Netflix to raise $2 billion in debt to fund more content spending

For the second time this year, Netflix is offering $2 billion in debt to fund its investment in content, including original programming, content acquisitions, investments, and more. The news was announced on Monday morning, and was followed by a slight dip in Netflix’s stock price.

The decision to increase its investment in content production follows Netflix’s well-received earnings beat last week, when it reported revenues of $5.24 billion versus the $5.25 billion expected, and EPS of $1.47 versus the $1.07 expected. Despite missing on subscriber numbers in Q3, Netflix’s stock quickly surged on the news.

However, the streaming service is not out of the woods just yet. It will soon face significant competition — especially among families with children — when Disney+ launches next month. Apple is also poised to launch Apple TV+, NBCU is bringing us Peacock, AT&T’s TimeWarner is debuting HBO Max, and Jeffrey Katzenberg is launching a mobile-only service called Quibi with big-name talent attached.

On their own, each of the new services wouldn’t be likely to unseat Netflix as a top streamer. But combined, they can chip away at Netflix’s user base if consumers decide to ditch and switch, instead of adding on yet another subscription.

On Netflix’s Q3 earnings call, Netflix CEO Reed Hastings even admitted that Disney is going to be “a great competitor.” However, he pointed out that all of the services — including Hulu, YouTube and Amazon Prime –have been competing more with linear TV than with each other.

That said, Netflix still needs to up its content game to keep customers subscribed. And that can be expensive.

“We don’t shy away from taking bold swings if we think the business impact will also be amazing. We don’t close every deal we chase and we don’t chase every deal on the table,” said Hastings, in Netflix’s Q3 letter to shareholders. He added that while not all Netflix’s projects work out, the large and growing subscriber base lets its experiment. And the size of its content budget — $10 billion on P&L spend and $15 billion in cash content spend — helps Netflix from getting too dependent on any single hit show.

The company also said its growing revenue base and expanding margins would allow it to fund more content spending internally, with cash flow freeing up further in 2020 and beyond.

In the meantime, however, Netflix is taking on debt.

In today’s announcement, Netflix says it intends to use the net proceeds from this offering “for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.”

Original Content podcast: ‘El Camino’ provides a quiet coda to ‘Breaking Bad’

When a TV show gets turned into a movie, it often represents a big change of pace, with a standalone plot, a bigger budget, all made for a bigger (or at least more casual) audience.

“El Camino: A Breaking Bad Story” — which premiered a week ago on Netflix —doesn’t take that approach at all.

Far from telling a new story or serving as jumping on-point for new viewers, “El Camino” functions more like a two-hour epilogue to the existing show. It appears to have been made exclusively for existing “Breaking Bad” fans who were wondering about what happened to Aaron Paul’s character Jessie Pinkman after the series finale.

As we acknowledge in the latest episode of the Original Content podcast, Jordan is the only regular OC host who’s actually seen the entirety of “Breaking Bad.” And she was reasonably satisfied with the film, feeling that it had some of the same strengths as “Breaking Bad” — though it didn’t quite capture the strong character development and elaborate plotting that made the series great.

Darrell, meanwhile, gets a chance to explain why he’s so resistant to “Breaking Bad,” and why nothing in “El Camino” changed his mind.

In addition to our review, we discuss Netflix’s latest earnings, in which which the streamer reported better-than-expected profits, despite still-sluggish subscriber growth in the United States.

You can listen in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

And if you want to skip ahead, here’s how the episode breaks down:

0:00 Intro
2:12 Netflix Q3 earnings
16:06 “El Camino” reviews (spoilers for “Breaking Bad” but not “El Camino”)
38:20 “El Camino” spoiler discussion

Netflix Q3 earnings exceed estimates, despite disappointing US subscriber growth

Netflix’s Q3 financial report has given the company’s stock a boost in after-hours trading, with profits significantly exceeding analyst expectations.

The streaming giant reported revenue of $5.24 billion revenue, up 31% year-over-year and more-or-less in line with predictions of $5.25 billion. More impressively, it reported GAAP earnings of $1.47 per share, compared to analyst estimates of $1.05 per share.

Subscriber growth, meanwhile, was a mixed bag. Netflix reported 500,000 paid net additions of in the United States, falling far short of its forecast of 800,000. Conversely, international growth exceeded expectations, with 6.3 million net adds compared to a forecast of 6.2 million.

