How Podcasts Became Ad-Skipping's Latest Victim

The co-evolutionary development of consumer viewing habits and marketing strategies continues to impede the revenue growth of many digital formats as the two sides try to make sense of each others' tactics.

With more time, ad strategies will become more sophisticated, but the question is whether consumers' increasing interest in creating their own digital environments may limit penetration.JL

Steven Perlberg reports in the Wall Street Journal:

About 21% of Americans over the age of 12, or roughly 57 million people, listen to a podcast monthly, up from 17% last year. The 15-second skip button allows listeners to avoid commercials. The big barrier to (advertising) is measurability and the fact that you have to A) take on trust that a podcast is being listened to and B) that your particular ad has not been skipped over within that
Web advertisements face ad blockers. The DVR lets viewers bypass television commercials. Now, podcasts must contend with the 15-second skip button.
The decade-old podcast industry has been reawakened in the past two years as producers create new shows and more listeners tune in on their mobile devices and in their cars. But advertising growth has been limited by difficulties in audience measurement, and the podcast world is grappling with the same phenomenon rampant across rival media: ad-skipping.
Apple Inc., AAPL -0.36 % which accounts for the bulk of most podcasters’ audiences, allows listeners to skip ahead by increments of 15 seconds on its podcast application. Other podcast apps, such as Spotify AB and Stitcher, also feature a skip button.
Anna Mowry, a 32-year-old podcast fan who listens to about five programs a week, avoids ads through the Downcast podcast-listening app, which has different time-skipping options: 15 seconds, 30 seconds and 2 minutes. “Depending on the podcast I’m listening to, I know the one I need to click,” said Ms. Mowry, who works at the James Beard Foundation, a culinary organization.
Podcast ad formats vary across programs, but the most common two are promotions read by the program’s host or spots that sound similar to traditional radio ads.
Advertisers prefer the former because they weave marketers’ messages into the program and are less likely to be skipped, said Stephen Smyk, chief executive of Performance Bridge, which buys ads on behalf of podcast marketers such as glasses maker Warby Parker and razors supplier Harry’s.
Skipping is “definitely on our radar,” Mr. Smyk said, so he prefers if ads are an odd length. “Fifty seconds is better than 60 seconds. You don’t want those 15-second increments because that 15-second skip button hurts you,” he said.
How much it hurts advertisers is largely unclear. Podcast ads are sold based on how many people download an episode, but advertisers and producers are essentially blind to whether or not those people go on to listen, let alone whether they hit the skip button during the ads.
Producers have been able to observe the behavior on a small scale. During a recent episode of the Gimlet Media Inc. podcast “Reply All,” for example, 85% of listeners who began the program on Spotify were still listening by the 12th minute of the show, which covers internet culture. At roughly the 16th minute, when the ad break started, the audience dipped to 77% of the original listeners. It then bounced back to about 85% after the ad finished. Spotify is a new entrant to the podcast world, so that sample only represents a few thousand people, said Gimlet co-founder Matt Lieber. Spotify declined to comment.
“We always assume that people could turn away and listen to something else, and we treat the ads the same way. We don’t want you to skip them and we don’t want you to turn off the show,” Mr. Lieber said. Ad-skipping isn’t a concern at the company, but advertisers have sometimes asked about it, he said.
The ad-skipping conundrum taps into a larger issue in the podcast world: Measurement challenges have kept many big-brand advertisers on the sidelines. “The big barrier to most brands is the measurability and the fact that you have to A) take on trust that a podcast is being listened to and B) that your particular ad has not been skipped over within that,” said Jonathan Barnard, head of forecasting at ZenithOptimedia, a media agency owned by Publicis Groupe SA.
About 21% of Americans over the age of 12, or roughly 57 million people, listen to a podcast monthly, up from 17% last year, according to Edison Research.
Podcast companies say that keeping ads entertaining remains the best way to mitigate ad-skipping. “Repetition is what leads people to skip over and over again,” said Bryan Moffett, general manager of National Public Media, a sales subsidiary of National Public Radio that is owned in partnership with the Public Broadcasting Service and Boston public media station WGBH.
“One of the key reasons we rely on ‘host reads’ is for this exact purpose,” said Lex Friedman, executive vice president of sales and development for podcast advertising company Midroll Media, which is owned by E.W. Scripps Co. SSP -2.42 % “If it’s a comedy show, the ads are going to be funny. If it’s a science show, the host is going to nerd out.”
Norm Pattiz, executive chairman of podcast advertising network PodcastOne, said he doesn’t see ad-skipping as a significant problem because listeners are on the move so often, either driving or running. “They are not going back to their device and speeding through the commercials to save them 18 seconds of listening,” Mr. Pattiz said. “It’s not logical.”
Jenna Weiss-Berman, co-founder of Pineapple Street Media, which makes shows for ad agency Wieden+Kennedy and actress Lena Dunham, said ads in the beginning of a show are more likely to be skipped than more pricey “midroll” ads.
“If it’s 20 minutes in, you’re probably into the story and you’re not thinking about fast-forwarding through the ad,” she said.