Thanks to streaming your audience listens to more music and podcasts than ever before. Data from 2017 reveals that users tune in for an average of 33 hours a week in the U.S. alone, and the momentum shows no signs of slowing. Little wonder that audio programmatic–the business benefits and the best ways to buy it–lead the list of hot advertising and marketing trends in 2019. Where is the growth? Who are the players? How can you measure effectiveness? These are just a few of the questions our host Peggy Anne Salz discusses with Jeffrey Mayer, Head of Programmatic at SoundCloud, the world’s largest audio platform and one that has seen an incredible surge in programmatic audio budgets in 2018. Jeffrey discusses the market drivers and updates us on progress following the decision to enter into an ad sales partnership with Pandora–a move that will create the largest ad-supported audio marketplace in the U.S. with an unduplicated audience of more than 100 million users. He also talks about how marketers can make effective audio ads (which are much cheaper than video ads, by the way) and tackle challenges around audience measurement and segmentation.
Hello and welcome to Mobile Presence. I’m your host, Peggy Anne Salz, with Mobile Groove, where I plan, produce and promote content that allows my clients to reach performance goals and scale growth. And growth is what it’s all about here, that’s what you’ve been hearing if you’ve been listening in often and I hope that you have. We’ve had growth marketers, we’ve had growth hacking strategies and today we’re going to look at a growth opportunity because audio-based media, that is, you know, programmatic, audio and what you’re doing when you listen to podcasts when you’re streaming music. There are advertising spots in those broadcasts and it’s your chance to reach and engage customers, consumers, at work, in the car and everywhere else.
So, that’s what we’re going to be talking about, we’re going to be talking about that growth opportunity and how you can harness it and I’m excited to welcome Jeff Mayer, he is Head of Programmatic at SoundCloud. So, we’re going to the source here, we’re talking to SoundCloud. Jeff, great to have you here on Mobile Presence.
Hello Peggy, thanks for having me, very excited for this.
Very excited because I have to say full disclosure, a lot of the guests I bring on the show is because I have been really impressed with presentations at conferences and elsewhere and it left a really indelible mark on me when you were talking about this a year ago and here we are, fast forward, it’s really happening so I’m having you on the show here to talk about it today.
But first, Jeff, a little bit of background on yourself – I didn’t know this, I was just looking at your bio, you were at Shazam and other companies in this space before. I’m just curious, is this an audio file thing, is this a work thing for you or is it a calling to be in audio?
Oh, I think for audio itself that was just like a transition of my career. I knew that I wanted to get into digital and I started at a company called White Pages in 2010 on the Ad Ops team. So, from there, worked there for 5 years and then went to Shazam for another 3 until the Apple acquisition and now for the last 8 months I’ve been at SoundCloud.
I think that music has always been a really important part of my life, I love going out, seeing small independent artists and love discovering music and I play guitar and I’ve always been – I always wanted to work either at a record label or in some form in music. And then with the digital – sorry, can we pause for a second?
Certainly, just take 10 seconds and start in. But you were doing really well, Jeff, and I had no idea that you had such an eclectic background so take a pause…
Yes, someone interrupted and walked into the room while I was talking so it kind of distracted me for a second. So, I’ll just kind of start the whole thing over?
No, do what you were doing, you were saying you were playing the guitar and you liked it and we can edit it together, it will sound great, so you liked audio – what was that you were saying?
Yes, so I love going to see bands, independent artists, all round Manhattan and discovering something new and I always wanted to work in the music industry at some point, work for a music label, be an AR rep. And then as I was at White Pages first, that was just ad operations and programmatic and I started to love what I did and then when Shazam came calling, that was the ultimate blend of the two things that I loved to do is the technology side of my work and the strategy of my work and then also to work in music.
So, going from Shazam to SoundCloud was just a natural fit for that extension. SoundCloud is very unique in terms of doing audio advertising where Shazam was more of a display ad network because it was the discovery of music where SoundCloud is the streaming of music.
Absolutely, and I have to say I’ve got SoundCloud, I’m based in Europe so this is part of the society here to have SoundCloud. It’s the way you discover really super cool things and of course there’s been a lot going on at SoundCloud recently, you have a partnership with Pandora. Do you just want to bring us up to date on some of these recent milestones, Jeff?
