Are Podcasts the Next Big Thing for Sponsored Content?

Imagine what it might be like to listen to the radio and, rather than having your music interrupted by a typical ad spiel, you hear a sponsored rock song. While this doesn’t really happen on your typical FM radio station, it has happened on podcasts like “Back to Work,” which has created original sponsored songs like “Obstacle Race” for Squarespace and a rock opera for MailChimp.

This creative approach is typical of the ads played on shows from 5by5, the podcast network that’s home to “Back to Work” and over other 30 podcasts about tech, design, and pop culture. While not all the ads are musical projects, they’re all more innovative than your everyday marketing. In fact, considering the format and storytelling is very similar to the actual content of the show, it’s not too much of a stretch to call these native ads or “sponsored content,” depending on which buzzword you prefer.

5by5’s experiments with podcast ads may just be the beginning of a new way for brands to capitalize on what appears to be an increasingly popular storytelling medium. As more people get into the podcasting experience through popular programs like “Serial,” “This American Life,” and Bill Simmons’s “B.S. Report,” it’s worth asking the question: Could podcasts be the next big territory for sponsored content?

Podcasts Can Deliver Exciting Sponsored Stories—But Few Do It

“When you hear a 5by5 host talking about a product, and you wonder why it doesn’t sound scripted—it’s because it really isn’t,” says Bailea van den Brink, sales associate for Archer Avenue, the ad network that finds and coordinates sponsorship deals for shows on 5by5. Rather than getting a full script, Archer Avenue’s sponsors are encouraged to send only key bullet points about their products so the podcast hosts can include their personal stories and tips in the ads.

“If the host doesn’t sound excited, the listeners won’t be either,” van den Brink adds. “This is great for the show because listeners have told us that sometimes they don’t even realize they’re listening to an ad, so it doesn’t interrupt the show and it keeps the listeners’ attention. Of course, this also makes sponsors happy because the ads are different every time and many of our sponsors see a great ROI.”

Creative podcast ads aren’t limited to songs and entertaining banter. One notable example is StartUp, created by former “This American Life” producer Alex Blumberg. Since the podcast tells the story of how Blumberg is launching his own startup, the ads are relevant to entrepreneurship and rely on a documentary or interview-style approach. For instance, in an ad for MailChimp, Blumberg interviews the company’s head of marketing about how much they pay StartUp for advertising—around $6,000 per episode—and how much value they get out of it.

It’s this personable storytelling nuance that’s attractive to many of the brands that regularly advertise on podcasts.

“Podcasts are personal,” says Ryan Stansky, marketing manager for Squarespace, which has sponsored dozens of podcasts over the past five years. “We have the opportunity to get hosts genuinely excited about our products and values. When they relay an authentic message to a large audience who trusts them, it benefits everyone involved, because the show is supported, we get new business, and the customer learns about a product that is useful in their personal and/or professional life.”

Still, most podcasters miss the importance of this approach. As Stansky points out: “Many of the largest podcasts don’t allow for the personal, fun, free-flowing ad reads that smaller shows do.”

Podcasts Are Blowing Up

Many have speculated about the coming explosion of podcasting and how we’re entering into a “podcast age.” It’s fair to be skeptical about these claims because even if podcasting has been around for more than a decade, it hasn’t gone mainstream.

But this might change soon. A 2014 survey from Edison Research showed approximately 39 million Americans listen to podcasts each month, and this number has been growing almost every year since 2008. It might not be an explosion on the scale of an overnight hit like Snapchat, but it’s hard to ignore the growth.

More importantly, the podcasting audience is engaged. The same survey shows that the average podcast listener consumes at least six podcasts per week. Another Edison Research study on the audio habits of Americans found that podcast listeners are actually “super listeners,” consuming more than one hour and 45 minutes of audio per day than the average American, and they spend more than 25 percent of their total audio time listening to podcasts.

Simply put, those who listen to podcasts listen to more of them and consume more audio in general.

This level of engagement is good news for sponsors, especially since 54 percent of podcast listeners have actually made a purchase from podcast ads, a striking figure. Then there’s the brand awareness that comes with being active in such a personal medium. According to Stansky, “It’s been good for our brand. The publishers and the listeners know us well and appreciate our commitment to supporting great content. We’re continually evaluating the cost versus benefit and adjusting the mix from both a brand and performance perspective.”

Why Brands Aren’t Podcasting—Yet

Despite the growing audience, why aren’t more brands producing their own shows? After all, brands were relatively quick to use other online publishing channels such as blogs, social media, and longform interactive stories. Podcasts have been around since the early 2000s, yet most brands either don’t have a podcast, or if they did, it was short-lived.

The simple answer: High-quality podcasts are very difficult to pull off.

“Producing a successful show takes an incredible amount of work and dedicated resources,” says Todd Cochrane, host of the New Media Show and CEO of RawVoice, a company that provides services and tools for podcasters. “Also it takes at a minimum a couple of years to build an audience. Most corporations do not have the time to do that. Most companies are also not willing to hire dedicated folks to do a show.”

Even Squarespace recognizes these difficulties, and Stansky told me the difference between creating ads for podcasts and actually running a podcast is huge. “Some of our employees host podcasts, but as a company, if we host a podcast, we’re going to do it right,” he says. “The content and production would have to be top-notch, which takes resources, time and focus that we simply don’t have at the moment.”

But he also mentions that producing a podcast in the future wouldn’t be out of the question for the company.

The Podcasting Space is Growing, Will Your Brand Grow With It?

If your brand has been ignoring the podcast industry because it seemed too niche, it might be time to reconsider—even if it’s just to explore the types of shows out there. You might not end up sponsoring your own rock song, but finding a good fit with the right podcast could be just what your brand needs to get the ear of your target customer.