Interview Transcript

Can you give us some background to your role in advertising and at Acast today?

I have had an interesting run over the past 20 years. I started my first job at CNN Turner Broadcasting in the late 90s, where they had one of the best training programs in the world. There I received a good introduction into the world of media which I never knew existed; how media is bought and sold and those relationships. Over the years, a little thing called digital emerged. We got out of the digital 1.0 hiccups and I made the switch in the early 2000s when the stronger business models emerged. All my friends thought I was crazy. I saw an opportunity as consumption was changing and new platforms were allowing brands to connect with those audiences, and I jumped full-on in. Over the last 15 years, I worked for video companies, spending time at programmatic-first companies, automating buying and selling, and then back to a big company with Spotify, where I was responsible for the global video business.

I have now come full circle to an audio company, who is using technology to change how people consume podcasts and which allows creators to earn a living.

What is the fundamental difference between the video and audio advertising ecosystems?

Video has evolved several times over the past two decades. When I first got to Turner Broadcasting in 1999, Ted Turner had a program called Media at the Millennium. They were trying to describe how cable television had reached the point of mass consumption and that it was very similar to broadcast television, and therefore, should command similar pricing. Obviously, we now know it is very equal but when digital video was emerging 10 to 12 years later, it was faced with similar challenges. You had the long-tail of video – full episode players being premier branded content – but one thing absent in both instances was the lack of standardization in media metrics.

In the late 90s and early 2000s, a lot of cable networks were not rated yet, so it was difficult for them to command the type of pricing that broadcast enjoyed because they could not get a Nielsen rating, which was how all audiences were monetized. Looking to digital video, what started with the full episode players in those same TV networks, they enjoyed their first bit of success. All the other content, with large viewers, every time you type in “brownie recipes” into Google, you would find a recipe and there would usually be a video there with it. It might not be a branded piece of content, but it was still valuable. What was needed there was a metric that people could understand, which could cut across everything and be applied across all those channels. That metric was viewability, which first emerged because there was concern around muted in-banner videos.

Pixels were also hidden, so it was a fraud issue at first, but then people realized this was a standard metric they could apply to the full episode players. The two metrics all digital video buyers looked for over the last decade were viewability and completion. Did you watch my video all the way through, and during that period were the appropriate amount of pixels in play for the right amount of time? That is where video really took off, around 2015, 2016, with a metric that everyone could measure. Third parties were able to do that, from integral ad science and mode and double verify. There were associations and regardless of whether the viewability measurement was correct, it was still a standard.

With podcasting, that is one of the challenges that face our medium – there are different standards and metrics – which is a little confusing. We need our viewability moment and I believe it is coming soon.

Is there a difference in the technical journey and process of advertising between audio and video, using RSS feeds or URL embedded links for example?

Everyone has a content management system, but podcasting is a free medium and you can get any podcast anywhere, with the exception of Joe Rogan and others. If you want to watch an episode of CSI, you cannot watch that everywhere because there are rights issues and walled gardens. Podcasting is slightly different, which is what makes it more complicated.

What would trigger that viewability moment?

Third parties are very important; external firms who measure, verify and report on these metrics. We have seen the big companies like Facebook and Google get tripped up when grading their own homework. While that duopoly is critical to the ecosystem, there have been many challenges and concerns around the reporting of that data. Someone needs to come up with a metric – audibility, listen-through rate – something like that. Many companies are working on it, but it needs to exist to allow the channel to grow in the same way video did.

Is a measurement issue preventing the industry from going to the next level?

The commercialization of it is a big piece. It is a misconception, but the critics of podcasting are correct; we have not made it easy to buy or understand. There is confusion between downloading and streaming. There are different types of ads – host-read, audio, pre-produced and branded content. The way IAB measures an impression is different from if it is dynamically inserted. There is still much confusion and many different players out there. Metrics such as viewability and demo targeted measurement would certainly help.

