This is a long and complicated subject which deserves an essay length answer, but because you’re curious I’ll try to hit the highlights.
In a new and, as yet, not well understood medium, like podcasting (and TechTV before that) advertisers mostly do direct response advertising. Something with a phone number or an offer code or a custom URL that they can track. That’s the best way for them to assess the effectiveness of a campaign. Almost all podcast advertising is direct response. It’s imperfect - and sponsors often put too much reliance in the technique - but it’s all they’ve got.
There’s also research, either before or after. We’ve had some advertisers to “lift studies” wherein they check to see if the brand received any “lift” from the campaign.
TWiT generally does very well in these kinds of metrics.
More recently agencies have started asking for better ways to track ad success with a technique borrowed from banner advertising called pixel tracking. You may have heard about some trials we’ve been doing with companies like Chartable and Podsites along these lines. We’re chary of these because we understand our audience is very privacy focused, but we think we’ve found a way to do it in a privacy-forward way. In any event, ad agencies are increasingly demanding this and other ad tech from podcasters. It’s the primary reason for the rise of the podcast giants like I Heart and Spotify.
Ultimately, however they do it, advertisers want to see a return on investment. If they’re unhappy with the results, they’ll stop advertising. Budgets also change, as do marketing goals. We constantly need to find new advertisers to compensate for the attrition. This is completely normal. That’s why you have a sales team.
As advertisers come and go sometimes a product in a category gets replaced by another. Harry’s gets replaced by Dollar Shave Club, Carbonite by iDrive. AWS by Wasabi. As long as they’re good products we’re happy to take their ads. I’m not in a position to be “loyal” to a product that no longer advertises. If I say I use a product, I use it. Not all ads are endorsements, however. Increasingly we’re getting ads from enterprise companies I can’t use. Those are straight reads without endorsement.
Despite the rise of the stock market, the world economy has been very hard hit by Covid-19 and podcasting is far from exempt. In fact, I’d guess companies drop podcast advertising faster than they drop older, better understood, media. The entire industry has been cratering. It’s estimated 60% of small businesses will disappear due to quarantine. We are a very small business. And we rely on other businesses spending money on marketing. If they don’t, we lose revenue.
Thanks to Lisa’s very hard work, and innovative programs like selling naming rights, we’ve done better than most in 2020. But, we still lost 30% of our revenue year over year. There are many other media companies doing much worse. Have you seen how thin Vanity Fair is these days? Our prospects for next year are, at the moment, even worse. Ad sales for Q1 2021 are less than half of normal.
You may be used to seeing startups, like Uber, running massive deficits for years. We are not that kind of startup. We can only spend what we make. If revenue is down we need to tighten our belts. We laid off nine staffers this year, and if things don’t turn around we will probably have to cut shows and other costs for next year. Our goal is to survive until the economy turns around. No one knows how long that will take.
We may explore Patreon at some point, but I’m skeptical that we could run TWiT at its current level that way. It costs millions of dollars a year to keep the lights on at TWiT. For now, advertising is really the only way to generate that level of revenue.
I don’t want you to worry about us, however. TWiT is a little like a Lego house, there are all sorts of ways to configure it. As long as Lisa and I can scrape by, we will. There are very many people who have it a lot worse than us. As long as you keep listening, we’ll keep podcasting.
