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Scaling the Host-Read Ad

At times, the discourse around podcast advertising can feel like it’s presenting the future as a coin flip between two maximal outcomes.

On one side, you have a view towards the preservation of the historical status quo, committing to the black box totality of artisanal host-read ads that may be ideologically pure but potentially limited in the value it can generate for the entirety of podcasting’s creative class. And on the other side, you have a vision of a fully programmatic future, one that ostensibly opens podcasting up to more digital media dollars but nonetheless raises the spectre of a dystopia filled with obnoxious ads that scream “BRANDS BRANDS BRANDS” into your eardrums every few minutes.

Of course, binaries are rarely true, and there’s always the possibility of a third way. (And fourth, and fifth). But the thing about alternatives is that they need to be articulated. More importantly, they need to be advocated for.

Which is why I’m paying some attention to something called Gumball, a new podcast advertising marketplace that was launched last week by Headgum, the Los Angeles-based comedy podcast network. In a nutshell, Gumball is an attempt to articulate (and structurally advocate for) a future where the fundamental value of host-read ad, podcasting’s long-time edge in advertising, isn’t only preserved and protected, but modernized and emboldened.

The fundamental intent behind Gumball, the Headgum team tells me, is to build something that improves the process of buying and selling host-read ads, the current version of which they describe “archaic and outdated.” The typical sales process, they argue, places too much power in the hands of the mediating sales agency. This is by virtue of the fact that the creator’s side often doesn’t have the capacity to handle the sales process themselves, and the agency side often has dominant control over the flow of the sales information. As such, the argument continues, one of the less desirable outcomes that pops up the agency side is a tendency and bias to overemphasize the sales focus on the biggest shows, which isn’t just to the detriment of other shows within a sales portfolio, but also may just be an ineffective and inefficient way to engage in the sales process to begin with.

With Gumball — structured as a self-serve advertising marketplace platform for podcasters and advertisers — the core premise is to deliver a sales environment that increases efficiency and transparency by removing the mediator from the process.

“The idea is to try and take out as much of the bias possible and to give everyone a better shot of displaying and pitching themselves,” said Marty Michael, one of Headgum’s co-founders, when we spoke over the phone last week. “We’re building something to help connect podcasters and advertisers in an ecosystem that allowed them to interact with each other without the need for a sales team.”

The principal idea being that podcasters, particularly those operating independently, wouldn’t have to pitch themselves to a network or a sales rep in order to potentially get in front of advertisers, because they would be able to present themselves to advertisers directly within the environment of the Gumball platform. (They would, however, still have to write decent copy that would catch the eye of potential advertisers browsing the platform for suitable inventory, which in and of itself is a filtering talent.) I’m told that audience targeting is not part of the platform’s design, which means that buyers would have to hand-pick their audience at the show level, basing their decision on broad demographic assumptions and content categories.

The network has been testing the platform internally over the past year, using it to facilitate ad sales throughout its entire portfolio, and the press release associated with the launch announcement listed out a number of its claimed findings. Among them: network revenue growth by about 55% year-over-year, the delivery of over 4000 host-read ads for over 300 brands, and projection to double platform revenue by the end of next year. The release also lists the brands working with the platform, but for reference, they include Squarespace, Warby Parker, ZipRecruiter, Everlane, CBS, and Netflix.

When we spoke last week, Michael disclosed some additional data points, including the claim that the platform helped reduce the need for make-goods — ad units given away to advertisers for free to accommodate for mistakes and campaign underperformance — by about 70%. He also claimed that the platform effectively shortened the time that goes into managing the sales process by about 80%. Which is significant, he noted, because the increased efficiency has apparently allowed the network to bring more podcasts into the fold than they would have been able to in the past, because the self-serve nature of the platform means that they’re able to support new shows without needing to hire additional sales and support staff.

More importantly, though, he claimed that the platform’s facilitation of a more transparent sales process resulted in more engagement by podcasters, because they get to be directly involved in the buying and selling, plus they get to see the revenue flow in real time.

Because Gumball is a marketplace platform, the business model is predicated on some participation of the revenue share. I’m told that the Gumball team is still working out the exact rate structure, which will be variable according to size. Also worth noting: podcasters interested in signing up for the marketplace would have to go through some sort of vetting process. When I asked if there were any baseline numbers for audience size to qualify for the platform, they were soft on providing a hard number, but seemed responsive when I raised theoretical sizes within the 5000 average download per episode range.

At this point, I would be remiss if I didn’t bring up the risk associated with platforms in general. Headgum’s pitch with Gumball is chiefly structured around the idea of taking power away from sales agencies acting as mediators, but the end result of a successful Gumball push is one that centralizes the power in the platform. Which, ultimately, may well end up being a coin flip of its own, depending on the array of choices the Gumball leadership will make about priorities and values as they navigate the future of podcast advertising. (Hypothetically speaking, there’s nothing stopping the company from adopting targeting or non-host-read-ads into the platform after a while, perhaps when facing a potential industry environment that’s, say, leaning heavy on programmatic radio-style ads, or something like that.)

But that’s the future, and this is the present, and in this present, the Headgum/Gumball team is positioning themselves as the advocates for the host-read ad. “Everyone’s talking about trying to force a round peg into a square hole —  to take what exists in digital and make it into something that’s viable in podcasting,” said Michael. “It makes me want to, like, scream, because we’re not either of those holes. We’re a triangle hole, you know? Like, we get to pave our own path. Podcasting is its own thing. It doesn’t have to be something else.”

Awkward metaphorizing, but the point is taken.

Side note: The State of the Podcast Network. One of the secondary storylines that interests me about this business of Headgum, a somewhat traditionally-structured podcast network, building out a technology play in the form of Gumball, is the indirect questions it raises about the viability of podcast networks in the modern age. Can you be a podcast network in 2019 without having to diversify your business model in non-network directions, like building out a technology arm?

Michael seems to think so. “It’s probably a little more difficult to get into the network side of the business today because there’s a lot more people in this space than there was four years ago, but I think there’s still room for networks” he said. “There will always be shows who need production and distribution support, and there’s always going to be more artists and talent and creators coming into the podcast who want the support of a network and a staff.”