Yes, so that kicked off late last year kind of the announcement of our exclusive partnership with Pandora. Basically they’ll be our exclusive ad sales representation in the US and it just began January 1st and it’s actually – I think the general announcement went out today for all Pandora buyers, like of all our inventory is available through their platform and their pipes, so that’s really exciting. It creates the largest ad supported audio marketplace in the US, it’s going to have an unduplicated audience of more than 100 million users in this environment so it’s really – when you think about the size of the audio market, in total, Pandora plus SoundCloud all together in one unified platform, you buy audio through either one or both or separate, however you wish, but it’s a really unique marketplace and probably now the largest one in the world for just plain audio advertising.
I mean, I see it because I see how people interact with content on their devices, you know, we have audiobooks, we have podcasts, streaming music, everything that is streaming is doing really well out there. So, it’s a lot of opportunity and also how we interact with the devices, we have our voice-enabled devices, we have Echo etc so it makes sense that this is going to be a really good fit but what do the numbers tell you, Jeff? I mean there is a surge in programmatic audio, I see it coming but is it there?
It’s there and getting better. So, if we take a look just at some past industry metrics which I’m reading off a sheet because I’ll never remember it off the top of my head, but digital audio spending increased over 200% between 2015 and 2017. I don’t have the 2018 numbers but I’m sure it’s much more than that now and then audio ad revenue spiked from $425 million to $600 million which is a 42% increase year over year.
So, that was a measurement back in maybe early to mid 2018 when these numbers came out. As of Q3, we noticed a surge in audio spend which was unrivaled on SoundCloud. It was hallmark quarter Q3 and then Q4 blew that out of the water. So, it was beyond impressive what we saw, you know, between July and September but then October and December were just incredible for our business.
And then with the announcement of Pandora, that’s only going to multiply that factor as – when we take a look at what they bring to the table with 400-500 sales people in their market, it’s the unification of content and the unification of inventory that’s all coming about. So, it makes the opportunity even stronger for 2019 – we’re going to see numbers that we’ve never seen before and didn’t expect.
I mean, we have a broad audience here at Mobile Presence, you know, we have the mid-size, even the small and indie all the way up to the big brands and marketers. Is this an opportunity that the small and mid-size companies can also aim at because I know that it’s not as much – well, I wouldn’t say effort, but you don’t have – you’re only dealing with audio so all the video problems and all the productions companies, that isn’t part of the process and the budget that you need to have to advertise on audio. So is this something that’s not only just a big market but a broad market? Can everyone get in?
Yes, you know, obviously there are always going to be restrictions in anything and we know that the costs to produce let’s say a video spot is going down with better technology to film even on your mobile phone to be able to film a video ad. But with audio production, you don’t have things like stunt co-ordination for wardrobe, the costs for talent is different for video or television as it is for audio. So the investment for building a creative ad is much lower, it’s a lower barrier to entry into a marketplace that performs a lot better than display advertising and has comparative numbers to video.
So, for the small players out there, if you’re choosing – I know that video’s a big market and I want to spend my money on video, audio performs amazingly well for our marketers and you can build better creative services in terms of having more ads available in your marketing campaigns and there’s probably a better format option as well because audio is either 6 seconds, 15 seconds, 30 seconds or 45 seconds, depending upon which platform that you’re introducing it to.
So, there’s a consistency with audio that you don’t typically see with video where you have to build for other formats, other aspect ratios and other sizes and other screen sizes. So, it’s much easier to produce and it’s more unified.
So, we do have a lot of the standards in place that we need here because that’s the – I wouldn’t say the problem but that’s the concern with much of the other advertising as we’re sort of finding our way but this sounds very set and stable. Like this is a market that you can get involved with in rather now rather than waiting for the standards to settle.
Yes, absolutely. And, you know, even to that, like I think as an audio producer ourselves at SoundCloud and Pandora is an audio producer themselves, we also help facilitate the creation of audio ads for our clients when it’s necessary. So, we can either do those in-house or we know the right audio engineers to work with, so it’s a bit of a more fluid process and in terms of stability, we’re using a VAST tag. So, if you’re used to creating a VAST tag for video, then creating an audio ad is very much similar to that. So, it’s the same file type format, nothing different there, with just a different type of media file that’s introduced.
But, yes, I mean, I think that audio as a play experience is stable, the way to build a creative is stable. I think the next driver that we’re all getting to is the measurement part of it.