Where is the industry in the shift towards dynamic insertion of ads versus the less scalable, host-read version?

Dynamic ad insertion is a must to both scale the business and properly measure it. Think about the practicality of being able to rotate creative, in a time we are living in right now. Imagine having a travel ad baked into a podcast from a year ago, which still happens on back catalogs; great content exists from Ted Talks to history podcasts and even true crime. Many podcasts are evergreen and older ads do not take into account the current travel restrictions. Other categories have also been affected by it, so there are challenges.

Acast pioneered and invented dynamic ad insertion two years ago. We do it for every single ad we deliver. Our different ad formats do sponsor host-read ads, because it has been a main fixture of podcasting for years. Part of the joy people have is that a host talking about your ad makes it more organic and fits into the content; it is an endorsement. We want to continue that, but there are obviously challenges in host-read ads, particularly in a programmatic environment. You still have to pre-record an ad and deliver it, but other innovations can happen here. Dynamically inserted audio ads are either read by a producer or take into account different types of creative capabilities.

Perhaps we could dynamically change creative, based on location or weather or similar data we know about you. As long as it is customized, the host-read part is not as important as the fact that this is not radio where the same 10 million people listen to it. That is the piece the audience are asking for. We are experimenting with all those different ad formats and the critical part of our research is making sure we understand which works; which ones resonate with consumers but what will also drive outcomes for advertisers. If we do not drive outcomes for advertising, none of it matters.

Could a podcast host pre-record many advertisements and insert them dynamically, based on location, demographics and platforms?

We have that capability in-house, and work with podcasters to do different script versions. It is a key part of our business to consult on which creative to use in the right moment.

How do you compare dynamic ad insertion in podcasts to music streaming?

The technology is similar depending on the platform, but reporting back is different because in a streaming environment you are, in fact, streaming. You have a live connection and there is a feedback loop of when an ad started, quartile reporting and when an ad ended. We have seen an increase in streaming which we believe is where the market is heading, but many people still download. They are queued on the phone and they listen with or without a connection. That is trickier, but as more podcasts are streamed in real time, it will result in more accurate reporting and measurement.

The more streaming penetrates and people listen to podcasts, the more likely use of dynamic ads, which results in better measurement and increased attraction to advertisers?

That is correct.

How difficult will it be to change that consumer behavior of downloading or using RSS feeds?

That rests with the platforms and is outside of our control. The investment that companies like Spotify, Pandora and iHeart have made into this world should accelerate that shift, but who knows; that is what makes this fun.

When a user listens to adverts on Spotify for example, they appear before the music, whereas in audio it is integrated into the experience.

Some of those streaming platforms insert ads at proper insertion points between songs. Think of it as less about adding a pre-roll before a song and more about, how long is my session and when do those ads get inserted? Is it every 15 or 20 minutes, or when the person is active on their phone changing songs? Each platform is different but they have to keep the consumer in mind. Comparing video again, what is the commercial load of premium video providers today? Some broadcast networks like Channel 4, Channel 5 and ITV in the UK, have eight to 12 minutes of commercials per hour.

You cannot minimize or skip past the video and it is almost a full load. 2.5 per pod, 7 pods, equates to many ads, so what are the unintended consequences of putting more ads into those pods? That is probably what drove low viewability – people minimizing and skipping – which is a culture today. I watch my kids on YouTube, hovering over that skip ad button. I can hear them saying, skip the ad, skip the ad, skip the ad. We are accustomed to this because ads are everywhere. Podcasting is one of those great last frontiers where it remains respectful. The ads are integrated in a civilized way and do not shout at you as they do in video and audio streaming. We should be very careful of that as we scale, automate and introduce creative, to always protect the user experience or issues will arise. Today, ads can still be skipped in podcasts.

How do the ad loads in podcasts compare with video?

