Why So Many Podcasts Are Brought to You by Squarespace

Or Mailchimp, or Audible, or LegalZoom

It’s by now a trope of modern listening: The soothing tones of Ira Glass or Sarah Koenig subside and make way for a sponsor mentioning promotional codes for online stamps, boxes of all-natural snacks, or tools for building a website. In the upper echelon of iTunes’s list of most-popular podcasts, it’s the same companies making their pitches again and again. None of them have the outsize marketing presence in other media that they do in prerecorded audio—they’re podcast famous.

What promise do these companies see in buying these ads? And, as podcasting is poised to scale up in audience size and investigative ambition, will larger companies with deeper pockets see the same things?

Representatives of the companies I spoke to for this article (the four companies named above, plus Scion) all told me similar stories about how their companies came to sponsor podcasts. Most of them started buying advertising slots four or five years ago, and directed their efforts toward shows with devoted followings of web developers and programmers. At that time, podcasts were thought to draw the entrepreneurial, early-adopter types that these dotcoms were chasing. More often than not, companies had a specialized reason for advertising on podcasts: They were usually tech-first companies looking for tech-savvy listeners.

Since then, podcasts have changed. Their audience has grown—17 percent of Americans age 13 and up (that’s almost 50 million people) have listened to a podcast in the past month, up from 9 percent in 2008—as they’ve gotten easier to download and as the accessibility of wi-fi and mobile data has multiplied. And podcasts themselves have gotten more post-production polish, following the leads of premier shows such as This American Life and Radiolab.

But even though podcasts themselves have changed, the list of regular podcast sponsors hasn’t. An unscientific but dogged analysis from FiveThirtyEight—which enlisted an intern to speed-listen through the latest episode of each of the top 100 iTunes podcasts in two days—confirms this. Based on that sample, most podcast ads were purchased by companies that bring on new customers and sell products through the Internet, with Squarespace, Stamps.com, and Audible leading the pack in terms of ads bought.

That’s quite different from the list of the top radio advertisers, which includes Home Depot, T-Mobile, and Geico. (Geico alone is estimated to spend more money on radio ads every year than all companies spend on podcast advertising combined.) Advertising on the most popular podcasts usually costs between $25 and $40 for every thousand listeners, which is about two to three times what it costs to advertise on terrestrial radio.

Historically, the typical dotcom that has advertised on a podcast has been trying to get listeners to take action by placing an order. That’s why advertising segments on podcasts include promotional codes: When you visit, for example, squarespace.com/american after This American Life tells you to, Squarespace can see where its new users are coming from. Besides this rudimentary way of tracking customers, which is an old method that wasn’t devised with podcasts in mind, there’s no uniquely powerful, podcast-specific way to measure an ad’s impact.

Perhaps that’s why the prevailing podcast marketing strategy is beginning to change. Instead of pursuing signups and orders, companies—especially larger ones—are increasingly hoping that podcast advertisements create positive associations for their brand. “We select a property like This American Life not because we expect it to increase sales the next day, but because … we know our target values the content,” says Nancy Hubbell, the communications manager for Scion. Some advertisers trawl Facebook and Twitter to see how their ads are being received.

The companies that, like Scion, advertise on podcasts to build their brand are well aware of how podcasts and their hosts make listeners feel. “People tend to have warmer feelings about advertisers on podcasts than other media, and they tend to remember us a lot more than on other media,” says Mark DiCristina, the director of marketing at Mailchimp. There is an intimacy to having a nonthreatening voice piped directly into listeners’ ears, and advertisers bank on that.

After the breakaway success of Serial, an offshoot of This American Life estimated to have brought in upwards of one million listeners in its first season, marketers have been trying to figure out what their podcast strategy is, or if they need one. One employee at Midroll, a middleman company that connects podcasts and advertisers, told Marketplace that he’d like the medium to bring in the sorts of sponsors seen on primetime TV—purveyors of movies, cars, and clothes.

“I think it would make sense for larger companies, although selfishly, I would like for them to stay away, because I enjoy being a big fish in the pond,” says DiCristina. “I can't imagine,” he continues, “especially for larger brands, that there's going to be much advertising interest in shows other than the ones that are really big and impactful, like Serial and similar shows."

There may also be some institutional inertia working against the inclusion of big brands. Many of the top podcasts are the products of public radio, which is used to supporting itself through pledge drives and foundation grants. That said, This American Life’s Ira Glass recently proclaimed to potential advertisers that “public radio is ready for capitalism.”

Many media writers have mused over whether high-quality podcasts in the vein of Serial can scale up, but the subtext of a good deal of the writing about the question is that they will, and should. But that thinking—the idea that podcasting would be better off bigger—might be led by journalists’ disproportionate love for the form. (Squarespace’s Ryan Stansky has said as much.)

The truth is that for now, the supply of podcast advertising slots is far outstripping demand. In FiveThirtyEight’s sample, more than a third of the shows had no ads, and the median number of ads that the others had was two, out of a standard six. If premier podcasts can keep charging the same rates for ads, they might not need the massive marketing budgets of larger advertisers.

Still, there are signs that bigger companies will come around. “Now, we’re seeing lots more interest from established brand advertisers who see that podcasting is the ultimate narrative format—a great way to tell their story to an engaged audience,” says Matt Lieber, a co-founder of the podcast network Gimlet Media. His company is a good example: The second season of its most popular show, StartUp, is sponsored by Ford.

StartUp’s sponsorship is an indication that other big companies might see something to be gained from podcast advertising in general. But it could also just be an indication of how powerful a single audio personality is—Gimlet co-founder Alex Blumberg’s personal stamp on each of the company’s shows has been instrumental to their success. Both could be the case, and that’s why predicting the Future of Podcasting is as fraught as untangling a set of earbuds.

As that future plays out, even the medium’s smaller logistical details have yet to be perfected. Complicating things for larger, brand-oriented sponsors is that ads aren’t always listened to—users can easily skip ahead in recordings, over the advertisements. That’s what I do, and while no one in the industry appeared to be concerned about this, it might be quite common:  Two of the marketing directors I spoke to confessed that, occasionally, they do the very same thing.