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Milly Botes on How Acast is Powering the Business Side of Podcasting
00:23:21
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- [00:01]
Ari Paparo
This podcast is brought to you by audiohook, the leading independent audio dsp. Audiohook has direct publisher integrations into all major podcast and streaming radio platforms, providing 40% more inventory than what could be accessed in omnichannel DSPs. What's more, audiobook has full transcripts on more than 90% of all podcast inventory, enabling advanced contextual targeting and brand suitability. Audio Hook is so confident that in addition to CPM buys, they offer the industry's only pay for performance option where brands can scale audio and podcasting with peace of mind. Mind knowing they are only paying for outcomes. Visit audiohook.com to learn more. That's audiohook.com welcome to Marketecture where you can get smart fast with in depth interviews of leading technology executives. I'm Ari Paparo and I'm joined today by Millie Boats from acast. Millie is the VP of Product management there. Millie, thanks for being here.
- [01:06]
Millie Boats
Thank you so much for having me. Very excited to join you, Ari.
- [01:09]
Ari Paparo
Yeah, so I always get excited on these interviews when I have less information about the companies and I don't know very much about Acast. So I want to hear about it. What is acast?
- [01:19]
Millie Boats
Well, Acast is the world's leading independent podcast monetization company. So we are essentially a platform between advertisers and creators and the audiences that those creators represent. And we host and monetize 140,000 shows, which is super exciting to have access to that diverse pool of creators. And then we kind of do the matchmaking to advertisers for advertisers that want to reach audiences that those creators represent. So we facilitate the ad sales and then we also do the dynamic ad insertion for both pre recorded audio ads and also host red ads, which we're going to talk about a little bit today. So I'll call them sponsorships for the basis of this conversation.
- [02:06]
Ari Paparo
That's great. That is a. Yeah, I mean, making money on podcasts. You have my interest. Maybe we'll do a deal after we finish recording. So tell me about the company briefly, like where's the base, how big is it? Et cetera.
- [02:19]
Millie Boats
Yeah, so we are a listed company in Sweden. We have. So we, we started in 2014 and we were actually the inventors of dynamic ad insertion. Very now lots of people are doing. But we were first to market with it and that's how a class was born. And sort of all of the product evolution has spanned on top of that kind of ad tech legacy, with the innovation and podcasting being kind of what we were at the forefront of early days. So now that we're 10 years old, we just hit profitability last year, which is a big milestone for any tech company.
- [02:53]
Ari Paparo
That's great.
- [02:54]
Millie Boats
Really riding those waves. And yeah, we're just saying we very much around 500 people now or just, just less than that. And we're really excited because I think that kind of over the course of the last 10 years, it's really in the last two or three years where I think podcasting is hitting its groove, becoming so much more of a mainstream media channel. The creator economy is booming, people are putting ad dollars into podcasting. And so we're really excited about kind of being a key player in the industry and shaping it going forward.
- [03:23]
Ari Paparo
Yeah, that's exciting to hear. It's funny, for me, as a longtime ad tech executive, the idea of inventing dynamic insertion of ads is funny, but podcasting has sort of reinvented everything from scratch a couple years after everybody else. So let's talk through what this means. Obviously people who are listening understand the idea of making money on their content. But why is it different in podcasting than say, video ads where you just put in a pre roll from some ad network and make money?
- [03:52]
Millie Boats
Yeah. So I think that when people, I think when people think of podcast advertising, normally they think of host red sponsorships as their first kind of port of call because. And a lot of the times people don't actually know the uniqueness of podcasting in that it's dynamically inserted, not baked in as part of the episode, or traditionally a lot of it is dynamically inserted, not baked in. Although we are going back to baked in and maybe we'll be talking about that as a trend going forward. But when you hear an ad on a podcast episode, you're either going to hear something like, you know, a McDonald's ad by McDonald's and it's going to be, you know, two for one on our big Mac or something like this. Or you might hear your podcast and let's say you're listening to Giggly Squad, one of our big ones at Acast. You might hear Hann Burner, one of the podcast hosts, say, I just had the most Amazing Burger at McDonald's last week. Two for one on Big Macs. You guys should all go down there. I go every week.