It is much lower for sure. The premium video world in major markets like the US, UK, Germany and Australia, carry a minimum load of seven minutes an hour. When scrolling through social media platforms, look how many autoplay, audio off, video you; it is everywhere. Podcasting remains uncluttered and it is not our job to bring virtual commercial loads to increase revenue. That would be a greedy and improper way to approach it, which I would violently advocate against. We cannot make the same mistakes of these other mediums.

The CPM reaches up to $30 in the podcasting industry, which is much higher than a YouTube video ad?

YouTube are in a great situation where tons of supply drives down pricing. There are more digital audio ads which result in lower CPMs. It is interesting that video has been able to enjoy high effective CPMs, and because they use models like CPCV, it can be even higher. Most people do not calculate that. Podcasting CPMs have been similar to video without that commercial load and forced lack of proper integration into the experience.

It is one of the best values in the marketplace, because you have an engaged audience who purposely chose to listen to the podcast. They have their AirPods in, literally pumping into their brain. They are not watching casually on the couch or desktop. They may be doing other activities but those AirPods are going right into the brain and people are talking directly to them, the same way we are talking now. That engagement in an environment where we are continuously bombarded with messages, is an intimate experience which justifies higher CPMs. At the end of the day, podcast advertising works. Buyers do not care what the CPM is, they want to know who their audience is and were they driven to action? That is the only thing that matters and they will pay triple digit CPMs for that.

You have to be transparent in your methods and show them it works, and the good thing is that podcasting works. It works because of all the reasons we just talked about, but now we can prove it. That is what brings new brands into the channel and will contribute to growth.

Do you expect CPMs to increase with dynamic insertion, targeting and a shift to streaming, rather than increase ad growth as video did?

It is possible, but I am not worried about it. Good solutions rise to the top and brands are willing to pay for outcomes. All media will eventually be performance-based media. As I talk to buyers about it, everyone is measuring something, whether it is footfall, awareness, affinity, intent or an actual purchase of something. It is fascinating that DTC brands were first to embrace podcasting. They are the most ROI hyper-focused, measuring every click of the sales process. If podcasting did not work, they would not be here.

Insurance companies would not be here either, and they have optimization engines looking at every return on advertising dollars spent. That tells us it is an appropriate channel and our industry approach has been correct. We need to bring in more skeptical people because of the metrics, but do it the right way. I do not want to hear re-purposed radio spots on podcasts, because that is what we did in TV or digital video, with re-purposed TV spots. Those mass made silly ads with quirky humor will not work in podcasts.

It is interesting how podcasting can advertise with high integrity, where video lost control and blasted you with ads, whether in the feed or pre-roll. It seems podcasting can still maintain the consumer experience.

Absolutely and, as an industry, we have done a good job policing ourselves with that, which will hopefully continue.

If you are not worried about pricing or how CPMs evolve, what are you worried about?

I am worried about growing the business correctly and ensuring we preserve the integrity. Our job is to protect it and deliver results for all constituents. It is an ecosystem where the user has to be the center of your universe. Without them, there is no business. You have to protect the podcaster so they can earn a living, and can grab insights into what does and does not work. The podcasters I talk to are creating art; it is their dream to speak and tell stories. People from diverse backgrounds with behind-the-scene stories of their upbringing and families, never heard before.

There is so much to be done and to be able to create an environment where they can get paid for that is really fulfilling. Of course, the advertiser is the one supporting this. If we do not connect the appropriate audiences who are engaged and want to take action, it will not keep the flywheel running. We have to ensure all three constituents are harmonious in it. I like how we approach this at Acast with our philosophies and how it is built as an independent agnostic platform. I like our chances in contributing to the betterment of the channel for everyone.

What is the most crucial part of that flywheel between user, creator and advertiser?

