EBAY eBay Inc

By Steven Perlberg 

Podcast listeners are used to hosts stopping mid-program to read advertisements for delivery mattress services, email marketing companies or discount socks. But they aren't used to the entire show being one long ad.

Media companies ranging from BuzzFeed to the New York Times to The Wall Street Journal have formed internal units dedicated to creating "sponsored" articles and videos for brands that feel similar to regular editorial work. But more recently, podcast companies like Gimlet Media, Panoply and Midroll Media are trying their hand at making sponsored shows for big marketers, too.

Those podcasts, which can cost a marketer in the mid six figures, are emerging as a new form of revenue as more people tune into on-demand audio shows. About 21% of Americans over the age of 12 have listened to a podcast in the last month, up from 17% last year and 15% in 2014, according to Edison Research.

While listenership has grown, companies still face a series of challenges in wooing big marketers who still view podcasts as a niche category. Most host-read podcast ads are for direct-response marketers that offer promotional codes, making return on investment easier to track. But fashioning custom podcasts could bring in an additional, more premium revenue stream from large brand advertisers, podcast executives say.

To that end, Gimlet Media, which gets six million podcast downloads a month across shows like "Reply All" and "Mystery Show," has launched a new sponsored content studio called Gimlet Creative. The first show created by the unit is the aptly-named " Open For Business," a six-episode podcast about entrepreneurship that's sponsored by eBay.

Gimlet Creative has been in the making for some time, as some listeners might recall from "StartUp," a (rather meta) Gimlet podcast that documented the early formation of the company. In a November 2015 "StartUp" episode, Gimlet executives negotiated with real-estate company Zillow over the creation of a branded show. A Zillow representative balked at the price tag -- mid six figures -- while a Gimlet executive resisted the notion that the marketer could have editorial control of a Gimlet-branded show.

Gimlet co-founder Matt Lieber said that "StartUp" deliberately featured "the most awkward conversations," but building Gimlet Creative as a separate unit meant it could now maintain a more traditional wall between advertising and editorial. Plus, the branded podcast idea and high price have "been validated because there's pretty strong demand from brand partners to do this kind of thing," he said.

The podcast, which is hosted by entrepreneur John Henry, allows eBay to display the company's renewed focus on small- and medium-size business as opposed to the stereotypical mom-and-pop seller hawking used goods, according to Annie Lupardus, director of seller communications at eBay.

"At a high level, we're trying to change perception about eBay," Ms. Lupardus said. "It's a little bit more narrative-forward and story-forward."

Gimlet Creative has projects in the works with HP Enterprise and Spotify, Mr. Lieber said.

Gimlet isn't the only podcaster making programs for brands. Panoply, a podcast network owned by the Slate Group, created " Points of Courage" for insurer Hiscox and " Dogsmarts" for Purina. The company also produced a fictional sci-fi podcast with General Electric, called "The Message."

"There's an appetite for people to listen to custom podcasts," said Keith Hernandez, president of the Slate Group. "We're making big bets that it's going to be a significant market, but we're also careful about how we test and learn on it."

Hiscox had aired standard host-read ads with Panoply podcasts before, but the Purina podcast marked the brand's first time working with the company.

"As the podcast space is getting more crowded for advertisers and the shows are getting more mainstream, we have a group of advertisers reaching out saying, 'What else can we do? How can we go deeper?'" said Lex Friedman, executive vice president of sales and development for podcast advertising company Midroll Media, which is owned by E.W. Scripps Co.

Midroll has experimented in the space, producing four episodes of "The Cracked Podcast" in partnership with GE. Mr. Friedman says finding opportunities for branded podcasts has become a higher priority at the company in recent months.

One challenge for podcast companies has been providing marketers with the kind of data they are used to in other areas of digital media, like sophisticated demographic breakdowns of listeners and how long consumers tune in.

The ruling metric of the podcast industry is the "unique download" of an episode. Podcasters are often unclear on how many actually listen after downloading an episode, how long they listened and their demographic makeup.

To deal with that issue, Panoply created landing webpages for each podcast, which it distributes across its social channels and buys ads on places like Facebook. Mr. Hernandez said Panoply guarantees marketers a certain amount of engagement on those webpages, as opposed to being able to guarantee a certain number of listeners.

The Wall Street Journal distributes its podcasts in partnership with Panoply.

Branded podcasts are still in their infancy, and savvy listeners may be turned off by entire podcasts promoting marketers' messages. But podcast executives say that ultimately listeners are willing to tune in so long as the show is actually good.

"It's a substantial amount of time and energy that goes into these and you can't just churn these out," said Mr. Lieber of Gimlet.

Write to Steven Perlberg at steven.perlberg@wsj.com

(END) Dow Jones Newswires

June 17, 2016 05:14 ET (09:14 GMT)

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