Building a Business Case for Podcasting

These are my opening remarks from yesterday's panel on building a business case for podcasting at Syndicate New York. We also released a white paper that has a lot of the research cited below, but also covers an integrated approach to online PR and interactive marketing through blogs, RSS, dynamic web presence, organic SEO and email marketing. You can download the white paper here.

Syndicate Conference – May 17, 2006
Building a Business Case for Podcasting
My Opening Remarks

Last year, the question on everyone’s mind was whether or not podcasting was a community of hobbyists, or a bonafide business. Today, the question is how do you build a business case for podcasting?

I have been producing a podcast about how new media is changing the way organizations communicate, and the way people consume media and information since April 2005. And since that time, it has become the single most effective and efficient business development initiative we have in place.

I bought into the idea of distributing MP3s and MP4s via RSS early on. And it’s because of my podcast that I have the honor or moderating this distinguished panel. It’s also one of the reasons Heather agreed to be here. I interviewed Heather on my podcast last year — before she had launched her own podcast for BusinessWeek — which I listen to regularly and enjoy very much. I also met Jeff through my podcast interview with Chet Rhoades, who oversees the editorial side of the Washington Post’s video podcasts, and Mike through Brooke Gladstone, the host of “On the Media” which is produced by WNYC, distributed by NPR and was public radios first mahjor market program to be distributed via podcast

Now, I didn’t have to make a business case to start podcasting. I did it originally as a way of demonstrating iPressroom’s hosting and RSS feed generation service. But now, largely as a result of the visibility that our podcast has received, I am frequently asked by executives at entertainment, media and technology companies, who – I might add — are considerably less cavalier than I am, what the business case for podcasting is.

It’s funny because I rarely have a prospective client come in and ask me to build a business case for public relations. They want to know specifically what I can do for them, but if they’ve taken the time to come into my office to meet, they’ve already decided they want agency support.

You build a business case to keep an account, and a proposal to win one. In conventional PR, where mainstream media relations remains the holy grail, the business case is something that is demonstrated by building visibility and credibility through third party editorial endorsements and tracking the results.

In the business of television, the decision of whether of not to order a show is based on the content of the program itself, and whether or not the network thinks it will find an audience and entice advertisers.

But it when it comes to podcasting, the tendency seems to be to focus on the media, rather than the message, even though spending on Podcast advertising is projected to grow from $3.1 million in 2005 to $327 million by 2010 according to PQ Media. (Get background on my research here) And this prediction is backed by a 4 As poll that found executives anticipate spending more on podcast than blog advertising in the future.

Given that newspapers are eliminating their stock tables and shrinking their page width to save money, networks and studios are starting to distribute their shows online and all other the media formats seems to be migrating to the web – and these are businesses whose profitablity hinges on their ability to distribute content effectively and effeciently – it seems counter intuitive that corporate communicators and PR agencies would try to buck the trend by favoring print collateral and email over what Doc Searls refers to as the live media. But as someone in the trenches, I’m here to tell you, the overwhelming majority of corporate communications executives and PR practitioners still lack the ability to publish and syndicate pages, images and rich-media on their web sites without the support of IT personnel, who keep them bound and gagged, lest they compromise network security, or g-d forbid, outsource their infrastructure.

A blog is great way to get familiar online communications. But in the end, it’s really nothing more than a crude content management system that builds pages in reverse chronological order. Without cobbling together a bunch of unsupported, open source freeware, blogs provide business users with poor provisions for editing meta data, no integrated email marketing functionality, no video on-demand, no audio on-demand, no data collection provisions, no way to handle editable horizontal menus and certainly no way to integrate with CRM and legacy software. You get no reliable redundancy to protect your data, no service level agreement and no telephone support. But blogs are essentially free, so they’ve opened our eyes to the benefits of managing a living web presence.

In the business of advertising, an agency wins an account based on the strategy, the creative and the media plan. If the client picks the right agency, the business case becomes proven through the results of the campaign.

In the business of media, it’s about the amount of attention an outlet receives that is packaged and resold to advertisers based on third party metrics, which – even though they are becoming more and more suspect each day – remain the standard upon which a business case is blessed with budget dollars daily.