U.S. subscriber growth looks particularly weak when you compare it to 2018 — Netflix has only seen 2.1 million net additions domestically in the first nine months of 2019, compared to 4.1 million in the same period of 2018. Netflix’s investor letter seems to blame this on price hikes earlier this year.

“Since our US price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower US membership growth,” the company says. “On a member base of more than 60m, very small movements in churn can have a meaningful impact on paid net adds.”

The company also noted that its average revenue per user is up 16.5% year-over-year in the US. (I assume it can thank to those same price hikes.)

Overall, Netflix said it now has more than 158 million members. It’s projecting 26.7 million net adds for the entirety of 2019, down from 28.6 million net adds last year.

“While we had previously expected 2019 paid net adds to be up year over year, our current forecast reflects several factors including less precision in our ability to forecast the impact of our Q4 content slate, which consists of several new big IP launches (as opposed to returning seasons), the minor elevated churn in response to some price changes, and new forthcoming competition,” Netflix says.

Netflix’s stock is up 7.6% in after-hours trading (as of 4:39pm Eastern).

However, those subscriber numbers are certainly going to provide more fuel to skeptics. For example, eMarketer analyst Eric Haggstrom said in a statement that “the fact that Netflix has shown disappointing growth without the new competition present, is a negative omen for Netflix in 2020 and beyond.”

The investor letter also includes an extended discussion of that competition, acknowledging the upcoming launch of Disney+ and Apple+ next month, and HBO Max and Peacock next year.

“Many are focused on the ‘streaming wars,’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade,” the letter says. It goes on to acknowledge that these upcoming launches will be “noisy” and could create “some modest headwind in our near-term growth,” but it adds, “In the long-term, though, we expect we’ll continue to grow nicely given the strength of our service and the large market opportunity.”

Updating

Original Content podcast: For better or for worse, ‘The Politician’ is absolutely bonkers

We all agree: “The Politician” is a crazy show that tries to do everything at once.

After all, why settle for a fast-talking satire about a high school election; a more serious treatment of wealth, illness and emotional turmoil; or a showcase for the musical talents of “Dear Evan Hansen” star Ben Platt? Instead, why not watch a show that tries to encompass all of that and more?

Still, the hosts of the Original Content podcast found themselves split on whether they actually liked it. Jordan and Darrell admitted that they were strangely compelled by the whole thing, but they ultimately found the mixture of gaudy production design, over-the-top melodrama and serious emotion to be exhausting.

Anthony, meanwhile, couldn’t defend the show’s treatment of weighty subjects like suicide, but he was still delighted by the rapid-fire dialogue and “The Politician”‘s apparent determination to entertain at all costs.

This is Ryan Murphy’s first production for Netflix — and since the “Glee” and “American Horror Story” creator signed a $300 million deal with the streaming service last year, the show is attracting extra scrutiny.

In this case, Murphy created the series with his “Glee” co-creators Brad Falchuk and Ian Brennan. Platt stars as Payton Hobart, the titular politician, with each season focusing on a different election in Payton’s career, starting with his run for high school president.

The show mines the gap between the grandness of Payton’s ambition and the triviality of the election for laughs, but that contrast also makes it hard to take Payton seriously at all. And while Jordan and Darrell admire the incredible cast (which also includes Jessica Lange, Gwyneth Paltrow and Bette Midler), they had a particularly hard time with the season finale, which they argue was little more than a trailer for season two.

You can listen in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

And if you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:37 Disrupt recap
9:30 “The Politician” review (mild spoilers)
31:14 “The Politician” spoiler discussion

As Sinai Ventures returns first fund, partner Jordan Fudge talks new LA focus

At age 27, Jordan Fudge is quietly making a splash in the VC world.

Fudge is the managing partner of Sinai Ventures, a multi-stage VC fund that manages $100 million and has more than 80 portfolio companies including Ro, Drivetime, Kapwing, and Luminary. His 2017 investment in Pinterest — a secondary shares deal from his prior firm that was rolled into Sinai when he spun out — will have returned the value of Sinai’s Fund I by itself once the lockup on shares expires next week.

Fudge and co-founder Eric Reiner, a Northwestern University classmate, hired staff in New York and San Francisco when Sinai launched in early 2018. Today, they’re centralizing the team in Los Angeles for its next fund, a bet on the rising momentum of the local startup ecosystem and their vision to be the city’s leading Series A and B firm.

Fudge and Reiner have intentionally stayed off the radar thus far, wanting to prove themselves first through a track record of investments.

