Comedian Marc Maron famously began his podcast in his garage — at once revitalising his career and legitimising an emerging media format that, in his case, drew the attention of the President of the United States.
President Barack Obama participated in an interview with Maron in that same garage early in 2015. Now one of the nation’s oldest media organisations is moving into the podcasting space.
In July of 2015, E.W. Scripps Company acquired podcasting company Midroll Media. With a national advertising network of more than 200 podcasts, Midroll is arguably the largest player in the growing podcast space.
More than 46 million Americans download at least one podcast a month, and the company tends to have higher than average education and income levels, according to a 2015 report from Edison Research.
“Podcasting has emerged from the relentless evolution of the media marketplace as one of the best new platforms to build organically growing audiences and revenue streams,” Rich Boehne, chairman, president, and CEO of Scripps, said at the time of the acquisition. “In the Midroll teams and shows, we found creative content and business strategies that already have defined the importance of podcasting, and with strong growth still to come.”
The acquisition speaks to the media company’s focus on digital as a key part of a multi-pronged strategy to ensure its long-term viability, says Carolyn Micheli, vice president of corporate communications and investor relations.
The intent is “to create diverse revenue streams that allow us to stay in the media and journalism business,” Micheli says. “Digital revenues are not keeping pace with traditional revenues, and the opportunity to make money is challenged by programmatic [advertising].”
That challenge is amplified for Scripps by demographics. After completely divesting itself of its newspaper properties in 2015, it now only owns television and radio stations.
“On the audience side, local [broadcast] news programmes are where you by far make the most money, but they’re an older audience and [Millennials] are not necessarily converting,” Micheli says. Scripps’ digital strategy focuses on “other ways you can capture them,” she adds.
Along with Midroll, in 2014 Scripps purchased Newsie, a Millennial-focused news site that is featured on streaming media devices such as Roku, as well as a paid weather app.
Midroll creates and distributes 35 original podcasts, mostly focused on pop culture and comedy, through its Earwolf and Wolfpop networks. Along with its own network of podcasts, Midroll represents and sells advertising into an additional 250 shows, according to Micheli.
“They have a network where they’re selling on a national platform… That’s where their big revenue growth is,” she says. “There’s an economy of scale with this.” (In fact, Midroll’s name is a reference to the commercials positioned within podcasts.)
Advertising on podcasts, Micheli says, has great potential. She cites the medium’s “stickiness and the credibility of a host-read ad.” Because many podcasts have passionate audiences, there’s a built-in affinity for the host, who typically reads all advertising and integrates it into his or her content. (Comedians, for example, often do humourous reads of advertising copy that call back to the theme of the podcast.)
Much of the advertising derives revenue from referrals or purchases, not CPMs — another advantage for the small and passionate audiences that podcasts typically draw. And since podcasts are essentially long audio files that are downloaded or streamed, it is also difficult to skip the advertising.
Midroll also introduced a premium subscription model this summer. Through a smartphone app and Web site called Howl, the service offers exclusive content and archives from some of Midroll’s best known podcasters for a monthly fee.
“The subscription model is nascent, but we think there’s a market for people willing to pay,” Micheli says. According to Micheli, Millennials who have been reluctant to pay for legacy media content have proven more willing to pay for new types of digital content like podcasts.
Just months into its acquisition, Midroll has remained independent: “There are a lot of good things about keeping the startup culture,” Micheli says.
However, Scripps is looking for opportunities to use podcasts with its core media properties, particularly in radio. Scripps’ radio division focuses on developing local talent within its eight radio markets.
“When you develop these great personalities, there are opportunities to do national podcast shows,” she says.
As part of a larger reorganisation that came with the sale of its newspaper properties, Scripps made digital its own business segment. Currently, approximately 80% of digital’s revenue is related to its local broadcast properties, with the remaining 15% to 20% coming from pure digital plays like Midroll and Newsie.
“We think that the long-term scalability is much larger,” Micheli says.
The Scripps reorganisation is positioning the 136-year-old company to take further advantage of other digital plays going forward. Focusing on broadcast “wasn’t the end game,” she says.
“A lot of people thought we were trying to be a big broadcaster, but the conversations internally are about what is going to get us through the next 100 years. It’s really important for media companies to be obsessed with where people are getting their content. As a content company, we’re in a better position to continue to meet those needs because we’re adaptable.”
This is one of 14 case studies featured in INMA’s strategic report “Revenue Diversification Beyond Traditional Print and Digital,” released in December 2015.