- [04:47]
Ari Paparo
Sure.
- [04:47]
Millie Boats
Something like that.
- [04:48]
Ari Paparo
That's a lot of Big Macs. Just FYI, that's a big sandwich.
- [04:51]
Millie Boats
I also, Hannah Burner looks like she doesn't eat that many Big Macs. So maybe it was the wrong example, but very much, you know, you're either hearing that pre recorded episode, pre recorded ad. Sorry. Or you're hearing the host run ad. And we like to call kind of host read advertising. So where the host is reading that ad about the Big Mac in question, those sponsorship reads, also known as, we like to call them the podcasters, as kind of the original influencers. Because now you've got a lot of kind of influencer marketing. But really podcast advertising and what it's associated with is that host read authentic format, that the host delivers the ad and there's that trusted element to it. You know, 49% better ad recall than prerecorded audio ads because that host is lending their authenticity and their trust to their audience for it. But it's dynamically inserted in the episode. So it is not recorded at the time that they're recording their full episode, but it is inserted based on who we are targeting the ad to. So that's kind of the, I guess with podcast advertising, it's the two different mediums that you'll hear the pre recorded ads or the host read ads. And I think that what makes it special is that that host read ad carries so much trust and the authenticity from the host. Because with podcasting you're opting into that ad in a very different way than you are with sort of web based display advertising, for instance. But you're choosing which podcasts, for instance, market to listen to. So you assume a higher intent.
- [06:21]
Ari Paparo
Yeah, I mean, not to, not to be self promotional, but we've heard from advertisers that they've gotten some of their biggest deals in their entire company's history by advertising on this podcast because the listeners are all their customers and that. So we do host red almost exclusively. So let's, I don't want to get too technical here, but let's just talk like, let's dumb it down and say, say I'm a podcaster and I want to make some money and I want to use, and I want to use Acast. So my understanding, maybe I'm wrong, is that I have to both host and serve the ads from the same platform. So I would have to, you know, basically upload my new podcast to you folks and then those would be distributed to Apple and Spotify and all those places. Is that, is that basically how it works?
- [07:06]
Millie Boats
That's. Yeah, that's how it works. For a large portion of our creators, we do have instances where we don't host the podcast, but we're still able to monitor these but for the large majority of our creators, what you'll do is you'll come to acast.com or you'll come in through our higher tier creator network service and you'll become a customer of acast. And that usually means, like I was saying, for the vast majority of people that means, you know, uploading your audio and publishing your RSS feed and then we as the hosting provider will distribute that to kind of Apple Podcasts, Spotify and then we will also, if you're eligible for monetization, so if you're part of our A class ads marketplace, then you will be available for audio pre recorded audio ads running against your podcast. And you will also enter our sponsorship marketplace, which is where, like you were saying, you know, if you do almost exclusively host reds on this podcast, you would be available to be matched with advertisers that we serve at ACAST within the sponsorship marketplace. And then we'd be bringing to you these sponsorship opportunities as well.
- [08:05]
Ari Paparo
Yeah, so let's talk about how that works because I think the prerecorded is kind of simple. You just, it just shows up and you make money. Although I do want to talk about that separately. But let's talk sponsorship first. So you know, in my case with this podcast, we're selling direct, probably we know the sale the other side of every transaction. But how do you bring new demand to a sponsorship host red model?
