The format may be in the midst of a 'perfect storm' of innovation, but advertisers are just beginning to test the waters.
Apple's integration of podcasting into its iTunes software has propelled the grassroots movement into the mainstream, but marketers say there are challenges to overcome before ad dollars begin pouring into podcasters' pockets.
Among those challenges are finding ways of measuring listening and of efficiently buying ads on a medium that has so far been made up of small, fragmented audiences.
"It's very early days. The first step in any commercialized relationship is for the content producer and advertiser to have an agreement on the reach of that particular broadcast. You need to be able to figure out how many people are getting the message," said Rick Klau, VP of business development at FeedBurner.
Since podcasting uses RSS feeds for distribution -- the same mechanism popularized by blogs -- FeedBurner and other RSS-centric technology companies are at the forefront of helping podcasters build the format into a monetizable business. FeedBurner's technology measures the number of people who are subscribed to a blog's feed, reading the content of a post, or clicking through on any links. It is applying the same technology to podcasts.
"We think that's the foundation on which any future advertising discussions will be based," Klau said.
The difficulty in tracking podcasts beyond the number of downloads lies in the portability of the files. Because the player software isn't connected to the Internet, the marketer loses track of the file when it leaves the computer. That's why some podcast advertisers are turning to techniques used for traditional media like radio, such as custom 800 numbers or offer codes, said Bill Flitter, CMO of Pheedo.
"At this point, advertisers are happy with the measurement of downloads, since it's such a new medium," Flitter said. "What's important is for the advertiser to understand the demographic of the listeners to be sure it's a good fit."
Along with its blog advertising network, Pheedo has begun offering a podcast ad network. It currently offers ads on about 30 podcasts, and has run campaigns for six advertisers. While the numbers are still small, Flitter feels there is still value to be found in advertising in the medium.
"It's micro-content, with a small group of very loyal fans," he said. "It shouldn't be ignored -- there's a lot of potential in this. As audiences get more fragmented, advertisers are going to need tools to reach them."
Some in the industry think there's already enough value in the medium to make it worthwhile for advertisers. "For strategic marketers, there's always an ROI element," said John Furrier, founder of Podtech.net and host of the Infotech podcast series. "Marketers want to know the basics -- who's viewing the page, who's downloading the file. They can measure the effects on their end."
Better ROI calculations won't be possible until the different systems involved are integrated, he said, but this first phase is good enough for some marketers to get started. Furrier's own podcasts have been sponsored by Barracuda Networks and Audioblog.com for several months. The second phase may also come sooner than expected, with heavyweights like Apple and Yahoo each making moves that should boost podcasting's viability as an advertising medium.
"We're in a perfect storm for innovation in consumer, technology and business theaters," Furrier said. "People are consuming podcasts in growing numbers. RSS as a delivery technology is viable. The costs for businesses to make and distribute podcasts is reduced."
If there was any doubt to the swift arrival of ads in podcasts, one need look no further than Apple itself: "Podcasts are going to remain free, but I do think we may start to see some advertising tagged onto them in the coming months," Apple CEO Steve Jobs told the ABC News Shuffle podcast last week.
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Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.
Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.
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