Goosing the Podcast Model

For high-profile network shows like ABC's "Lost" and NBC's "The Office," the video iPod is the hottest new distribution venue. But at least for now, these shows aren't ad-supported on iTunes.

Experts predict that will change soon. Just as advertiser support has been the backbone for traditional TV, it will likely form the vertebrae for alternative ways of delivering programming via the video iPod, video-on-demand, and podcasts.

Apple has 53 percent of the market for digital music players; no other brand has a share in the double digits, according to Solutions Research Group in Canada. Now that Apple is applying the same influence to portable video, the ad model is beginning to emerge.

According to a recent eMarketer study, the audience for podcasts will reach 25 million in 2008 and 50 million by 2010. With that growth will come ad dollars--some $300 million by 2010, estimates Mike Chapman, eMarketer's editorial director. He believes most of that money will flow into network content, which today is offered for a small fee per episode.

That's also likely to happen because the audience for podcasts is an attractive one for advertisers: Early adopters are in the 18-to-34 demographic sweet spot. Advertising on podcasts also has the benefit of interactivity endemic to the broadband-based iTunes platform and could be priced on a per response model, à la Google's AdSense, Chapman notes. With niche content, advertisers can target their messages more granularly.

Already a handful of free (read: ad-supported) video podcasts are defining the medium's commercial potential. "Photoshop TV," produced by the National Association of Photoshop Professionals, is essentially branded content for Photoshop, while Autobytel's "Car TV" features videos of different makes of autos. The tech news show "Diggnation," a top-ranked video podcast, is sponsored by GoDaddy.com and Revision3.

Ziff Davis' "Digital Life TV" runs 30-second spots in its twice-weekly show for technology enthusiasts, available online and via iTunes. The show attracts about 70,000 viewers per episode. And they're loyal: 92 percent watch the entire episode, and the average age is 34.

While it's Ziff Davis' only podcast at the moment, the publisher recently launched an online video pilot called "Cranky Geek," featuring PC Magazine columnist John Dvorak. If demand is strong, Ziff will introduce it as a stand-alone video podcast, says Jason Young, president of Internet and consumer technology publishing at Ziff Davis Media. "In the next few months you will see a lot more advertisers," Young says, adding, "We believe there is a CPM-based [cost per thousand] price metric that can be applied and looked at for total viewership."

Meanwhile, eMarketer's Chapman predicts that video podcasts will nab the lion's share of podcast ad dollars--between 75 and 80 percent. Audio podcasts are luring ad dollars, too. In March, HBO placed ads for its series "Big Love" on 31 podcasts, including "The Associated Press Celebrity Focus,"  "Wine for Newbies," and "American Cliché."