So, that’s going to be the next step in this evolution is that with the marketers that we currently have buying, they’re seeing great performance with the metrics that they’re looking at. So, they’re increasing their spends and we’re seeing that influx of investment coming into the marketplace which is great, and these are not once and done type of buyers, these are people that dipped their toe in the water either in 2017 or early 2018 and then we saw expansive growth because the performance was working out so well.
Now, going forward is going to be all that third party, how do you layer in realtime location into it and other factors.
Of course, that is going to be the really exciting part of it as well, Jeff. We do have to go to a break but, listeners, when we get back, we’ll be talking more about this opportunity and more about the audience opportunity – how are they interacting with audio and how can you reach them on the move or even in a leanback mode in the living room, wherever they’re enjoying audio, that’s where you can be reaching them and we’ll be talking about how you can do that right after the break.
And we’re back to Mobile Presence. I’m your host, Peggy Anne Salz with Mobile Groove and we have today Jeff Mayer, Head of Programmatic at SoundCloud. And Jeff, right before the break we were talking about the opportunity which is huge, the question however is how to measure success. We have our head around a couple of those metrics and thankfully we’re an audio so we’re not going to worry much as marketers about viewability, it’s not a problem here. So, good news, bad news, we’re out of that jungle but we still have to figure out what is success. Now, I was looking in some of your research and I noted that SoundCloud audio has an 11% higher completion rate than video, so that is massive compared to video but what are some of the other metrics that marketers have to start thinking about when they’re thinking about their campaigns?
Yes, sure, and that 11% completion rate is based upon SoundCloud inventory of what we’re measuring on our own inventory. Yes, so obviously as you mentioned, there is no viewability so that’s actually one thing for you marketers out there to make sure that you don’t put a viewability pixel on your audio creative because it won’t work and that might actually prevent the ad response.
But other metrics that our buyers are looking at is completion rate, it’s where a click through rate, there’s a companion banner served. So, along with the audio, if the app is in view, we can deliver either like a 300 by 250 or 1000 by 1000 companion banner that has a call to action on it that you can click on. You’re looking for your standard brand safety and content alignment metrics, making sure that your ads are delivered in a brand safe environment which is very important for us as well. We don’t deliver ads against any unknown content in our app. So, you know, even though we’re an open audio platform, we’re not delivering ads to things we don’t know what it is.
And we’ve heard from other marketers that have done brand love studies that they’ve seen excellent performance on our inventory in that respect and as an overall metric for audio, ad recall is about three times greater, brand awareness is about 1.5 times more effective when you deliver an audio ad than through a traditional display.
How does that work by the way with the other formats because it sounds to me just as a layman here and thinking about how I’ve been interacting with SoundCloud here in Europe, you know, the display doesn’t interrupt, it actually can enhance and since you’re listening, you’re not bothered, it’s not that issue that you have, for example, with gaming apps or other apps, something’s interrupting game play. This is actually sort of going with the flow. So are there certain formats or certain combinations that are working really well because I would imagine if I do it right, I can get even more out of a campaign with you?
Yes, you know, I think that at least as someone that listened to radio in my car all the time, you’re used to that ad break experience. It’s a disruptive experience but it’s a non-disruptive experience, it’s both things at all the same time where there’s an expectation that an ad will play in between two tracks or between two songs. I think what we control is the frequency of that, that’s what we model out a lot is how often is that ad delivered within your experience, how often does it break? Because we don’t want the user experience to be poor and have you drop out of your listening time because that’s not the purpose of our platform. We want you to listen.
So, it’s a lean back experience that your phone’s in your pocket or the radio is on in your car or you’re streaming it through your speakers at home and through this lean back experience, the audio content is disrupted by the ad but it’s not interfering with your action.
Speaking of the actions, is there something about this that also dovetails really well with local in a sense, maybe more so than was the case with other advertising approaches because it seems to me that you can get very local here, very relevant because we’re used to that, it’s like the radio experience as you said. So if there’s a sale going on down the street or what have you, I mean, I expect that in that experience where it might be a little creepy in some app experience where that gets too personal.
Yes, there’s certainly like micro-targeted campaigns out there that are delivering to a specific geo area. I think that the hurdle there for location-based audio ads is that dynamic ads haven’t really been built out at full scope yet but there are companies out there that do it. So, just throw one out there, there’s a company called “Million Ads” and basically you can have your basic framework messaging and then drop in all the various locations and then based upon the IP address of that user, that audio ad will play the appropriate location copy or voice over for you.
So, there are ways to do it, I think that’s going to be probably more like the emerging part of our market again, I think with the measurement KPIs is how do we get precision local in audio?
