There are early signs that media will be one of many industries to take a huge blow from the COVID-19 pandemic, with sharp declines in ad revenue and significant layoffs. Podcasting is unlikely to be an exception; Podtrac recently reported that downloads have fallen 10% since the beginning of March, while unique listeners fell by 20%.
A different picture emerged when I spoke to Ross Adams, CEO of podcast advertising company Acast, which works with both bedroom podcasters and large publishers like the BBC and PBS NewsHour.
Adams said listenership isn’t down — it’s just that audiences have changed when they’re listening and what they’re listening to, with Acast seeing its largest weekends ever in recent weeks. And plenty of people want to start new podcasts; signups for the Acast Open platform increased 49% month-over-month in March.
“What we’re seeing now is an opportunity for people to discover podcasting as a medium,” he said. “And once you discover it, you stick with it.”
Advertising may be a separate issue, with Adams admitting that the downturn is likely to affect “every business that has the majority of their revenue from ads.” But even then, he sees opportunity as marketing dollars move from traditional industries like radio and out-of-home advertising.
We also discussed Acast’s financials, the podcast discovery process and tips for new podcasters. Read a transcript of our conversation, edited for length and clarity, below.
TechCrunch: Let’s start with the good news. One of the prompts for this conversation is the fact that you guys announced some financial numbers — you doubled the revenue last year to $38 million. So first of all, congratulations.
Ross Adams: Thank you.
And secondly, there’s a lot of different factors at play and different conversations about podcasting breaking through in 2019. But when you look back, what do you see as the biggest factors that contributed to your growth?
I think a lot of it is the hard work we put into 2018 — especially [in] our core markets of the U.S., U.K., Sweden and Australia. Those are the four major markets that we’ve been [in] the longest.
One of the big factors, of course, is the efforts we put into preparing the market for the following year, like we’re doing this year for next year. Also, we launched in some new markets as well. Being a global podcast platform like we are, we want to be in every market, so we launched in Germany, France, Ireland.
And then, of course, we bought this company called Pippa, which was a podcast company that had an open hosting platform. We have since launched Acast Open (back in November), and that was one of the key bits that we were missing as a business. [Previously,] it was a very private, curated approach to how we approach content, and this is the first time we’ve opened to allow anyone to join Acast from a [software-as-a-service] perspective, [allowing us to focus] on the bedroom podcast all the way up to the big publishers.
It’s about looking and finding that next big show, and that comes through servicing the entire podcast industry, from small to big.
And I would imagine that what you’re providing to podcasters is going to be a little bit different depending on whether they’re one of the larger media companies that you work with, versus a bedroom podcaster. I think of Acast as a podcast advertising company, but now it seems like you offer a much broader suite of services.
Yeah, we’ve always been into that tech platform. And the tech we normally give away for free, in exchange for the rights to sell advertising within that content.
So even with the open platform, are you still taking that approach? The technology is free, make money from the advertising?
It depends. There are a lot of podcasters who don’t want to monetize through advertising. We have a free service to get you started, to get you out the gate, to try podcasting as a medium. And if it sticks, let’s offer you a lot more services which hopefully you see value in paying for, in a SaaS-style perspective. And then on top of that, if you wanted to add on advertising, that’s a separate step after that.
What I’m getting at is, it seems like you’ve always had technology, but from a business model perspective, my sense is that you were primarily an advertising company and that mix is starting to change.
The mix is starting to change, but we’re predominantly an ad model, that’s where the majority of our revenue comes from. SaaS businesses are very interesting, but we see the future definitely coming from the ad revenue side.
You’ve already alluded to some of the changes that you’ve been seeing in the past month or two months. And you acknowledge that there’s a lot of uncertainty right now, but one of the things that surprised me was that I’d seen some other third-party numbers about podcast listening being down, because people don’t have that on-the-go time anymore, when they’re normally listening.
But it seems like you’ve actually seen a significant amount of growth, at least in some categories.