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Jordan Fudge. Image via Sinai Ventures

A part-time film financier who also serves on the board of LGBT advocacy non-profit GLAAD, Fudge describes himself as an atypical VC firm founder, an edge he’s using to carve out his niche in a crowded VC landscape.

I spoke with Fudge to learn more about his strategy at Sinai and what led to him founding the firm. Here’s the transcript (edited for length and clarity):

Eric Peckham: Tell me the origin story here. How did Sinai Ventures get seeded?

Jordan Fudge: I was working for Eagle Advisors, a multi-billion dollar family office for one of the founders of SAP, focused on the tech sector across public markets, crypto, and eventually VC deals. Two years in, I pitched them on spinning out to focus on VC and they seeded Sinai with the private investments like Compass and Pinterest I had done already, plus a fresh fund to invest out of on my own. It was $100 million combined.

How Bongo, the ‘Netflix of Bangladesh’, won the local video streaming market with just $10M

Thousands of miles away from the U.S., where technology giants, cable networks, and studios are locked in an intense multi-billion dollar battle to court users to their video streaming services, a startup in Bangladesh has already won the local video streaming market.

And it did all of this in six years with just $10 million. And it’s also profitable.

Ahad Mohammad started Bongo in 2013. The on-demand video service began life as a channel on YouTube in 2014 before expanding as a standalone app to users a year later.

Of the 96 million people in Bangladesh who are online today, 75 million of them are subscribed to either Bongo’s YouTube channel or to its app, Mohammed said.

Bongo’s domination in Bangladesh is second to none in the nation. iFlix, which raised $50 million a few months ago to expand its presence in several Asian markets, and India’s Zee5 are among the players that Bongo competes with, though their market share remains tiny in comparison.

TechCrunch caught up with Mohammed to get an insight into the early days of building Bongo and what holds next for the “Netflix of Bangladesh” as it increasingly expands to international markets.

Stranger Things 4 takes Netflix’s hit retro sci-fi show beyond Hawkins

Stranger Things 4 got its first teaser today, courtesy of the official Stranger Things Twitter account. The Netflix series, which is in its fourth season (although the creators, brothers Matt and Ross Duffer, maintain that each instalment isn’t really a ‘season’ in the traditional TV sense, but rather more like a movie broken up across multiple episodes), is being renewed alongside an overall film and TV deal with a 9-figure value for the Duffers at Netflix.

Stranger Things manages a unique blend of sci-fi, horror, 1980s-era nostalgia and coming-of-age teen buddy comedy. It’s among the most successful of Netflix’s original content creations, by most accounts, and also one of the most critically-acclaimed. Details about this fourth series are scarce for now, but based on the teaser we can expect the action to move out of Hawkins, the sleepy town which has provided the backdrop for all of the action thus far (minus a very strange outing for main character Elle back in season two).

Judging strictly from this preview, we can also probably safely assume that a lot of the action will take place in the ‘Upside Down,’ the fictional dark mirror dimension where the series villain monsters are from. It’ll be interesting to see if Stranger Things 4 can spend a whole season in this realm, which seems to mostly be filled with moss, slime, dust and spores of some kind.

Original Content podcast: ‘Between Two Ferns: The Movie’ is fun but forgettable

“Between Two Ferns: The Movie” is based on the comically confrontational web interview series starring Zach Galifianakis. In fact, some of us assumed that the film might be nothing more than one interview after another.

The movie does indeed have plenty of celebrity interviews, but they’re connected by a loose narrative thread in which Galifianakis and his crew have been dispatched by their corporate overlord Will Ferrell to crisscross the country, trying to film 10 interviews in two weeks.

If that sounds like a pretty thin story for a feature-length film, you’re not wrong — as we discuss in the latest episode of the Original Content podcast. Galifianakis and the actors playing his crew make some inspired jokes, but they can’t entirely dodge the sense that they’re filling time between interviews.

As for the interviews themselves, it’s still a delight to see Galifianakis toss off one belittling question after another. However, it can get a little one-note when the interviewees are rarely asked to do anything more than sputter angrily — which may be why some of the interviews have been cut down to just one or two questions.

To be clear, we all enjoyed watching “Between Two Ferns: The Movie,” but the real highlight turned out to be the interview outtakes that play over the end credits, and the extended interviews that have been posted on YouTube.

In addition to reviewing the film, we also discuss the Emmy Awards, covering the winners we liked (“When They See Us”) and the ones we didn’t (“Bandersnatch”).