I am encouraged by the amount of new content coming in. The most interesting things about podcasting is the low barrier to entry; you only have to talk. We have been approached by world class musicians who want to do a podcast. They say things like, you have no idea how many stories I have from the road; man, that would be really cool. One of our podcasters called Creepy, is part of the Bloody Disgusting network, which is horror. It is amazing how scared you can be from audio without visuals. There is a lot going on in the content creation side which I am excited about. COVID has resulted in most of Hollywood still shut down.

You cannot get onto the sets, whereas podcasting can be done from home. I am encouraged by the amount of content being created which will benefit the industry. From the advertisers' side, I am also encouraged by the number of interested brands. Some are still waiting for perfection – to be able to put podcasting in a bucket – which is difficult to do. Years ago, people struggled where to put Snapchat; was it social or video or a camera company? Buyers want to bucket you somewhere. For podcasting is it audio, digital media, radio, or is it new? Working with legacy classification systems can limit growth.

I am encouraged by the interest and, of course, the users. Earlier this year, Edison reported 105 million people listen to podcasts on a monthly basis, which is a third of the entire US population. Less are doing so on a weekly basis but that is also growing, so podcasting has become a mainstream activity. When I talk to people, we now share our favorite podcast rather than Netflix. It is still word of mouth. I just got off the phone with someone else and I was like woo, that is one I have to check out, because there are so many out there. Podcasting has become part of the Zeitgeist in consumer conversation which is good for everyone.

With multiple players like Apple and Spotify and apps such as Overcast, Castro and Acast, how do you look at the structure of the ecosystem?

That goes back to your point about RSS. It does not matter to us because we work with our creators to get them where the audience is. Who knows what the next platform is going to be; if it is open and people can consume it there, that will be a good thing. As an independent platform, we work with everyone and want to be part of that distribution and commercialization engine plugged into every existing platform. Maybe the podcast audience moves to YouTube and the opportunity is there. We do operate a platform, but that is only part of the equation. Having a service which is inter-operable with everyone gives us a huge advantage.

Why would a creator go to someone like Acast versus an Apple or Spotify?

Apple or Spotify are closed systems whereas Acast can work with everyone. Many providers do not play nicely together. Getting yourself promoted on the Apple flywheel or Spotify's top tiles, if you are at one versus the other, could be challenging. In the US you have Pandora and iHeart, and Android is going to be a big player. Google is figuring out their podcasting strategy, as are Amazon. If you go to one of those big walled gardens, you may be limited. It will be interesting to see what happens with Joe Rogan, who as of next week, will be 100% exclusive to Spotify, which initially will be great for their subscribers. We will see what happens and if it continues to pay dividends for them.

People who love Joe Rogan but love another streaming service more, might not want to use two services, so the jury is out on that and time will tell.

How does the consumer journey flow through the industry? If a host works with Acast, for example, do they pay you a fee to distribute their podcast to all platforms and you have an advertising network or platform which advertisers funnel funds through to distribute on all platforms?

Yes, that is the flow, however there is flexibility in those steps, where we help podcasters host and distribute their content. We help analyze the listing data. We have a team of A&R professionals who help them with their stories, figure out where the best insertion points are, how to tell a story episodically, when to release them and what guests to have. We help from a production standpoint to give them our support. In terms of the distribution, we distribute nearly everywhere. For the commercialization part, we give the bigger podcasters the tools to help monetize it themselves, but most people tap into our global professional sales staff.

They have relationships with trading desks, clients, DTC brands and podcast agencies, and can source that demand in an efficient way either directly or programmatically. It is a good plug and play solution for podcasters who know what they want. They want to create it and need someone to help promote and commercialize it, which is why they come to Acast.

What is the structure of the podcasting advertising stack? Do you have specific supplier-and demand-side platforms like in the video world?

With programmatic, we operate using private marketplaces, either through direct PMPs or programmatic guaranteed. We have an SSP where that inventory sits and the DSPs plug into it. You can buy it and use the DSPs targeting capabilities, or layer in our own targeting capabilities. The ad stack is proprietary but we have brought in many third parties to aid with new targeting and measurements that will give us the sophistication other channels have enjoyed for several years.