- [08:29]
Millie Boats
So we have a large sales organization and then we also have a self service ad platform which was actually the first in the podcast industry to sell both host red sponsorships and also audio ads against podcasting inventory. So we're really proud of that and that generates a lot of the demand as well because advertisers love the directness and the transparency of being able to buy on podcast inventory for sponsorships in a way where that wasn't necessarily possible if you're doing it always directly through each individual creator. Because you know, if you're, if you want to sponsor a podcast and you want to sponsor the, and you want the host to read out your sponsorship, that relies on the advertiser knowing the huge landscape of the kind of, you know, multi millions of podcasts there are out there. Whereas very fragmented. Yeah, exactly. Very, very fragmented. And the host thread necessarily you want that affinity between the advertiser and the creator because of the, and nature of that host read being so leaning on the host's authenticity and their relation to the brand. And that's what makes it so effective. So how do you kind of scale this process and Create a true sponsorship marketplace. It's having a network big enough of available creators, which we have because we have 140,000 creators. Having a large amount of advertisers you work with. We work with over I think 2,400 advertisers, although you can see it in our public stats because we have to report that. And how do you create kind of efficient facilitating that transaction between them and those collaboration workflows? Because if you have done host reads, you will know that kind of being known to an advertiser is just the start of that process. You then have to negotiate your rates, you then have to understand what they want you to say. You have to be okay with their campaign brief. You have to record, maybe you have to re record if they're not happy with the way you said it. So that's a huge, it's a very complex transaction. And the way in which we've innovated in this space is to build a marketplace platform product so that creators can join and as I was saying before, they can host their podcast and then become available in this marketplace and advertisers can join our self service marketplace and also then scan all of our inventory. But we've developed products like AdCollab, which is basically scaled products to enable this kind of matchmaking between the advertiser and the creator and then those, those collaboration workflows. So you know, if you're an advertiser, you can go onto the ad platform that we have. You can see all of your available inventory. You can then send out your campaign brief to multiple different creators. Your creators will be receiving that as collaboration invites. You can then within the platform collaborate on that host read right through to getting it into production. So we've taken something that is a very arduous task before we work to productize it. I think it was a 42 step process that our managed sales teams were handling. I think if you're just one podcast, it's doable. So Ari, if you're negotiating with all of those brands directly, maybe it's doable for market, but very much if you're a network of podcasts, that is hundreds upon hundreds of emails daily with all the various different advertising opportunities you could be sorting out. So definitely one of the big things we focused on and being the best monetization platform for creators and being the best advertising platform for advertisers is very much that scaled collaboration workflows within our sponsorship marketplace.
- [11:57]
Ari Paparo
Right. So how does pricing work in this example? Does the advertiser propose a CPM and the creator has to approve it or are there set prices?
- [12:06]
Millie Boats
We have set rate cards.
- [12:08]
Ari Paparo
How does that work?
- [12:09]
Millie Boats
Is it by category on CPM basis? Yeah. And it's done by your geolocation, it's done by the targeting options that you're selecting. And we also now that we're doing omnichannel inventory as well. So not just the creators audio inventory, we're also expanding into new pricing methodologies for that as well.
- [12:26]
Ari Paparo
So to put a point on it, the advertiser logs in, says, I want say comedy podcasts in Sweden and the price is set. It's like X$, or CPM. And then they see a list of potential places they could participate and then send out effectively a creative brief. Brief to those people.
- [12:46]
Millie Boats
Exactly. And then the creator can receive that and say whether they want to work with the advertiser and they can do a collaboration on getting their host read effectively done. And I think that you've sort of teed up. My next point of one side of our proposition is around those workflows for efficient collaboration. The second side, which you kind of alluded to when you described, oh, I want to find comedy podcasts in Sweden, is that discovery problem. So there's two reasons why it is hard to do sponsorships at scale in podcasting. One is because it's so resource intensive to get that host read ad produced. But the second is the discovery problem.
- [13:22]
Ari Paparo
Discovery.
- [13:23]
Millie Boats
Yeah, say you can just send out all of these collaboration invites to multiple, multiple podcasters. You still don't want to send out a hundred and maybe 50 come back, but all of them aren't that relevant. And then your campaign's not that effective because the brand match hasn't been particularly pinpointed. So you really want effective discovery. And that's the second thing that we concentrate on at acars and we've actually just released our first product under our ACARS Intelligence product suite, which is our AI powered solutions. All in effort of finding the right podcast to advertise on for sponsorships. If you're an advertiser and we call it smart recommendations because essentially you can get as specific as saying, I want to find audiences for women that are interested in investing in Canada that like dogs. And then we will be able to, using OpenAI's 4.0 model, interpret the intent behind your query. But then we actually use retrieval augmented generation to search, which is kind of like a very hyper. Yeah, exactly. I was doing it for your audience. But if they're all AI nerds, then.