You can listen in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

If you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:31 “Terrace House” listener response
2:42 Emmy Awards discussion
16:55 “Between Two Ferns: The Movie” review (extremely mild spoilers)

Cracking the code on podcast advertising for customer acquisition

Of the various channels available to growth marketers, podcast is among the most misunderstood.

Brands like Dollar Shave Club, Squarespace, and ZipRecruiter have deployed podcast advertising for user acquisition for years, but it’s still a channel that flies under the radar. We have managed tens of millions of dollars in podcast ad spend for challenger brands and market leaders alike, and are eager to share some tricks of the trade.

If you want to test in a channel where early adopters are being rewarded with both attractive CAC and scale, here’s what you need to know:

  1. Podcast advertising is used very successfully as a direct-response channel with CAC on par with other consideration-stage activities. It is not just for awareness.
  2. Podcast reach is very good, reaching 51% of US audiences aged 12+ monthly.
  3. Ads read by hosts outperform canned “programmatic” ads.
  4. Tracking is harder than most digital channels and the cost to test the channel is higher than most digital channels.

Dive deeper on podcast ads and other growth marketing tips with Extra Crunch’s ongoing coverage of growth marketing, where Right Side Up was recently featured as a Verified Expert Growth Marketer. 

Who listens, who advertises, and why bother?

Podcast listeners are a sought after group – the audience trends towards educated, early adopters with a high household income. You can find this profile elsewhere, but what makes podcasts unique is that they are choosing to consume that particular content time and time again. The host becomes a trusted voice to deliver them not only interesting stories and banter, but information on companies as well.

Often podcast advertisers are newcomers or start-ups, and the podcast ad might be the first time the listener has heard about that company. Having the first touch with consumers be from a thorough, personal, and often funny host-read interaction is incredibly valuable and helps brands jump over the credibility hurdle. Compare that to an impersonal banner ad, and I’d choose a podcast ad every time. image2 1

Even though the term ‘podcast’ was coined in 2004, advertising in the medium has exploded in the last ~5 years. The IAB has been tracking podcast ad revenue since 2015, when the entire medium generated #105.7 million in ad sales. It recently released its third study of podcast ad revenue, which estimated the US market at $479 million in 2018, with growth accelerating to a projected  $1 billion+ by 2021.

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Andreesen Horowitz did a great investor profile on the space earlier this year, with a helpful rundown of the holistic ecosystem, from hosting mechanisms and platforms to the pace of podcast monetization.

Historically, the medium has been dominated by a mix of comedians doing their own thing, radio entities simulcasting sports shows, and otherwise popular shows that had a devoted niche following relative to other mediums. Most advertisers bought podcast ads as an extension of their other audio acquisition campaigns.

Podcasts go mainstream

Then Serial came along, in 2014, exploding into popularity and pop culture. They ran a MailChimp ad that had someone mispronouncing the name of the company as “MailKimp”, which was a funny inside joke for those in the know. Nina Cwik and David Raphael, co-founders of Public Media Marketing, explain the initial conversation around this now iconic spot.

“While discussing a launch sponsorship with sponsors there wasn’t a huge amount of interest in taking a risk on a new show even with the amazing This American Life provenance. MailChimp was committed to supporting Serial. The talented production team at Serial and This American Life created MailKimp and the sponsor was rewarded for believing in the show.”

Not only were they rewarded by being a launch sponsor of one of the most successful podcasts in history, but once Serial and the medium itself expanded, a loving impersonation of Serial host Sarah Koenig and the MailKimp joke eventually made its way into a Saturday Night Live skit. Serial also appealed to a female audience, helping to bring new listeners into the channel, and podcasters and advertisers followed.

Over the past 5 years, the space has diversified. We now see so many different shows with all flavors of true crime, news and politics takes that you don’t hear in the broader media picture, women talking to other women about literally everything, comedy and pop culture pods as diverse as Bodega Boys, Who? Weekly, and RuPaul: What’s the Tee with Michelle Visage, and a podcast to go with every reality and television show you can think of. There are too many shows to talk about; there are over 750,000 shows indexed by iTunes.

How to engage for growth advertising

So how do companies start testing in podcasts? And how do they do so successfully?

