Podcast companies are using new tech to make more money from host-read ads, but some worry about overwhelming their most loyal listeners

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• As the podcast industry heats up, advertisers look increasingly toward audio to promote brands and sell products.
• Avid podcast listeners are sought after because they engage with ads and take them into consideration when purchasing, according to a study conducted by Edison Research and podcast network PodcastOne.
• Ads read by podcasts hosts are most successful in connecting brands with listeners, several industry executives said, but some in the space worry about the consequences of increased ad loads.
• Visit Business Insider's homepage for more stories.

Podcast power users hear tons of ads, but they aren't overwhelmed yet, according to a study from Edison Research and the PodcastOne network.

The research found 70% of power users - those who listen for five or more hours a week - considered buying a new product or service after hearing about it on a podcast. 44% said they had a more positive opinion of a company if it was mentioned in a podcast they liked.

Analytics from podcast host companies like Apple also suggest ad engagement is strong, podcast executives told Business Insider. The average ad skip rate for a podcast is about 10% to 12%, according to iHeartPodcast Network President Conal Byrne.

Listeners trust the hosts of their favorite shows and are interested in what they have to say, even if a host is promoting a brand or product. Many podcast advertisers opt to have hosts read their ads for this reason. But traditional host-read ads can also limit the ability to target specific users, or monetize a back catalog of episodes - issues that some companies are trying to tackle with new tech as the podcasting industry grows.

Host-read ads work best, industry insiders say

The practice of hosts personally reading ads on their shows has becoming increasingly common.

Norman Pattiz, the founder and CEO of PodcastOne and a member of the National Radio Hall of Fame, estimated that over of 70% of the ads on shows in his network are host-read.

Other podcast companies have adopted host-read-only advertising models. The Ramble podcast network, a joint venture between podcast company Cadence13 and United Talent Agency that specializes in influencer podcasts, is one such company. All Ramble hosts read their own ads, which raises the company's cost per impression, said Cadence13 Chief Content Officer Chris Corcoran.

"These hosts are stars, and if the stars are voicing something for a big client, that's a real differentiator for advertising across any medium," Corcoran said.

Podcasting companies are looking to automation to make their ads more efficient

As host-read ads have surged, some podcast companies are looking to automate parts of the process.

Headgum, a comedy podcast network, recently launched an automated podcast ad platform called Gumball designed exclusively for selling host reads. The idea is to cut down the need for a dedicated sales team to sell those ad slots. A typical ad on the platform sells for about $2,000 to $5,000 depending on the size of the podcast and its audience, said Gumball co-founder Marty Michael.

Headgum has tested the platform internally over the past year and found it helped grow revenue by 55% year-over-year by connecting hosts with audio ad leaders like Casper, Hello Fresh, Squarespace, and Warby Parker, the company said.

While Gumball automates the ad sales process in particular, the podcast industry is also automating the placement of ads into episodes after they're sold.

Dynamic insertion of podcast ads has been gaining steam for the past few years and became widespread this year, Corcoran said. The process allows podcasters to change and swap the ads in their audio files with new ones as opposed to baking ads in permanently, opening doors for selling additional ads into back catalogs.

Some worry of ad oversaturation, but podcasts aren't there yet

As automated ad sales become more popular in podcasting, some worry this could lead to oversaturation, according to The Wall Street Journal.

But podcasts listeners have not yet reached a point where they feel overwhelmed with ads, according to Edison and PodcastOne, at least compared to other mediums.

Less than 25% of super listeners said there are too many ads in podcasts, whereas 62% said the ad load in TV is too heavy.

But 49% of super listeners said there are more ads in podcasts this year than last, and Pattiz warned fellow industry leaders against adding more commercials as podcasting heads toward becoming a billion-dollar industry, which some predict will be the case in a year or two.

"The minute you start doing that, then you start getting rid of one of the main things that makes a podcast popular beyond its content, which is that it doesn't have a lot of commercials," Pattiz said.

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