Yeah, we’re seeing a lot of different categories grow, and I think it’s just about the consumption and the appointment-to-listen time. If you look at the likes of news, the appointment to listen is normally in the morning, when you’re commuting to work, but that now seems to be spread throughout the day.
Our listening time has stayed the same, but it’s just spread out throughout the day. And weekend [listening time] is beating every kind of record we’ve had, [most recently] 13.5% up, week-on-week, and we’ve seen overall [weekend] listening up 8.4%. The trend is definitely up.
On the flip side, we’re seeing more and more podcasters joining the service. There’s a lot of talent who are stuck at home, who usually would be doing other mediums as well as podcasting. And now podcasting is really the only thing they can be producing consistently. So we’re really lucky that we’re benefiting — I want to be very, very cautious of the wording we use, but we’re actually doing well in this pandemic.
Of course, if you move on to ad revenue, that’s slightly separate. We’ll definitely see some kind of cut in Q2, but we’re seeing some really good signs. If you look at other mediums, cinema advertising, with cinemas closed, especially in markets like in Europe and America, you look at out-of-home, that’s taking a big dip, you look at radio … that’s massively down. A lot of new advertisers are coming through, a lot of digital advertisers who haven’t necessarily spent previously, but are redirecting that money from other mediums to podcasting.
If I sat here and said that we’re unaffected, I’d be lying. I think anyone in any medium would be lying. It’s affected, but nowhere near as much as a lot of the other mediums are. We’re in a lucky position that we will see a slight drop, but we’re not going to see a massive hit.
Are you confident the positive data that you’re seeing is reflective of the industry as a whole? How should somebody sort of be making sense of seeing this interview, where it seems like there’s some growth, versus another report that says listening is down?
If you look at the reports that talk about listening is down, it comes from, for example, people who might have categories that aren’t necessarily going to be growing in this time. Of course, sports is down right now, but then news has remained pretty much consistent, and is actually up in a lot of cases.
IAB-consistent, measured data is what we have. And that is the most accurate data you can get out there. And we’re seeing growth.
I think in some of the other media categories, panic is not too strong a word for it. There’s this worry that ad revenue is in the process of cratering. Whereas for you, this is not going to be your best quarter, but you’re not feeling like you need to completely rethink the business model.
No, and that’s the thing, we are not panicking at all. That’s the beauty about having a remote-first policy. From day one, we decided to all work from home, so the transition was pretty easy. I think the key thing is making sure people are mentally stable, especially my New York crew.
But we’re really optimistic about the ad market. We believe that Q2 is definitely going to take some kind of haircut, but I think that it’ll start to pick up again in June, when people start to head back to work, and things start to build again. And then September [continues] where March left off, and into that beautiful big Q4 that we normally see.
But you know, we’re looking at every week, week-on-week, and data is changing, and bouncing up-and-down. There’s no clear trend as to what’s going to happen. Even if we look at previous recessions, I don’t believe that this has ever been experienced before, people being forced to work from home, cinemas being forced to close, restaurants and bars being forced to close, we’re in a very different time.
Even when people can return to work, it won’t be a mass exodus back to the cinemas and bars, people are still going to be very reticent to be in crowded places. Which again, if you flip that back into the advertising model, in the U.S., [cinema advertising] is worth about just over $1 billion, out-of-home is worth about $9 billion, they’re going to see longer-term, massive hits. And even if advertisers were cutting their budgets by say, 30%, 40% because of this recession, they’re going to have to spend somewhere. We’re going to start to see spend in places which are showing good signs of growth and stability. And podcasting is one of those.
That’s how I see it, anyway.
Does that mean that you’re focusing your sales efforts on doing more outreach to some of these new clients and new advertisers?
Some of these advertisers we have already, and in this period they’re doubling down on marketing, because they’re seeing the opportunity. We’re also seeing businesses evolve from, you know, local pizza houses who turned into takeaway-only and delivery-only. We’re seeing banking and finance up, home improvement up — people are stuck at home and they want to smarten it up, every Zoom call I have, I get embarrassed now. We’re starting to see a lot more of those businesses coming through — online dating, video-on-demand services, educational brands.