How far are we on that, by the way, Jeff? I mean, it’s always a challenge, the industry is always working on it but you’re seeing it from the inside out. How far are we along in this process?
I think we’re not too far away. I mean, there are a lot of factors that are pushing the marketplace forward at exponential growth and speed. Part of that is a smart speaker market, Google and Alexa are a dominant force in our industry and our lives in every respect and as they build out their technology with their engineering teams and you’re listening to a smart speaker at home, they know your precise location when you ask Alexa for the weather forecast.
So, it’s not going to unheard of if you’re listening to an audio stream that’s catered specifically for your neighborhood through one of those devices in future and I see that happening sooner rather than later.
So if marketers are listening in, they’re saying “Yes, I’m excited about this, I see it, there’s an audience, there’s an uplift, there are metrics, it’s all coming together”. What about the actual programmatic landscape because when we talked about this a year ago, I don’t think we were as far along – now we know we have, for example, certain audio exchanges that are established that we can work with. So how simple and seamless is this to get my audio ad up running and out in front of my audience?
Before I start answering that question, it is so wonderful to work on this ad format because we don’t have the fragmentation of display. You know, when you think about a display ad or a video ad, you know, programmatic strategy, you’re looking at potentially on boarding 10, 15 different partners, you know, with your header bidding platform, with your ad-ex and exchange bidders, with standard networks and how do you mediate all that and how do you capture spends when one agency is testing different exchanges and you’re chasing their spend across different exchanges?
Audio doesn’t have that problem. There is a smaller group of SSPs that have audio support, you know, obviously one of the major ones is Adswizz which is probably the largest audio and display platform out there but Rubicon’s right up there, they do a lot of support for audio, they’ve a lot of the DSPs integrated already, AppNexus put investment behind it, Google’s putting investment behind it but outside of those four or five players, and Triton obviously, you know, it’s a small ecosystem, it’s more closed and also the same thing on the inventory side – when you look at, yes, you can mention Spotify, you can mention, you know, Google or Amazon or Pandora or SoundCloud and iHeart but when you really want like that music streaming experience, you’re going to go to one of these partners.
So, it’s not the long tail of music publishers that you have to worry about to get the reach that you’re looking for.
And it’s also thankfully also not a huge stretch to make the ads that work, I mean, you’re helping, as you said, you’re helping marketers as well. I’m just curious just at a high level view, is there a campaign or something that you can draw from to give us an idea of what’s cool, what can work, what doesn’t work? I mean, you’re working with them so you have an inside view.
Yes, I think – I don’t want to name you specific clients…
No, no, you don’t have to do that, maybe just a little bit of an approach that works, you know. For example, I was reading reports about video, because I was doing some work on, you know, video advertising doing some shows, and it was like a surprise – it doesn’t always have to be a celebrity and sometimes it doesn’t have to be in your face, sometimes you can just be human or even just slightly funny, it doesn’t always have to some sort of prankster thing going on to get someone’s attention. So maybe there’s something similar that you can share from what you’re seeing in audio.
Yes, I think that with the ability to be a little more creative with the audio ads, you have a voiceover talent and, you know, they could be a union member of voiceover talent but they don’t have to be a celebrity, you don’t need to hear Liam Neeson talk about an audio ad. And when we have crafted audio ads for our clients, you know, we work with our production team to help them with the script writing if necessary, if they don’t have those assets, we help them with the sound effects or the music licenses for the music that we’re going to play in the background of their audio.
I think what works well is to do some AB testing. I mean, it’s like anything else that you typically work with in terms of measuring how does this perform, which messaging is better, which call to action is better? I think it does vary on each client and campaign which is why there’s no definitive answer for it. But I think that you’re able to be a little more creative with audio because there are no limitations to the imagination of what you can tell a user over the story when you hear it.
That’s absolutely the case and also I notice in my own behaviour, you know, I’m finding that a more enjoyable experience because I’m not boxed in by what the visuals are – I’m listening, I’m sort of in the zone and what comes in sounds right and I can imagine it myself so absolutely ticking all the boxes for a user experience and we do have to go to a break right now, Jeff, one more time, but when we get back, I am so eager to hear your views on future trends, all of this cool voice tech and also what you’re looking at over there at SoundCloud as well. So, listeners, don’t go away, we’ll be right back.