- [14:34]
Ari Paparo
Maybe I didn't Even need to use magical AI to find the right podcast.
- [14:40]
Millie Boats
Yeah, exactly. And we use it within our proprietary database, which is, I guess why it would be different to just typing that in ChatGPT. Because we have. Oh, sorry, yeah.
- [14:49]
Ari Paparo
I mean, I gave the example of Swedish comedy because the Swedes are known for their sense of humor, but I guess you just used an interesting word. You said audience. How do you know anything about the audience of the podcast? What are the targeting criteria that allow you to infer who is actually listening?
- [15:09]
Millie Boats
Yeah, really good point. So we use both audience and contextual for how we're gaining all of the points within all of the data points within our database there. So in terms of audience, we have our third party audiences through the vendors that we work with, but then we also have all of podchaser's database. So podchaser is the largest database of podcasting data in the world. And Acas acquired Podchaser in 2000 2022, I think it was. And so we have all of the industry data points, but then we match that with also the 10 years of having operated as a podcast network as well that's been selling campaigns. So we have 10 years of known data. And then because we are not a nameless platform like a Spotify or a YouTube, we're able to have a relationship with the creators that we host where we can sort of solicit more proprietary first party data from them as well. So part of what really allow us to have that relationship with our creators is that they are participating in this marketplace platform that we've built, where we've launched features like creator profiles so they can give us more data on themselves. That really enriches their chances of having an effective match on the sponsorship marketplace. So for instance, Ari, if you were coming into the A class creator hub, you put, you know, I'm this type of person, this is my podcast. But also I have, you know, I really love craft beer brands like X, Y and Z and I do fly fishing on the weekend. I'm not trying to profile you now, but you would kind of pay two.
- [16:42]
Ari Paparo
Big Macs at a time, that sort.
- [16:44]
Millie Boats
Of thing out with Hannah Burner every weekend eating a Big Mac. But you would tell us that information as part of your onboarding journey, which really. And all of this feeds our recommendation engines. So we've got that third party data, we have the podchaser industry data, and then we have our proprietary first party data from our creators and also campaign performance as well.
- [17:04]
Ari Paparo
So in terms of delivery, I think this is where I get the most questions from more traditional ad tech people about podcasting. It really is, my understanding is it's really not one for one where every ad is targeted because you're dependent to some extent on platforms which may not allow you to have varying ads in real time. So in some cases it's a very targeted ad that's like not baked in, but other times sort of everyone gets the same ad in a certain geo. Is that accurate or can you give us a little sense of how podcasting is different from other ad environments?
- [17:41]
Millie Boats
So if we take what you just said around the distinction. So the vast majority of the ads that we. Well, all of the ads that we serve will be into RSS DAI environments because we operate in the open ecosystem and because Spotify has RSS pass through. So if we are serving the ad it is in an RSS DAI environment. But we know that podcasting does not just mean audio only RSS environments anymore. And we know that video podcasts, you know that content is being uploaded and re hosted by Spotify and by YouTube in terms of their video feeds. So in that way we can't serve ads in the way that we usually would where it is hyper targeted and it is rssdai. And that's when I think we said at the very start of the episode, we're kind of going back to the infancy of podcast advertising where it wasn't so technologically advanced prior to Acast ba before Acast, when it was more baked in as part of the recording of the episode. So I think what we're going to see now is the re emergence of more baked in content and then also potentially different players and the platforms themselves potentially innovating around how we can do baked in at scale and what the attribution and measurement methods might be for baked in advertising as well.