Start with a strong (but doable budget) and take your time

We advise companies to start with a test spend that you consider meaningful in the context of your other customer acquisition efforts. Initial tests in the channel that are properly diversified typically vary from $50,000 to $150,000 in media cost. If the idea of a testing budget in the high five figures makes you gasp, don’t rush it. If you under-invest, you run the risk of a false negative, i.e. you didn’t spend enough to validate performance, or a false positive; when you buy tiny shows, one or two sales may pay back. If you make media decisions at scale based on that data, you may find yourself in deep water. If the risk of testing a new channel and having a dip in your CAC is too great, we recommend you exhaust other channels, like Facebook, before jumping into the podcast space.

Podcast offers advertisers a low barrier to entry. Creative production is limited to producing copy points for hosts to use as they record their ad reads. However, it is quite manual relative to digital channels, and can take weeks to put into place. Most purchasing is done through a show’s sales representation or network, via calls and emails, and set in advance (sometimes way in advance depending on inventory levels). It entails RFPing multiple network partners, doing research and outreach to independent shows, gathering rates and evaluating content, and finally making decisions based on budget and inventory availability. We often describe this as the media puzzle – making sure that the ideal shows, with favorable pricing are available when you want them to be. This can take time and some back and forth with your network rep to set in stone, so give yourself room to plan ahead.

What’s the media landscape look like and how do you pick shows? 

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Image via Getty Images / venimo

We buy with a lot of direct shows, sales representation firms, and ad networks. We’re starting to see the beginnings of programmatic and exchange-based inventory become available, but it’s largely impression-based media, which isn’t yet a proven tactic that direct response-oriented advertisers can consistently use for customer acquisition. There are some managed service-like buying partners in the space, that work to varying degrees of efficiency for customer acquisition.

When it comes to choosing what types of shows to partner with, beyond budget and availability, it’s important to remember the obvious choice may not be the best one.

One of the most consistent, and pleasant, surprises in podcast advertising is how well shows that are seemingly unrelated to a product work well for customer acquisition. We’ve worked on products that had a primary target demographic of suburban moms, but guess what? Gamers want to stay at home and order snacks and food delivery, too; they have disposable income and are harder to reach via traditional channels.

If you’re advertising a product targeted to parents, you shouldn’t just test into parenting shows, you should also consider testing into shows with hosts who are parents, but have content not at all or tangentially related to parenting, like Your Mom’s House, with Tom Segura and Christina Pazsitzky. Sure, it’s a comedy podcast, and it’s NSFW (and hilarious). They’re also human parents who they do amazing reads, and their fans are legion.

Ryan Iyengar, CMO of HealthIQ, notes that “hosts with wildly different backgrounds were able to find a through-line to connect ad reads with their audiences, regardless of product line.” Of course, contextual advertising is worth consideration, and there are sometimes unique opportunities, but most successful shows aren’t a bullseye for content.

We’ve also seen the inverse, on contextual fit; food products can either do amazing or not well at all on food-related podcasts. If you have a food product with mass appeal, but one that (for example) many home cooks may already be familiar with, you may be better off doing just about any other popular genre of shows besides food.

Plus, these hosts are pros; they’ve been doing ad reads for everything from mattresses to meal kits for years. They know how to talk about your product in an engaging way.

Doug Hoggatt, the VP of Marketing at Betabrand, agrees, mentioning he would also coach new advertisers to “take the time to test across genres and hosts, you’ll be surprised at the results.” Iyengar is also the former VP of Marketing at ZipRecruiter; if you’ve ever heard a podcast, you may have heard the company advertised once or twice. He also notes, “[regardless of] content of the show, audiences can be interested in all sorts of topics, and are still potential customers. Yes, even hiring managers listen to comedy podcasts!”

Many business-to-business (B2B) advertisers do well in the channel, in part due to higher allowable CAC and high lifetime value (LTV). And the same point about show selection holds true for those audiences, as well. Visnick noted, “[HoneyBook] originally focused on testing industry-specific podcasts as those seemed to be the most natural way to target our prospective customers. We discovered that by diversifying our podcast mix into non-industry content we could still reach our target audience while also growing our reach and overall program performance.”

If we hear something that we think can help us at work, we’re amenable to that message, especially when it comes from our favorite host. Having an open mind to testing has helped so many advertisers unlock additional shows, and possible customers. You can take those insights back to other channels, too, and begin to integrate your campaigns and establish cross-channel frequency.

Pricing in the channel is unstable, and demand-based because inventory is finite; effective CPMs for host read, embedded mid-roll advertisements — by far, the most consistently performing ad unit for customer acquisition in the space — vary from $10 to $100. Yes, really.