And we’re back to Mobile Presence. I’m your host, Peggy Anne Salz with Mobile Groove and we have Jeff Mayer, Head of Programmatic at SoundCloud. And of course SoundCloud is the largest audio platform by far and you have your partnership with Pandora but you also have some other responsibilities at SoundCloud, Jeff, looking to the future of the tech and the future of what makes audio so accessible and engaging. What’s your job like over there now?
Yes, so, you know, part of our, you know, core is that we’re teller to the creator of content and also the listener of content. So, how do we expand that reach? So, we have 10 million creators every single month using our platform to help load their audio, we have 13 hours of content uploaded every minute of every day and over 200 million tracks in our library, and most of that is not available anywhere else, so, you know, all those independent artists and non-label artists and spoken word artists, you’re not going to find those tracks on a Spotify or a Pandora or other stream platforms just because of the use case and the natural environment of SoundCloud.
So, what we need to look for are ways to expand that opportunity out either through distribution or bundling or platform integrations such as smart speakers or connected TVs or devices, doing a really deep partnership with another company for future enhancements and building in unique ways to listen to SoundCloud while you’re doing something else.
So, a lot of that is what I’m going to be working on is that middle lane between the peer creator where we have deep integrations with DJ equipment and other aspects of music production and then the listener experience with our subscription strategies. But, there’s a nice clear middle lane that hasn’t really been tapped yet, like integrating into Google Voice of integrating into Alexa or some other areas that we’re going to be researching.
But while we want to make sure that what we’re doing is unique, we want a curated experience because we are different kind of a platform, we’re not necessarily ubiquitous so we really want to drive what the – feel the creator and the discoverer of music, those hip, young people out there that are much hipper than me because when you say hip too many times, you’re not hip!
So, yes, I think that it’s finding ways to connect with our audience in other areas of their lives that make sense.
That’s really interesting, I hadn’t thought about it but the integration with the actual equipment that the DJs are using and how they’re sort of making this sort of SoundCloud-ready from the get go, huh? Is that what it is?
Yes, and we already have some of those partnerships established and we’re working on some new things which unfortunately I can’t share but 2019 is going to be a pretty exciting year especially for like the DJ and hip hop communities out there with some of the ways that you can leverage SoundCloud natively, it’s going to be pretty dynamic.
Wow. And just curious, I mean, it’s always to look in the crystal ball but I’m getting a feel for how our lives are going to be, like the daily routine because of all of this voice tech and the spread of Google Voice, Alexa, the whole deal. Do you have sort of a vision for how this might play out this year or is it still all falling into place? I mean, what would be a day in the life of what SoundCloud experience can be in 2019?
Yes, I mean, we’ve a pretty definitively clear roadmap for 2019 for a lot of the products that we’re already working on and already scoped out. You know, the Pandora partnership was a big undertaking but with the technical integration with that so we’re pretty much at the end point there so now we can start moving forward on the other products that we have on our plate.
There’s still some things that we had the opportunity to do that we haven’t necessarily made decisions on and that’s kind of like part of my role is beginning those investigations and those evaluations. But we pretty much know where we’re going at this point and now it’s just a matter of getting there and making sure it all works.
Well, I’m excited, I mean, I plan to write about this on my other channels, Forbes and elsewhere, I’ll be following you very closely and watching this, maybe having you even back again a little bit later on in the year to give us an update but in the meantime, Jeff, our listeners, marketers amongst them, they might say, “Hey, this is really something I want to understand more about” – how would they best keep up with you or keep up with SoundCloud and keep up with these opportunities?
You know, obviously my contact information is always on LinkedIn, so feel free to reach out. I think that you’re going to see things in the trades coming out at regular intervals with us, you know, go to soundcloud.com, watch our space, there’s going to be some announcements in the future and obviously for your listeners, they know how to get in touch with you so I’m sure we’ll connect pretty soon on any next opportunity, even at conferences. So, I’ll be out and about and available for discussion.
If you want to keep up with me throughout the week or find out about how you can be a guest or sponsor on Mobile Presence, then you can email me, firstname.lastname@example.org, Mobile Groove is where you can find my portfolio of content marketing and app marketing services.
And that, my friends, is a wrap of yet another episode of Mobile Presence. You can check out this and all earlier episodes of our show by going to webmasterradio.fm or you can find our shows on iTunes, Stitcher, iheartRadio and many other channels simply by searching Mobile Presence. So until next time, remember, every minute is mobile, so make every minute count. We’ll see you soon.