• by Steve Smith , Staff Writer @popeyesm, May 26, 2006

Advertisers rush to reach early adopters in a small but growing medium

Hot off its celebrity run as 2005’s “word of the year,” podcasting got a reality check recently when Forrester’s ear count found a mere 1 percent of North Americans regularly use downloadable audio and only 2 percent have ever tried it. The penny ante from advertisers was a paltry $3.1 million in 2005, according to PQ Media.

So why the outsized interest in a medium with such a small media share? While overall penetration may be low, individual publishers tell OMMA that top shows already boast download numbers that rival cable TV or local radio ratings: 800,000 a month at Slate.com and 500,000 for The Onion’s daily newscasts, with Ziff Davis reporting 100,000 and 225,000 downloads of its video podcasts DL.TV and 1Up, respectively.

“In January 2006, a hit show got about 1 million downloads a month,” says Ron Bloom, co-founder, PodShow Network. Advertiser interest in downloadable media “is through the roof,” says Jason Young, president Ziff Davis consumer/small business group, which places podcasting spots from Microsoft and IBM. Five-second audio plugs on The Onion’s Daily Radio News are booked eight weeks in advance. On Slate.com, where Lexus, Chrysler, and Random House regularly appear, “We’re close to sold out for the rest of this year,” says publisher Cliff Sloan.

Advertisers detect in this nascent audience the whisper of media’s future, and many want to be in ahead of the curve. “We are seeing a very engaging medium that reaches a coveted younger demographic,” says Patrick Quinn, president, PQ Media. While traditional distribution plateaus, podcast downloads are growing at a rate of 20 percent a month, according to distribution hub Feedburner, and the medium retains the familiar audio and video attributes media buyers love. Quinn projects that podvertising will hit $327 million by 2010, easily surpassing ad spending on blogs.

For ARC Worldwide, which produces branded pet training podcasts for Purina, the added effort required by consumers to grab a podcast is a plus. “If someone is that interested in what you have to say to make a change in habits, they are fairly engaged,” says Scott Clark, senior vice president, account director, ARC. “If I have those brand ambassadors engaged, it is worth the production costs.”

Arguably, podcasting attracts media buyers because it contains in protean form much of what we anticipate from next-generation media: on-demand, time- and place-shifted consumption; à la carte TV; portability; brevity; and a blend of traditional and user-generated content. Likewise, early podvertising may become ground zero for testing new ad formats.

The Onion’s subtle 5-second plugs for sponsors, which roll at the end of its 45-second shows, are effective because of the show’s daily frequency. “We price those between $30,000 and $50,000 a week,” says Sean Mills, president of The Onion. The going rate among most publishers seems to be between a $30 and $50 cost-per-thousand. The PodShow Network not only sells spots and mentions within a show, but also encourages hosts to go postmodern and banter about the brand.

The PodShow Network’s Bloom dubs it “Advertising 2.0,” explaining, “The sponsor becomes a white knight and bonds further with the audience.” For Random House, Slate.com included an excerpt from the advertised audio book at the end of the podcast.

Then there is the relatively untapped mobile segment. The Purina dog training podcasts are meant to be used in the park with Fido, but ARC’s Clark is already envisioning how consumer packaged goods marketers might leverage the portability in branded infomercials to demystify in-store purchasing. “We think pod-shopping could be an interesting twist,” he muses.

By 2010, Wal-Mart greeters may be handing us a cart and an iPod.