Worrying too much about CPMs could mean that you’re leaving behind some of the best inventory in the space. So while it could make sense to cut higher CPM placements from a media plan, you want to be cautious. You could inadvertently cut out potential volume drivers or otherwise highly effective placements.

Allow for the host’s personality to shine through

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Image via Getty Images / TwilightShow

The listener is there for the hosts. They relate to them, laugh with them, or laugh at them. They come to expect a performance from them, and often that performance bleeds into the ad reads. Whether it’s a semi-NSFW jingle about MeUndies from Bill Burr, or Joe Rogan recommending his mind-blowing NatureBox snack combination, or Levar Burton delivering an oh-so soothing Calm read.

Alan Abdine, Senior Vice President of Business Development for Rooster Teeth, a network with geeky, gamer shows with a hint of irreverence, said “the best ads are the ads that are organic, natural, and originate from the voice of the show talent. When brands allow our hosts to be themselves, there are more opportunities for entertaining side stories and commentary related to the brand.”

He continues to say his “belief is that if an advertiser is willing to spend money to reach out audience, then let us be the experts on that audience and let us use our own voice to share their message and talking points!  They will always get better results in that scenario.”

There is a certain special trust that goes into podcast ads. And to allow hosts to be themselves while also being a positive brand advocate often mean striking a balance between scripting and giving space. The most commonly purchased ad unit for customer acquisition advertisers is a host-read, embedded, mid-roll advertisement, typically :60 in length, but many hosts go over.

Overly scripting the copy can lead to an ad sounding inauthentic and infringe on their creativity. Kate Spencer, the co-host of Forever 35, notes that “often there are a lot of required talking points to hit in a short amount of time. We’re always happy to oblige, but I think it takes away from the organic and conversational nature of the ad, which is what makes podcast advertising especially unique. ”

On the flip side, not scripting enough could lead to a disjointed read where the host is trying to piece value props together on the fly. Nick Freeman, Chief Revenue Officer at Cadence13, explains that “some hosts do like the perfectly written out :60 script, while others like bullets they can riff off of.” Because podcast campaign test across multiple shows and personalities, it’s best to find a starting point in your copy where hosts can be guided, but not stifled. Freeman says “that doesn’t necessarily mean trying to make jokes for comedy hosts, for example, so much as it’s giving the hosts who do well with it the freedom to ad-lib.”

And for those that want to get a little more creative, the space is primed for custom integrations. Recently DoorDash partnered with Rooster Teeth for an ad on a livestream in celebration of a new game their studios were releasing. Since there was a visual element, DoorDash and Rooster Teeth partnered on a creative spin to the ad.

Instead of the typical copy, food would be delivered to the group of hosts while recording. Grant Durando, Senior Marketing Consultant at Right Side Up, works with DoorDash on their podcast campaign and stewarded this unique partnership. “[Rooster Teeth] approached us with the opportunity to engage with the live stream in a deeper way than just a regular podcast ad. It was definitely an unorthodox integration, but exciting to be in front of the right audience for DoorDash, at scale, and in a meaningful, memorable way. Many conversations about chicken nuggets later (which I never thought would be part of my job), Rooster Teeth and Vicious Circle delivered a superb ad experience, [integrating] multiple brand mentions and actually making DoorDash a part of the content itself.”

Zack Boone, Senior Director of Sales at Rooster Teeth, added there is, “nothing better than having clients that understand how impactful utterly stupid things like this can be for a brand.” DoorDash “[offers] industry-leading selection to our customers,” said Micah Moreau, VP of Growth Marketing at DoorDash. “It was incredibly effective to bring the DoorDash experience to life with Rooster Teeth in a highly differentiated, yet relevant way.”

How do you measure response?

Ads almost always end in some sort of call to action, like use the show’s promo code to save money, or visit a URL to get a free trial of a product for listeners of the show. It’s a way for shows to get credit for their listeners taking some sort of action, usually a purchase, related to hearing the ad.

And it’s how advertisers can figure out if their ad investments are paying back, too. Along those lines, Hoggatt was happy to see “how direct response the channel could be. I was surprised at the lift in site visits and follow-on orders that correlate so closely to when our podcasts drop.” Consumers have been conditioned to listen for that call to action at the end of an advertisement so we can measure a direct response in the channel.

