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Making Money Out of Audio
Google's Ad Manager Unlocks New Opportunities
All content businesses have seen huge changes over the last ten years. Much of this is driven by a combination of the advertising market and changing consumer behaviour. Radio and audio is no different.
In the radio market, for thirty-odd years, the revenue has been split between local and national advertising. If you’re a station in Weymouth, you’ll have your own sales team who will make calls and knock on doors to tell potential customers the benefits of advertising on your station. Aware that national advertisers will also want to advertise on your station, but knowing they don’t really have the ability to negotiate deals with over 100 radio stations, you delegate some space on your station to a national sales house.
You know they take a cut and they have to offer it cheaper nationally than you can get locally, but if you have inventory to spare, it’s generally seen as ‘free money’.
In radio, the national buying has been surprisingly hi-tech. In 2002 the industry set up J-ET, programmatic software, very ahead of its time, that links together audience data, stations and agencies, making it easier for campaigns to be bought across multiple stations relatively automatically.
The rise of the national sales side, and the efficiency of it, was what led to the consolidation of much of the industry. For Global and Bauer specifically this meant that they could offer up lots of inventory to partners and get a guaranteed spend by giving them a good deal. This squeezed the smaller operators who saw their national revenue start to decline as the big groups were able to offer listeners everywhere and agencies didn’t need to scoop up that station in Weymouth to fill the gap.
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What was essential to radio’s early national success was these systems that combined local and national buying and then could schedule a combination of the right ads, for the right people, in the right places.
The physical ad break didn’t care whether the ad that was played out was local or national. It was the software (or a person) who would work out what the best mix was to maximise the revenue.
In the digital world, when you think about ‘display’ adverts - for example, banners or video pre-rolls - it works in the same way. You generally use a system like Google AdManager, upload some campaigns that you’ve sold yourself (usually for a premium) and then you can backfill spare spaces with remnant inventory. This might be from a network that you’re part of, something like Google’s AdSense or even just house ads, promoting your own things.
For a publisher, it gives you a lot of flexibility. If you’re the right size, you can make your inventory available to lots of different people who can bid on your space. It doesn’t stop you selling direct, but suddenly you’ve got more options.
In the digital audio world, the concept is similar. Your output could consist of streamed radio, an ad-supported music service, or audio on demand like podcasts - and you need ways to monetise that.
Just like the other platforms, you may sell advertising yourself, or you may allow others to sell some of it for you.
The dream for all content creators is that you just make the stuff, whilst the magic money fairy waves her magic wand and the cash just drops into your bank account. In some ways, that’s the pitch the vital digital future promises.
But it’s difficult to play in this world properly unless you’ve got scale. The true breadth of opportunities arise when you have control over your ads and flexibility over how they’re sold.
This requires two things - an ad traffick-ing system to manage and schedule the ads, and the ability to get on advertisers schedules - the list of publishers who they want to advertise with.
You can do all of this yourself, but it requires significant investment in large enterprise systems from people like Triton or Adswizz and then you need relationships, or expertise to get the programmatic systems working for you.
In the podcast space, companies like Acast, Audioboom and DAX from Global offer great services, but if you use them, your flexibility to work in a more bespoke fashion is reduced. It’s not really surprising - they’ve invested in infrastructure and systems that they give to you for free, and their model works by offering scale to advertisers. For that they’ll take, generally, between 25% and 50% of the revenue.
Google have an ad-trafficking system called Google AdManager, loads of people use it, and it’s free to deploy. It’s been used by thousands of publishers to run display campaigns for banners and video, but they’ve just announced it’s going to do audio too. They’re integrating audio campaigns into their platform, but have also hooked it up to the big audio programmatic networks. So, you can schedule your own audio ads, and take other people’s too.
TuneIn and Spotify are using it to traffic their audio ads already, and it’s now open to most Google AdManager customers.
At the moment it’s good for pre-rolls, and if you have your own stream tech, you can hook up the VAST-compatible ads. They’ve also said that integration into podcasts are coming, but aren’t quite there yet.
Taken together this is a great start, though not entirely an end-to-end solution. The future that it’s pointing at though, is a brighter one. Democratising access to Ad Networks and making ad scheduling software off-the-self suddenly allows growing audio businesses the opportunities only usually afforded to big operations.
I think it’s also great that how you schedule campaigns and how they’re bought can be separated. As a publisher I don’t necessarily want to be locked into your whole stack of services. I might want to do a deal with you because you’re great at selling campaigns, but I don’t want to be stuck using your systems and reducing my flexibility on how I monetise my audio.
If, for example, I’m a newspaper publisher with some podcasts, I may not have the expertise to sell hundreds of podcast campaigns, but I do have some of the clients that want to be involved with my podcasts. I don’t want to be locked into a deal with a brilliant podcast seller that makes it difficult to sell my own ads. Systems like Google’s mean that I should be able to do both - sell my own ads, and integrate with other networks.
The net result should be a win-win. All the companies in the value chain get to concentrate on what they’re good at, and the opportunities come to those with great audio and great audiences.