By Stuart Last, Chief Operating Officer at Audioboom
There’s an increasing amount of high-level data being released about podcasting; the IAB’s annual revenue and market-size report, Apple’s global download numbers, and Edison’s Share of Ear study. But none of that information drills down to network level, so there’s no real insight into how podcast companies are operating; How fast are podcast companies growing? How long does it take to become profitable? How much opportunity is there outside of the US? What are the most valuable parts of a podcast business?
Audioboom released our financial results and KPIs for the first half of 2018 today — we have to do that as a publicly traded company. Our business model is comparable to several other podcasting companies with ad sales services and original content publishing at the core. So this is probably the best chance to go a little deeper and get some insight into how a podcast company works.
Here’s the headlines from our interim results…
- Revenue growth outpaces the industry
- Our focus on Original Content has become a key factor in driving revenue and value
- The investment we’ve made in our global operations made its first real impact
In H1 2018 our revenue was $3.6M — up 43% from the previous year and up 703% from two years ago.
So our revenue growth remains strong, but how are we performing against the industry?
The IAB’s most recent study of the podcast market estimated annualized growth of 28% between 2017 and 2018. Audioboom’s 43% increase is outperforming the market by 1.6X. As a result we continue to increase our market share.
Last year I wrote a post about how $10.85 was a key number for podcasting as it was the value that the industry as a whole was extracting, on average, from 1000 podcast downloads. In the US we’re currently making $19.03 from every 1000 downloads of Audioboom content — far more optimal than the market average and another indicator that we’re making great progress.
We launched our original content network at the start of 2017 — it’s the home of our fully owned and operated podcasts, as well as our co-production partnerships. We’re very proud of the network with shows like Mafia, Covert and Mission To Zyxx very quickly connecting with large audiences, and from a business perspectives it’s made a strong impact that can be seen in our latest numbers.
The network has grown quickly; revenues from Audioboom Originals jumped from just $26k in H1 2017 to $205k in H1 2018 — that’s 688% growth
Here it is as a percentage of our overall business in each half… 1.05% of revenue in 2017, increasing to 5.6% in H1 of 2018…
But, the importance of developing original content is seen best when shown as a percentage of our total gross profit rather than revenue. Our originals have higher margins than the shows that we simply represent for advertising sales. As we optimize production cost on the Originals and increase the amount of content published through that network, it’s real value to us can be seen… our Audioboom Originals are already worth 11% of our gross profit just one year after launch.
Money starts to flow outside the US
One of my favorite parts of our 2018 H1 results is the growth shown in the UK market. Audioboom has our HQ in London, and it’s where I spent 10 years working in radio and audio before I came to New York. Our UK team have done a fantastic job to educate the advertising sector on the value of podcasting, and to create valuable connections between brands and listeners.
UK sales for the first half of our 2018 financial year exceeded $500k — up from almost $200k a year ago. That’s 177% growth.
What we’ve done so successfully is take the US podcast model of native host endorsements into a market that was previously focused on dynamic ad insertion or pre-produced ad spots. It’s taken longer to get this started, but I’m convinced this model we are creating in the UK will make more money for our podcast partners and will drive more value to the brands that we work. One of the brands we brought into the space and helped understand the Live Read approach is also convinced by this model;
For The Economist, well selected podcasts have been shown to perform with a CPA that is comparable to Paid Search and about 5 x more efficient than broadcast TV and even more efficient than linear radio.’
- Tom McCave, Audience Development Director at The Economist.
As a percentage of our overall business, 15% of revenue is international compared to just 8% in the same period last year — giant strides when you also consider how quickly revenue growth has continued in the US too. We’re starting to prove that our early investment in nascent podcast markets will provide long-term value.
Revenue will continue to grow quickly, ahead of the market average for at least the next two years fueled by continued US expansion, growth of our Audioboom Originals, and the acceleration of the industry internationally.
We’re going to double-down on our Audioboom Originals. We’re expanding our production team, and production facilities. We’ll commit more budget to new show launches and become more ambitious creatively. The number of shows we launch over the next 18 months will more than double the footprint of the Originals network.
Our UK revenue will grow fast — we just launched the official Formula 1 motorsports podcast Beyond The Grid with Bose as the presenting sponsor, which is a real indicator of how that market is professionalizing. We’re also seeing traction from our operations in India with commercial and licensing deals — more prevalent in that market — as well as partnerships with popular distribution platforms in the region like Saavn and Book My Show Jukebox.
I haven’t gone too deep with this analysis, and I’ve been careful not to give away any information that could help our competitors, but I hope it’s been helpful to understand how a podcast company is thinking about their business growth.