That isn’t to say podcast advertising should displace a highly effective channel like paid social or paid search in your paid marketing testing priorities. We often ask advertisers information about their overall CAC or CPA  from other paid marketing efforts like Facebook or Google advertising, and use that data to benchmark target CAC for podcast.

As a general rule of thumb, if you can’t make Facebook or Google work for customer acquisition at meaningful scale, think twice before you engage in testing podcasts at a scale meaningful to your business. But if you’re looking for demand generating channels, podcast is an excellent contender.

“The success we’ve seen from podcast advertising has proven that we can drive sales through paid media outside of “traditional” direct digital response campaigns,” said Visnick. “We’ve significantly grown our podcast budget every quarter since we started testing the channel and it’s now a core part of our overall acquisition strategy and an important part of our media mix.

Don’t under-account for breakage or indirect activity

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Image via Getty Images / Olivier Le Moal

Another challenge for advertisers that aren’t used to offline channels is managing indirect activity, also sometimes called breakage. It’s imperative to look at indirect activity to help triangulate response, as another way to get a false negative is to only look at direct response, i.e. direct redemptions of a promo code or sales from only users who visited the vanity URL.

A decent analog is like view-through conversions, but without the technology enablement. You can tell, via tracking, what actions site visitors have taken after exposure to ads on Facebook and Google, etc.

However, there isn’t a way for a consumer to tap or click on your podcast ad, so you don’t have a direct action correlated to ad download or exposure, nor can you track indirect activity (view-through) via pixels or other technology enablement. The aforementioned promo code/vanity URL combo is what generates that direct response.

To get around this breakage and triangulate a full response, advertisers commonly use a post-conversion attribution survey, colloquially referred to as a How Did You Hear About Us? or HDYHAU survey. This allows for a crude, but effective, translation of the impact that podcasts had on that user’s activity.

It helps you determine how much of the activity you’re capturing in paid search, for example, may have actually been driven by podcasts, streaming audio, or television. It’s self-reported data from users, sure, and it can feel a little shaky when you’re used to more precise digital measurement, but it’s how virtually every scaled advertiser in the channel has discovered a path to scale.

It also helps you determine benchmarks before you get into other channels, and can provide a solid look at multi-touch attribution if the survey is designed with best practices, and served to enough of the population to achieve stability.

Why can’t we use measurement techniques from other mediums?

We already talked about why, even though podcasts are digital audio, we can’t track conversions digitally (we know, it’s a little crazy). Unlike television, where you can use spot-based attribution, or radio, where you can achieve consistent ad exposure and but according to average quarter-hour (AQH) ratings, there’s a delay in both download of an episode and media consumption.

For advertisers, that means performance comes in over time, and it takes a minute to build reach and frequency (R/F). You may see very little activity for the first week or two of a campaign, and then as R/F builds and crescendos, you’ll see conversion activity catch up. That’s when you can start to get a solid picture of return on ad spend (ROAS); you should have structured your tests so you have a good sense of performance by the third or fourth drop with a show.

Looking at results sooner is possible but largely inadvisable. “Give it time,” says Dan Visnick, CMO at HoneyBook, “It can take a few weeks to see the impact from a single podcast, and months to build a strong portfolio.”

One of the biggest mistakes new advertisers in the channel make is getting a false positive, by testing into tiny shows that back out because 2 people bought their product, and then quickly scaling in the same genre only to find out that the content doesn’t scale.

False negatives are also common, when advertisers get cold feet in the first few weeks of an integration, and cancel shows after one ad insertion in a single episode. The channel requires diligence in testing, and if you have other business challenges to navigate, using digital growth channels can help iron out your messaging, landing pages, etc. before you launch offline channels.

Although you may have honed your messaging in other channels, you should expect to be flexible when it comes to podcast creative.

Opportunities to expand to other audio acquisition opportunities

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Image via Getty Images / Anastasiia_New

Positive signals in podcast campaigns can also indicate that other audio channels may be ripe for testing, which can help diversify your marketing mix and minimize the pressure on individuals channels. Hoggatt says his “success in podcast advertising proved that it is possible to invest in offline channels and find measurable success.”

SiriusXM and streaming platforms, whether pureplay like Pandora or Spotify, or aggregators like Westwood One and ESPN, are great next steps for advertisers who see the right signals in podcast. For SiriusXM, it’s a high household income audience that are used to paying for a subscription (any subscription model companies out there?), and streaming audiences are choosing to listen to their content, similarly to how podcast listeners choose their content. The podcast landscape is the perfect arena to play in to learn more about how your brand works in offline media and allows there to be a stepping stone into other mediums.