I recently met with the executive in charge of marketing at one of the three major broadcast networks to discuss podcasting at their request. We discussed, at length, what I perceive as the benefits of podcasting, which are:

  1. Podcasts allow listeners to time-shift and place-shift media consumption
  2. Podcasts are 100% efficient, since episodes are only downloaded by listeners on an opt-in basis
  3. Podcasts are easily accessible to a global audience that is not defined by geographic boundaries
  4. Podcasts are heard by an educated, influential audience with a high disposable income
  5. Podcasts afford companies the ability to leverage electronic programming without an outside news media filter
  6. Podcasts are the most cost effective electronic media distribution channel available

And each of these was supported by considerable research. And BTW, if you’re interested in getting that, we’re releasing a white paper this week that has all that research in it so give me your card if you want a copy and I’ll make sure you get it.

Anyway after my presentation was done, the network executive said they were completely and totally convinced that podcasting was the future and that they need to started integrating podcasting into their marketing program. Then, the executive asked, “Do we do it now, or in six months?”

I felt like I was a revolutionary talking to a Russian aristocrat in a Chekhov play. And what was even more uncanny to me was that this executive was in charge of overseeing the marketing efforts for the network’s syndication business. Now seeing as how this name of this conference is Syndicate, I want to take a moment to us the synidicated TV to illustrate just how disruptive a new media format like podcasting is to the business of syndicated television.

Right now, studios, networks, broadcast stations, advertisers and syndicates profit by selling TV shows station by station, market by market. Once the flesh has been pressed, the trade shows have been attended, the sales calls have been conducted, the contracts have been negotiated and terms have been agreed upon, shows are distributed via satellite to stations. The engineers download them off the satellite, insert the ads, cue them up to play at a time when the programmers think they’ll get the most viewers, so DRV-less viewers can watch them. They’re like these giant TiVo boxes without rewind, fast forward or save.

Now, many of those networks are starting to distribute programming online, which means, as far as the stations are concerned, goodbye geographic exclusivity. The whole system is terribly inefficient, and as venture capitalist Ester Dyson said on Charlie Rose earlier this year, businesses that profit from inefficiency will die. But unfortunately, Esther wasn’t with me in my meeting with the network executive, and neither was this expert panel, to which we will pose the question today, how do you construct an argument in favor of an emerging format for which no standardized metrics exist?

If you had to build a business case for attending at this conference or advertising in a trade publication, a stack of business cards or circulation count would suffice. But new media is new, so it gets measured by tougher standards.

When you look at the research available about, opportunity an emerging media channel like podcasting affords seems almost undeniable.

1. eMarketers says the audience for podcasts in the US will increase to 25 million by 2008, and 50 million by 2010.

2. The Diffusion Group says demand for podcasts is likely to grow from less than 15% of portable media player owners in 2005, to 75% by 2010. And estimates say more than half of all podcasts are consumed on the desktop.

3. And according to Disneyland VP Duncan Wardle, who’s in charge of the resorts podcast, “In a very short period of time, consumers that choose not to hear from a given brand will screen it out.”

(Get more research here)

If you’re an advertiser, why focus the majority of your marketing dollars on buying time in an outlet that reaches 600,000 with the objective of winning 6000 customers, if you can leverage search and media on-demand to reach that 6000 directly through a syndicated channel like podcasts? Why try to reach 2% of the audience, when you can reach 100% without interrupting 98% who couldn’t care less? And the same is true of PR. Why focus all your energy on winning editorial coverage, when you reach your audience directly via podcast?

Yet, regardless of these inefficiencies, conventional advertising still receives the overwhelming majority of the corporate marketing budget. While the percentage of each dollar spent on new media is growing, mainstream media still gets the largest piece of the pie.

In fact, in its 2006 CMO Web Smart Report, 56% of all respondentssaid the web is or will be the central component of their marketing program within 12 months, but only 9.7% had multiple, full time employees dedicated to Web marketing. And the same is true of the MSM. Heather, Mike and Jeff where not hired to produce podcasts, but its been added to their plate.

And they are going to tell us how not only how the balance they’re expanded job responsibility, but also, how they built a business case for podcasting both inside and outside their organizations. As promised, they’ve agreed to open up their playbooks, and walk us through exactly how that got buy off internally to start podcasting, how their podcasts are being benchmarked and, in case of Jeff and Mike, how they use their organization convinces advertisers to support their podcasts.

And then we launched into the panel discussion.

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