“The treacherous future for terrestrial radio.” That’s the headline Axios ran with the news of iHeartMedia officially filing for bankruptcy last week. It would be weird for me to aggregate an Axios article, which are designed to be super skimmable to begin with, but I do want to highlight the fundamental tension that makes this “terrestrial radio in trouble” thread particularly interesting to me: on the one hand, you have broadcast radio giants grappling with growth issues and long-term uncertainties in the broadcast advertising model, and on the other hand, you have the standing fact that AM/FM radio listening remains extremely prevalent among American adults.
(Interestingly enough, I often hear the latter factoid offered up a bunch as push-back against any optimism around podcasting. “On-demand audio still has a long way to prove itself” is the implication, along with the sense that “we’re not sure what’s going to happen with this podcast thing, but that can fall apart, while broadcast radio is, has always been, and will always continue to be the status quo.”)
That gap is telling to me. I must admit that I often have trouble wrapping my head around the story of broadcast radio, largely because I think there’s too much of a conflation between the long-term health of a medium and the long-term health of certain companies that dominate the medium. Of course, there is a problem when the two things are synonymous; in this instance, this narrative could well be unpacked as a story about the specific ineffectiveness iHeartMedia (and Cumulus) to innovate, improve, and/or redefine the broadcast radio advertising model over a more general ineffectiveness of the broadcast radio advertising business model.
Anyway, far from me being the person who’d go out and defend broadcast in this day and age. But I suppose my analytical allegiances lie more within the gap between opportunity and execution; I just think that one should never count out a space just because its current guard has withered away.
Risk and Diversification. Stumbled onto this blog post from Grant Durando, the podcast and emerging media supervisor at the media agency Oxford Road, who thinks out loud about the current (concentrated) spread of podcast advertising buys and the potential risks that brings to the space.
Here’s the money:
Among the total paid spots that ran everywhere in the podcast universe last week, a majority of them were shared between those top 5 advertisers, whatever the reason. It is likely that a majority of the spend in the space is also made up of those five advertisers. Therefore, not only are networks not diversified in terms of revenue generating talent, but they are also not diversified in revenue from different advertisers.
There isn’t a problem if that status quo continues. The big five maintain their positions, talent contracts get ironed out, and the ecosystem thrives, or at least survives. There is a problem if and when something happens with the consolidated group of advertisers. If, in a landscape where 10-30% of a given network is driven by two advertisers (at 5-15% each), and if in a downturn, those advertisers run out of VC funding, have poor IPO performance, or cut their podcast spend for whatever reason, then that marketplace takes a 10-30% immediate drop.
It’s nothing that we don’t particularly know already, but it is certainly interesting to see the dynamic spelt out publicly in one place — by a shop that mediates podcast advertising buys, no less.
ICYMI: Pandora acquires AdsWizz, the digital audio advertising firm that’s been doing some business within the podcast space. Its client base includes Cox Media Group, iHeartRadio, TuneIn, Entercom, Omnicom Media Group, Spotify, Deezer, PodcastOne, and GroupM, among others, as pointed out in the TechCrunch write-up. Also: National Public Radio, with which it built out a podcast exchange last year, as AdExchanger highlighted.
I’ve previously dedicated some real estate to sketching out a potential future in which music streaming platforms get more involved in podcasting. Something I haven’t quite grappled with or name-checked enough yet: how those platforms will impact podcast advertising. Watch for the programmatic.
An extra read: Not directly podcast-related, but it’s a well-reported story that’s germane to our broader interests: The Verge’s Megan Farokhmanesh explored the curious case of Telltale Games, the videogame publisher behind story-driven (and IP-driven) adventure games like The Walking Dead that ended up pushing its best talent away. The story turns out to be an interesting case study of what can happen when a creative content studio becomes consumed by the pressures that come with a certain kind of venture capital funding and expectation. That’s how I read it, anyway — you could easily see this as a story about breakdowns in leadership. The two things interact, of course.