wait and see which way the advertising winds blow.  How and why DTC advertising hasn’t cooled off as much as once thought Shreya: Last Tuesday Digiday’s Michael Bürgi published a brief look into the world of direct-to-consumer advertising in a world anticipating DTC upheaval. With the deprecated ability to track conversions due to changes in iOS 14.5 and the additional changes to cookies and third party data, DTC brands are turning to alternatives like branding opportunities to hit their goals. Surprisingly, after seasonal changes are taken into account, there’s quite a few DTC markets growing.  “Facebook has the highest monthly median spend in July 2022 at $19,022 ($2,000 less than a year prior), according to Varos, a research company that tracks e-commerce spend for about 1,800 companies. Google’s median spend inched up from $8,101 to $8,209 over the same period; TikTok’s grew from $4,095 to $5,981.”  The commonly-held belief that there would be pullback from DTC spending was indeed widespread, even leading to some companies not surviving. Those who did explore other avenues besides the cheapest and fastest clicks have discovered the wide world of influencer marketing, which just so happens to be where podcasting thrives.  Quick Hits: Recommended Weekend Reading Manuela: Finally, it’s time for our semi-regular roundup of articles we’re calling Quick Hits. These are articles that didn’t quite make the cut for today’s episode, but are still worth including in your weekend reading. This week’s Sounds Profitable releases their second study, After These Messages.  Do podcast audiences prefer improvised host-read ads, scripted host-read, or pre-recorded radio spots? After These Messages is a one-of-a-kind study polling over 1,000 podcast super listeners to answer that question. Both the study and the half-hour video of Tom Webster’s presentation at Podcast Movement 2022 are available now.  Streaming surpasses cable and broadcast for the first time by Kurt Hanson.  While not a podcasting story, per se, it does highlight a significant milestone for digital media. People are becoming more and more comfortable unplugging from traditional broadcast media and constructing their own media diets from digital sources. Podcasting could ride along with that. I made a map of Spotify podcast recommendations. Here’s what I learned by Dan Misener.  The inner workings of the aggregators are completely unknown to us. While Spotify refutes Dan’s points, his research with multiple touch-poi