- [18:58]
Ari Paparo
Yeah, and that kind of tees up the next question, which is around reporting. If you're charging people, I presume you're charging primarily on a CPM basis. What is the M in the cpm? Is it downloads or listens or what?
- [19:15]
Millie Boats
It's downloads, which is the IAB industry standard for podcasting. I think obviously you are seeing methods around people wanting that metric for advertisers to change and pricing to be done more on listen through rates or Spotify plays or all these other metrics that are coming about. I think that that's not going to be possible as an open ecosystem industry wide until everyone has the same access to that data. And because the platforms are incentivized to not necessarily share that level of data and charge their own proprietary models using that data, then it's not necessarily going to be something that the industry can adopt until those metrics are more freely available. But we welcome any innovation that can be industry wide in this because we know that downloads is not necessarily the future.
- [20:01]
Ari Paparo
It is tricky. And what about the business model? Is it pure rev share or do you also charge for the platform?
- [20:07]
Millie Boats
Yeah, so for ads, which is the majority of our business model, it's typically a revenue share and those splits can vary, but it's a revenue share between us and the creator.
- [20:19]
Ari Paparo
Okay, great. All right, let's do the lightning round. Really quick questions, relatively quick answers. What is your number one competitive advantage?
- [20:27]
Millie Boats
That we are podcasting first, not podcasting only. So we are truly the best monetization platform for creators because for podcasters that have started that way, we really know what makes an effective monetization strategy for them. But we know that podcasting is maturing and that's growing into multi formats across audio and video and we are able to serve that need as well and truly make you the most money. Including you, Ari, if you.
- [20:52]
Ari Paparo
Yeah, including me. I'm going to join. Do you do influencer deals that are not strictly post this sort of thing?
- [20:59]
Millie Boats
Yeah, we do do. So if we're talking about influencer in terms of like broader omnichannel campaigns that span like Instagram, YouTube. Yes, we very much are. Actually, it's our fastest growing revenue line and omnichannel sales are a huge part of our future in terms of that. Not just podcasting. Podcasting first, not podcasting only.
- [21:17]
Ari Paparo
What's your greatest challenge?
- [21:19]
Millie Boats
I think my greatest challenge for the product teams at the moment is we built small autonomous teams building, I'd say component solutions to problems in podcasting. And now we are very much trying to make a platform and that requires a lot more interdependency and unified product experience. And I think when you go from an architecture that has really traded on component product building into one that is more integrated, it's a different mindset to adopt in a product organization, right?
- [21:50]
Ari Paparo
Yeah, that's the truth. All right. I ask this of everyone, so don't be offended. Why won't the giants like Google, Spotify, Apple just ultimately do this and crush you?
- [22:00]
Millie Boats
I mean, they are trying to do it. So you have Spotify, YouTube. I mean, YouTube podcasting is a huge part of their strategy, but it's not all that they do and they haven't started doing that. So whilst they might have more access to resources. They don't have the specialism. And then and knowing what works and having tried and tested what works. So I think being a niche player that can capture a broader segment of the market as it grows is a really advantageous point to being a giant player, of which it is maybe one of your business units, but not necessarily the one that you are focusing the most on.
- [22:33]
Ari Paparo
Okay, final question. If ACAAS was an animal, what animal would it be?
- [22:38]
Millie Boats
I think I was going to say a lynx and then I doubted whether that was a real animal.
- [22:44]
Ari Paparo
It's the name of the lynx is a real animal.
- [22:46]
Millie Boats
Okay, thank God. Great. I'm going to say lynx because it is the team name for our AI recommendations team that has just release smart recommendations. Check it out on LinkedIn.
- [22:56]
Ari Paparo
That sounds great. I don't think the AI team would create a fake animal for its name. All right, well, Millie Boats from acast, thank you so much for being here.
- [23:05]
Millie Boats
Thank you so much, Ari.
- [23:18]
Ari Paparo
Thank you for listening to the Market podcast. New episodes come out every Friday and an insightful vendor interview is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Market tv. And if you're feeling social, we operate a vibrant Slack community that you can apply to join@adtechgod.com.