Why The Future of Radio and Podcast Ads Isn't Programmatic

With the rising consumption of online music streaming, a steady increase in podcast listeners, and radio's solidified presence as a lead generator, today's world is more audio-inclined than ever. Podcasts have evolved from their role as a niche entertainment and are continuously gaining popularity. According to the Pew Institute, the number of people who listen to podcasts is steadily increasing and podcast ad revenue is anticipated to reach more than $220 million in 2017, a rise of 85% over 2016. Because of this, audio channels are a hot spot for media buying opportunities to engage with certain groups.

With this boom, and alongside increasingly sophisticated technology systems, comes a growing appeal for automation. Programmatic advertising, an emerging marketing tactic that places ads through a combination of software and machine learning is sweeping the market. In fact, spending on programmatic advertising is expected to climb to $33 billion by the end of 2017—in the US alone.

The future of radio and podcast advertising isn't programmatic just yet, however, and here's why:

There's An Underdeveloped Audio Inventory

• Compared to the selection of inventory that other platforms have when it comes to programmatic ads, audio selection ad inventory is still under-developed. Although audio publishers view their inventory as premium, advertisers don't tend to prioritize audio in their marketing mix.

• Publishers are unwilling to put their inventory into an open exchange as most space is bought directly from a media buying agency.

It Can Risk Brand Authenticity

• Host-read advertisements produce strong engagement rates due to the trusting relationship listeners have built with the host. According to Exchange Wire, ads in the US are reaching CPMs as high as $80 USD. The seamless transition from podcast content to host-read advertisement is an engaging way to promote content without losing the interest of the listener.

• Host-read audio ads provide a sense of curation and customization to the way brands are presented to specific audience. A truly unique aspect to podcasts would be lost with the addition of programmatic ads, which could be perceived as generic—a risk that podcast producers are not willing to take.

It Guarantees Access To Remnant – Not Prime – Inventory

• When using programmatic advertisements, publishers are still focused on selling ad space via traditional channels and only offering the remnant inventory (leftover spots) to the programmatic area. Premium placements are reserved for direct partners.

• Often, leftover spots end up on channels that don't fit the intended audience. Worst case scenario, remnant programmatic ads can wind up on inappropriate channels (adult sites, for example), or somewhere targeting a different demographic from the brand's intended audience, defeating the purpose of having ads placed at all.

If you're looking to buy radio ad space, there are upsides and downsides. When it comes to programmatic advertising, all signs point to traditional approaches still leading in radio and podcasts. In order to properly target the right demographics and effectively place ads, it's best to leave it up to the professionals.