I get the sense that for some publishers, a few years ago podcasting was really this experimental, small team, with the idea that this will be a big deal someday. And I’m curious to what extent you’ve seen that your publishers have moved beyond that stage, so that it has become a significant piece of their revenue.
Yeah, it is a significant piece, but it’s still going to take a big effort to overtake publishing revenue from other parts of their business. But it’s a growing medium. It will be a billion-dollar revenue industry in the coming 12 months — depending on, obviously, where this [current crisis] pans out — and it’s going to accelerate beyond that. I think it’s going to take a couple of years, three years, before it becomes a massively significant part of their entire output. But there are some publishers who don’t have a big ad model and are fairly new, and actually, this really is a big piece for them.
You mentioned that you’re already starting to see a rise in people who are starting podcasts of their own. At the same time, there’s been this ongoing question about discovery and how people find new podcasts. Do you think the discovery problem is only going to get worse? Are we just going to see lots and lots of people creating podcasts that no one listens to?
There’s gonna be a lot more more podcasts launched, but it’s the same thing as music. I see artists launching all the time with new albums and new singles and new content continuously. Same with YouTubers, the amount of content released there. It’s still hard to get discovered in any medium.
With podcasting, discovery’s always been the issue, right? It’s always been the broken part, before we came along. But I think discovery will get solved in time.
What do you think the solution looks like? Is it primarily a technical solution?
There’s two elements to it. There’s technical and there’s human curation, as well. If you look at Pandora and you look at what Spotify have done, you know, Pandora has been more that “music genome” project, which was a very human thing, behind the scenes, and then it moves towards the tech. Spotify, same thing with Discover Weekly — when they bought Echo Nest, that was all about technology and metadata, tagging content and actually seeing what content is trending based on a lot of other data out there.
Technically, you can solve it to a certain extent, but then it’s a mix of human curation and human touch.
What are some of the general tips that a new podcaster should be thinking about if they’re launching something now?
Good question. You know, we give a lot of tips to the podcasters. One of the key things is, if you’re going to go into podcasting, you need to commit to it, commit to a series, be that six, eight, 10, 12 episodes, and be very clear with your audience about that. While it’s an on-demand medium, it’s still an appointment to listen. It’s also making sure you commit to releasing at the same time and be consistent with that. And then it’s just trialing stuff out, putting trailers out there, making sure you’re using your social media correctly to really promote that content and get it discovered.
And again, it’s looking at your data and making sure you listen to your data. When you see those spikes and when you see drop-off rates, why is it that people are dropping off? When you mention dogs, they’re picking up and they are sharing that moment on social media. But when you talk about cats, it falls off a cliff.
So you’re talking about having this hope, at least, that even if there’s a broader recession, even if the podcast industry takes a hit, you’re going to see revenue growth again when the economy reopens. How much uncertainty is there? Do you feel like there’s a risk of a much longer-term effect on both industry revenue and Acast revenue?
There’ll be an effect on every business that has the majority of their revenue from ads. But marketing will not stop completely in a recession. A lot of people talk about investing during a recession, when there’s actually a great chance to stand out from a branding perspective.
We believe that we’re still going be fine. No one knows how long this is going to last, but the data we’re seeing is pretty positive on our side. If you look at previous recessions like 2008-2009 — this is when publishing took a big downturn — the reason why advertisers didn’t necessarily return in droves to publishing is the audience shifted digitally. What we’re seeing now is an opportunity for people to discover podcasting as a medium. And once you discover it, you stick with it.
That’s the data we’re seeing, we’re seeing growth in new unique users. In my mind, the more people are at home, the more that will increase. The more traditional mediums — cinema, radio — will be affected by this. Longer term, it’s going to take them a huge amount of time, and it might never come back to the heyday for them. This might be the transition where radio does start to shift to podcasting.
