6 min read
Opinions expressed by Entrepreneur contributors are their own.
The global podcasting market had an estimated value of $9.28 billion US in 2019, according to Grand View Research, with an expected average annual growth rate of 27.5% through 2027. There are approximately two million active podcasts as of this story’s publishing date, comprising more than 48 million episodes (the latter figure almost four times the amount from 2018). Accelerated growth in the podcasting space is and will be the continuing result of improved bandwidth and connectivity of smartphones and digital assistants.
The audio streaming giant Spotify partly credited the popularity of podcasts for its remarkable 24% jump in subscribers during the final quarter of 2020, which also helped boost advertising income by 29%. A doubling of its podcast listeners validates Spotify’s decision to invest heavily in talented content generators, as well as its shift into markets beyond music; with competition from Apple Music and Amazon Music, the company recognized the need to venture into broader sectors.
Joe Rogan, for example, one of the world’s most successful podcasters, signed a multi-year and exclusive deal with Spotify that’s worth a reported $100 million US. Since arriving on the platform in September of 2020, it became the company’s number-one podcast in 17 territories after only six months. Such a pricey deal is rare for the industry, of course, one typically built on open principles rather than exclusivity, but the act of spending a vast amount on a medium that is not core business was telling — a significant shift in Spotify’s strategy, but necessary for its growth.
Additionally, Spotify’s 2020 acquisition of the podcast tech company Megaphone — with its emphases on podcast hosting, analytics and monetization technology — means the parent company can now make streaming ad insertion (SAI) systems available to third-publishers hosting their content on Megaphone’s platform. Real-time ads can now target specific users, unlike other platforms that merely swap ads out with limited targeting ability. In short, creators will be able to monetize their podcasts more efficiently, and give Spotify the chance to be part of a broader market for advertising.
Related: Entrepreneur’s Roster of Podcasts
What is Spotify’s podcast strategy, and how is it enabling growth?
During a Spotify earnings call, company CEO Daniel Ek commented that the focus of its podcast strategy to date has been to grow listenership among existing users and maximize value from the existing user base, in part by diversifying what they are listening to. This strategy has two core effects on the business model.
1. Audiences are better engaged, allowing Spotify to generate opportunities to monetize the user base through targeted advertising (hence the Megaphone acquisition) and produce an uplift in premium subscriptions.
2. Revenue is diversified to high-margin podcast activity. The company does not have to pay a percentage of income to music labels; therefore, it can leverage fixed costs.
Exclusive deals such as Rogan’s are being put in place to bring listeners from other platforms to Spotify amidst growing competition. The company is also ramping up in-house production to make more efficient use of budgets. In addition, its existing recommendation engine for music streaming can be applied to podcasts, putting them in a prime position before the inevitable competition comes from Amazon, Apple and Google.
What are the benefits of this strategy?
There are plenty of online guides that will help you start a podcast. Anyone can do it, but, as readers might imagine, few are successful. If you listen to Joe Rogan and read his backstory, his remarkable career reinvent was regarded by the show host as a hobby that just happened to become a hit, but the truth is that there was multidimensional work involved. Rogan created quality content — principally interviews with famous or otherwise notable guests — that people come back for. The show’s growth was organic, and without any paid marketing. If others can engage audiences with a similarly unique brand of content and style, it will also likely lead to growth and revenue.
In 2021, 80 million Americans reported being weekly podcast listeners, according to the content marketing consulting and social media strategy firm, Convince & Convert. That means there are more podcast listeners than there are Netflix account owners (69 million) in the United States. The statistics point to a demonstrable shift from video to audio media, with podcast fans listening to an average of eight shows per week. Furthermore, episodes from the hosting, monetization and growth support company Acast boasted an average listening time of 28 minutes. Few other media channels can boast such engagement.
Though successful casts certainly don’t have to be lengthy. 2 Minutes of Zen, for example, produced by the toothpaste company Zendium (with Unilever as parent company), provides simple “hacks” listeners can apply in order foster a healthier mind and body. A suggested product therein might be Zendium toothpaste — the idea to both engage audiences and connect them with a product while rethinking an activity typically regarded as dull.
Let’s examine Spotify’s model to find what lessons can be learned:
1. They are acquiring more listeners (customers) by positioning podcast hosts/guests as experts in the field, creating a community and discussing current and relevant topics, just as Joe Rogan does.
2. Using the podcast to grow other mediums. In Spotify’s case, the aim was to bring in music streamers through exclusive deals.
3. Growing a brand name with guest interviews, sponsorships from other companies or becoming a guest on other podcasts.
4. Converting a listener into a customer, such as with Zendium — the aim to promote products with a call to action as part of the podcast.
5. Internal company updates can be done via audio podcasts, uploaded to a company server or the cloud for employees to listen to at their leisure. They will help speed up engagement within the workplace for faster actions and higher performance metrics for growth.
For listeners, audio podcasts are easy to digest, as they can be listened to while having a shower, going for a run or dozens of other daily tasks. Podcasts can also be available within hours after recording begins, almost instantly promoting content to a worldwide audience, with loyal listeners quickly becoming customers if you create a message that resonates.
Why small businesses need podcasting
The two-plus-million available podcast number is additionally striking when compared to the more than 600 million blogs. This means, in part, that podcasting is still relatively low-hanging fruit to pluck as a business growth strategy. Companies who start their own now still have the opportunity to become a pioneer within an industry niche. Furthermore, given that Google research shows that consumers need to consume seven hours of content before making a purchase decision, the average listening duration mentioned above can be a particularly helpful component of content marketing.
Podcasts are here to stay, and it’s time to recognize them as a valuable internal and external business growth strategy.