Podcast advertising continues to be a growth area for the advertising industry. The top 500 podcasts saw a 20% increase in advertising revenue year-over-year in 2021, with increases to both the number of companies purchasing podcast ads (14%) and the retention rate of companies doing so (42%), per MediaRadar data shared with Marketing Dive.

In some cases, this trend is intersecting with another quickly moving development in marketing: the desire to invest in media with a diverse ownership.

"As podcasts' consumption grows exponentially, brands are optimizing this medium to reach across their listeners,” said Todd Krizelman, CEO and co-founder of MediaRadar, in a statement. "With so many different types of podcasts available to suit your interests, there seems to be a podcast genre for every taste. As such, advertisers are strategically considering where their ad dollars are best spent that translates to a higher engagement rate and loyal audience base."

While MediaRadar analyzed podcasts by content, finding growth in the true crime, news and comedy genres, other research has found podcasts to be a particularly effective way of reaching diverse audiences. Black listeners are streaming more audio and averaging a 73% brand recall for podcast ads, while podcast listening has doubled in the last three years among Hispanic listeners in the 25-39 age range, per Nielsen.

This growth has led to increased attention to and investment in podcast networks that can better connect advertisers with diverse creators to reach these audiences. SiriusXM this month signed an exclusive deal with reVolver Podcasts, a network that specializes in Spanish-language podcasts. Earlier this year, Pod Digital Media, a full-service agency for multicultural podcasters, signed a three-year, eight-figure ad deal with McDonald's as the QSR giant seeks to invest in diverse media partners.

"McDonald's came to us and said, 'Look, we don't have it right, we're not perfect, but this is what we're looking to do, help us get it right.' That idea alone has value to us, because you're actually asking for help from the experts who actually know the space, have the audience that you're looking to reach and have access to the direct community in which your restaurants are a part of," said Gary Coichy, founder and CEO of Pod Digital Media.

Serving authenticity in podcasts

For McDonald's, Pod Digital Media is creating custom content, including some for faith-based, Gen Z, esports and Latinx audiences, as well as finding opportunities to showcase brand ambassador and franchise operators on its more-than 400 podcasts. The deal took about 10 months to finalize, and demonstrates the value proposition that Coichy sought to offer when he left the major agency world to found Pod Digital Media in 2018.

At agencies including WPP's MediaCom and Omnicom's Resolution Media, Coichy's focus was understanding the media landscape, ensuring that leading brands like Volkswagen and Dell not only had a presence in reputable channels, but were also testing and spending on new channels and platforms. While working at Wasserman Media Group's Laundry Service, he saw podcast ads as an opportunity for L'Oréal's multicultural beauty brand Carol's Daughter. However, he found podcast network offerings around reaching Black women lacking.

"This doesn't make any sense," Coichy recalled. "There's no Black woman or Afro-Latina woman that will actually listen to a white male tell them what to do with their hair. That's just not how it works from an authenticity perspective."

With that in mind — and with contacts across agency, brand and content creator spaces — Coichy launched Pod Digital Media to broker deals between creators and advertisers looking to authentically reach diverse audiences. Currently, the network's inventory makeup is about 70% African-American and 30% Hispanic, but he said they are working to shift to a 50-50 mix. To that end, the company recently acquired the Latina Podcasters and Latino Pods networks, adding a total of 50 Latinx shows to its roster.

That authentic approach flows down to how Pod Digital Media serves ads, preferring baked-in, host-read ads over dynamically inserted ones. While dynamically inserted ads continue to grow — increasing their share of podcast revenue from 48% in 2019 to 67% in 2020, per an IAB study — adoption of the format is causing concerns around content and ad experience.

"If you want to reach this audience authentically, you need host-read ads. Those are the best performing ads, because it's coming directly from the horse's mouth, a trusted source for the audience," Coichy said.

Due to brand demand, Pod Digital Media does have a limited programmatic inventory in partnership with AdsWizz. But Coichy stresses that the move towards dynamically inserted ads and the rush to fill impressions leads ads to be next to content that is not contextually relevant, leading to brand safety issues. While podcast ads were previously dominated by direct-to-consumer brands that were more concerned with generating sales than brand safety, that is no longer the case, as marketers like P&G, Unilever, Home Depot, Pepsi and Coca-Cola that are more cognizant of brand safety and compliance have entered the space.

Podcasts as DEI investment

Advertisers have made a variety of moves to increase diversity, equity and inclusion (DEI) in the wake of the renewed movement for racial justice that kicked off in the summer of 2020, from equity-focused upfronts to commitments by agencies and brands to increase spending with diverse media companies. Pod Digital Media has taken part in some of those pitches, but sees the McDonald's deal — which comes as the chain plans to double investments with diverse media partners — as a difference maker, since it runs for three years.

"Now we can really prioritize your brand, because now we know what we're doing. For the next few years, we know the type of audience we're looking to get," he said. "We can fight on your behalf to get content and give you first-to-market opportunities against this content so you can promote your brand."

Coichy hopes that other brands invest in long-term partnerships, not just for the financial rewards, but because it allows them to have real relationships with the content creators, rather than doing "spots and dots" of podcast advertising that target diverse audiences at specific times of the year. Instead, brands looking to be a part of culture need an evergreen strategy all year round.

"Let's find ways to partner with those podcasts throughout the year, so by the time Pride Month, Hispanic Heritage Month or Black History Month is coming up, your message is truly resonating because you have been a part of the content for the last few months," he said. "Now you're coming across as very authentic."