Be good stewards

We know that podcast advertising can have a powerful impact on the marketing mix for companies of all sizes. As more and more players get involved in the space, it benefits all involved, from advertisers, to networks, to marketers.

It’s rare to have an opportunity to participate in a nascent medium, and be good stewards of one of the last remaining mediums on earth with finite inventory and listeners who actually respond to ads. And along the way, we hope to change the way people think about traditional offline media channels, like how they can be held to high growth performance standards, and where they intersect with popular digital growth tactics like paid social.

You’ll have to get creative, but with some trust and patience, and adherence to best practices, advertisers can reap significant benefits and customer acquisition, at scale, from podcast advertising campaigns.

9 things growth marketers should do when getting started:

  • Create the team (and time!) needed to execute a campaign, whether in-house or via partnership with a subject matter expert like a consultancy or agency
  • Learn the language of podcast advertising, terms like download carry a lot of baggage and understanding them can impact your campaign’s performance
  • Budget your initial test(s) appropriately to avoid a false negative or positive result
  • Have an open mind on show selection; make sure you test across multiple genres and formats
  • Measure direct and indirect activity, to triangulate performance and business impact, and make optimizations and decisions on renewals
  • Support, don’t stifle, the personality of the show hosts
  • Get comfortable getting creative, and take time to onboard hosts
  • Keep an eye out for additional opportunities, not only in podcast, but in other audio channels as well
  • Be a good partner to shows, networks, and others in the space. It’s ours to nurture

Tesla V10.0 car software update adds Smart Summon, Netflix/YouTube, Spotify, karaoke and more

Tesla is rolling out a new software update that adds a slew of new features to its cars. These include the new ‘Smart Summon’ feature which will allow cars equipped with the optional $5,000 full-self driving package to automatically drive themselves from a parking spot to collect you in a parking spot.

This is one of the most advanced semi self-driving features that Tesla has yet released to the general public, and the company still says you should use it only in lots and when you have a clear view of your car. The company also notes that you’re ultimately responsible for the vehicle, so definitely be aware of what’s going on with the car and its surroundings if you’re planning to use this one – and you can stop the car remotely should you feel the need to. Smart Summon has been out in a limited preview beta for some customers, but now it’s going to be rolling out to all vehicles that have purchased the FSD option

Other new features included in this update include the much-requested native Spotify support, which is available to all Spotify Premium account-holders across all markets where it’s available. That should go a long way towards satisfying Tesla owners who have been less than satisfied with playing audio via Bluetooth from this extremely popular streaming music option. In China, Tesla is also rolling out Ximalaya, a podcast and audiobook streaming service.

Tesla Theater Mode, also new in version 10.0, connects your infotainment system to your Netflix, YouTube and Hulu/Hulu+ (including Live TV if you’re subscribed to that feature) accounts, giving you access to streaming video from all these platforms while the car is safely in park. In China, the automaker is also adding IQiyi and Tencent Video, and it says it’ll be adding more options globally “over time” to supplement these offerings. The new Theater Mode will also provide access to Tesla vehicle tutorials for owners to watch in-car, again only while parked.

A lot of these updates focus on entertainment options, including the new “Car-aoke” mode, which, as you might have guessed, adds an in-car karaoke experience that includes a “massive” library of music and lyrics, Tesla says, with multiple languages supported. Singing along on road-trips has long gotten by with low-tech options only, but official support might encourage more amateur James Cordens.

Last but not least for new entertainment features, there’s the launch of the Cuphead port on Tesla Arcade, the in-car gaming software Tesla launched earlier this year. Cuphead is a cult smash hit indie game, with an iconic art style reminiscent of early Disney animation, and this is definitely a nod to Tesla’s core geek audience (and probably a treat for the Musk man himself). Again, this is only available while parked in case you were worried about distracted driving.

Tesla also added some new navigation features that suggest interesting restaurants and sightseeing opportunities along your way, w which could result in some more interesting spontaneous adventures. There’s also a new file system tweak that separates videos captured by the car’s camera when in Dashcam and Sentry Mode to make it easier for users to find them, and they’ll be auto-deleted when there’s a need to free up storage.

This is a big ol’ update packed with new features, and it’s going to be rolling out over-the-air to vehicles beginning this week. As mentioned a couple of places above, you might see some slight differences region to region but Tesla says you can also check out the updates in-store at its showrooms if you want a sneak preview.