What is the biggest challenge in building out a full ad stack?

It is hard, it takes time and you need people. We are a global business and have to choose our focus areas. We have much to do as a multi-national business many people are interested in. Do you build or buy is a classic question I have encountered frequently during my career? Sometimes you build first and realize you should have bought, or you buy then realize it is not wanted, so you should have built. One of our biggest challenges is not to get caught up in our own vision of the world, but rather listen to what the market needs.

What do creators and advertisers need? We cannot talk to ourselves all day and think we know what people want; we have to listen to our customers and our partners to build the things they need. Acast has that culture; we focus on our partners to solve these transformative issues, keeping them at the center of it. We do a lot of listening and workshopping, spending time with people to understand their frustrations. If we can make it easier and dispel the myths about it being too difficult, not working or neatly fitting into this a box, we will achieve success.

If the advertiser is using Acast, how does it work with distributed platforms?

We dynamically insert the ads as the podcast is being played on a platform. Once we get the data back, we know if it was seen or not. It is, quite frankly, as simple as that. I cannot reveal technical details of that data exchange as it is above my pay grade. The beauty of using Acast is that we get you on every major platform where 95% of consumption occurs.

Does the end platform not get any advertising revenue? Acast receives it, not Apple or Spotify?

Correct. Perhaps one day they will ask for that, but today, they are focused on building up their user experience and engagement, so they want as many podcasts on their platform as possible. Shutting out podcasts represented by other people is not in their best interests.

How important is exclusive content in podcasting?

Some people have thought that it is important, but you need to define exclusive. All our creators exclusively use us for tech. In that respect, you would not want two different technology firms representing your content.

Taking Joe Rogan as an example?

There has been much debate about that in the walled garden and whether that helps or hurts. What has made podcasting great is the fact that it has been open and free, which many people describe as its most redeeming quality. Video clearly is; you cannot watch an episode of Comedy Central anywhere. YouTube was sued in 2007 for hosting Daily Show episodes, which was only recently resolved. That is the fundamental difference between video and podcasting and I do not know if podcasting will go that route. I do know users have become accustomed to consuming what they want and where they want it, which is a good thing.

Spotify have their exclusive strategy, but will Apple start rolling out more exclusive or licensed premium content to drive usage and engagement?

You may see exclusives and then they go back to being open. The streaming service from Title is an example, where a number of artists who were exclusive are no longer. We will see and it will be fun to watch.

Is this not simply a scale game? Surely those with the most content, users and impressions are more attractive to advertisers?

Scale is important, but looking at podcasting audiences, outside of the top 200 you will still find shows with thousands of engaged listeners who buy things, so mass reach is vital. Having big shows helps your credibility as a platform and your ability to monetize it. Podcasting is such an intimate experience that there is still value in podcasts which only reach 100 people. If it has the right audience which cannot be found elsewhere, that is exactly what the advertiser wants.

When you meet advertisers and they are choosing between video or podcast, what is their decision-making process today?

Easy to buy and easy to measure. Again, measure is not simply from a media metrics perspective but outcomes. Most advertisers have measurements in place and use third parties to do it. They measure the amount of in-store footfall, the level of awareness versus a control group, was more action driven to the website or did people sign up for an insurance quote? These are all the things they need to do.

And are they accurate, getting validated, and do they have a high ROI?

Many CPGs do their own media mixed modeling so we do not have exact insights. They have different methodologies, which is also a challenge I often encounter, both in podcasting and media. Everything is performance driven and you have to prove outcomes. It is not only about reaching an audience, but what that audience did. The procurement folks on the brand side have tighter budgets so they need to show results. They cannot spend money on things they think might happen, you have to be able to prove it to them.

There is still that inflection point which you are waiting for, to drive trust and viewability with advertisers.

That is correct and I do not know what that metric necessarily is yet. Acast has some of the best metrics available and are the only company certified in IAB 2.0 podcast rules, under all four categories. We are also the only company giving listen-through rates in the bid stream programmatically, or offering dynamic ad insertion for each podcast. Globally, we are the only ones offering programmatic at scale today. We have a nice head start but we have to keep innovating. Part of that will be working with trusted third parties who have that gold seal of approval, and can say, look, the ad reached this person and this is what happened. If we do that, it is off to the races.

Do dynamic ad insertions have higher ROIs than standard host-read ads?

Our host-read ads are dynamically inserted, which results in better metrics. It is more timely and you can refresh creative, which makes it more relevant. I do not have numbers to compare DAI to baked-in ads, but intuitively, the more optimized and dynamic creative is, the better it will be. That is why Spotify and others are investing in it because they know they have to get that.

What is the big challenge for Spotify or Apple to build this stack out at scale?

I will not comment on Spotify because they are my former employer, but they are obviously committed to building their technology and solving the things that we talked about. Apple are not an ad company; they offer the hardware and a platform where consumption happens. They did try iAd but quickly gave up on it. Who knows what they are currently thinking. Microsoft seems to be ready to get back in the ad game by purchasing TikTok. If I knew the answers to this, I would build out my own platform and make tons of money. We are all figuring it out and growing together.

When you approach advertisers to purchase podcast inventory, are they buying music and audio together or is it typically only the audio in their budgeting process?

That goes back to how do you fit. Some advertisers only buy streaming audio as part of a music strategy. They may say, music is not a part of our strategy, we are not aligning with an artist this year, we are not tying ourselves to the Grammy's, so I don’t need to buy audio streaming. Those examples are fewer than they used to be. Today, more people look at streaming audio but I want them to see podcasts as an engaged audience which can be compelled to action. What that action is can be defined, but I have them and they are paying attention. You are literally injecting your message into their brain, without distraction. If you have a compelling message about a product, service or cause, this is a good place to talk to them, and I can measure the impact and efficacy of that message.

Do not think of it as a podcasting or audio strategy, but rather a people strategy. We are in the communication business and podcasting is merely the mechanism we use to reach those people and measure the impact a message has on them to act. The client ultimately decides what that action is.

How are industries, such as automotive or financial services, approaching this compared with the DTC businesses you mentioned who were laser-focused on ROI and early to the game?

DTC continues to be resilient given the pandemic, because that is what everyone is currently consuming, although it was happening even before this. There are razor subscription clubs, meal, hair and beauty kits and items for pets, which are going to continue as more of our food is delivered to our homes and we enter stores less. The pandemic only accelerated the path we were already on. The CPG and auto category businesses have been transformed forever. Unilever acquired Dollar Shave Club to enter that DTC business. CPG businesses need to notice the reduced time from message delivery to point of sale.

If I have a message about a different hair care product, you no longer need to wait, after repeatedly hammering them over the head so they remember you when they are in line at the local Sainsbury's. You only need to be relevant in that moment, because then they go, oh, I'm going to go buy it. Auto businesses have optimized and offer a virtual test drive using an Oculus Quest. Another retail category which have transformed their business to digital is Target in the US.

Does an insurer want different podcasting ad formats than a DTC company?

We have had requests for it and there is innovation in interactive, couponing and contests. There is a lot to be done and going back to video, they did many experiments with interactive ads which were dynamic and created new ad formats. More innovation will happen here and if it is done in a non-intrusive intelligent respectful way, we can test many things.

What is the potential tipping point for ad dollars to flood into this market?

The standardization of metrics is critical. Once people can pull in a dashboard what a single metric did across all providers and level the playing field, more dollars will be invested by the big CPGs. Those metrics have to include media metrics and outcomes, without which growth cannot happen. It will grow naturally because it is new and exciting and more people are doing it, but that tipping point where we start to see the hockey stick, will be third party validation done transparently.