🔉 The future of podcast advertising


February 25, 2021

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The Hustle
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GameStop is BACK. After news that its CFO is leaving the company, $GME stock jumped from $45 early Wednesday to as high as ~$200 in after hours trading.

We honestly don’t know if we can handle another round of this.

The big idea
Spotify logo

Spotify’s plan to monetize podcasts, explained

While the radio star was supposedly killed by video, he’s been rather resistant to podcasts.

According to eMarketer, US ad spend on terrestrial (land-based) radio is forecast to hit $12B this year, vs. $1B for podcasts.

Based on Spotify’s recent “Stream On” keynote presentation, though, the podcast ad industry could be headed for huge growth.

Podcast advertising has been hard to scale

This is thanks to a few quirks with the format:

  • Measurement problems: Key industry stats like downloads, impressions, and actual listenership are hard to measure and not standardized.
  • Static ads: Once a podcast is downloaded, the ad itself can’t be updated to target a particular listener.

That’s why when a host reads the ad, it’s typically done in a direct response format (e.g., “use code TRUNG for your bullet-proof socks”), which can be easily measured.

In lieu of downloads, Spotify streams the audio file

This change allows for the creation of a new advertising framework, which is being boosted by 2 key acquisitions: Anchor (podcast production) and Megaphone (podcast ad platform).

Spotify’s “Stream On” highlighted 3 advertising developments:

  • Streaming Ad Insertion (SAI): A service that provides Facebook-like targeting of ads of Spotify-exclusive content.
  • Spotify Ad Studio: A tool for advertisers to make self-serve audio ads.
  • Spotify Audience Network: This service is still in its early days but it will allow advertisers to target specific users instead of targeting a specific show.

These developments go hand-in-hand with Spotify’s huge spend on talent, including the likes of Joe Rogan, the Obamas, and Bill Simmons.

Spotify is not the only one making moves

There’s been a flurry of activity in the podcast space in recent years:

  • Liberty Media (which owns Sirius XM, Pandora) has acquired podcast player Stitcher, hosting service Simplecast,
  • iHeartRadio acquired ad measurement firm Triton Digital.
  • Amazon acquired podcast studio Wondery and has rolled out podcasts in its Audible player.
  • Apple, a longtime (albeit very laid back) leader in podcasting, acquired Scout FM, which uses AI to curate custom podcast playlists.

As for our old friend radio?

The research firm eMarketer forecasts double-digit billions in revenue for years to come. (They add that 2021 will be a peak and that radio won’t reach “pre-pandemic highs” again.)

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Snippets
  • Chip update: President Biden signed an executive order Wednesday calling for both short- and long-term reviews of the semiconductor industry as it deals with a global shortage.
  • iPhone maker Foxconn is driving fast into the auto biz via a potential deal with LA-based Fisker to produce 250k vehicles annually for the EV startup.
  • Engineering acumen: Israeli engineering ops startup Acumen announced a $7m seed round and came out of stealth. The company helps engineering teams identify bottlenecks and increase productivity.
  • MicroStrategy’s macro strategy: The Virginia-based software company announced it bought over $1B in Bitcoin and now owns 90k+ bitcoins at a not-too-shabby average price of $23,985.
  • New Delhi, or New Dell-hi: India announced $1B in incentives for companies that choose to make computers in India as part of an attempt to reduce trade deficits with China.
  • ViacomCBS jumped into the streaming ring with Paramount+. They’ll be reviving hit sitcom Frasier for it.
  • Bonkers: Verizon dropped $45B+ on the latest round of FCC spectrum auction. This is more than half of the $81B pledged by all carriers combined (we wrote more here).
Logistics
Shippo image

Shippo raises $45m to be Amazon for small businesses

Jeff Bezos may be the greatest deliveryman in history: He made shipping a delight through world-class logistics and Amazon Prime.

But earlier this week, shipping services startup Shippo raised $45m (at a $495m valuation) in an attempt to give SMBs the very same power of Prime.

“The goal is to set a new bar for SMB shipping for everyone who’s not Amazon…”

… explained Shippo CEO Laura Behrens Wu in a blog post. Shippo offers merchants access to tools that help deliver best in class shipping speed, infrastructure, and consumer experiences.

Today, Shippo works with 70k ecommerce businesses and counts 80 shipping carriers as partners.

In 2020, Shippo’s gross postage volume (GPV) wasn’t gross at all; the company shipped $12B+ in product and doubled its GPV — which, according to TechCrunch, reportedly tracks with revenue.

Riding the ecommerce wave

Last year, Shippo grew more than 3x faster than the US ecommerce shipping market, which itself grew more in Q2 2020 than the previous 5 years combined.

Ecommerce spending reached $245B in Q4 2020, up 32.1% year-over-year. Good ol’ USPS saw Q4 package sales increase 42% to $2.8B, and volume increase 435m to ~2.2B.

And if you like small businesses, you’ll like this: In Q4, UPS saw SMB volume grow 28.5%, outpacing larger customers whose volumes grew 4%.

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At the end of 2020, Caliber raised $30M to invest in distressed real estate as the market prepared to bounce back…

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Caliber is a pretty unique opportunity — just check out their numbers:

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Apps
collage of faces

Apple launches its inaugural Black Entrepreneur Camp

In January, Apple made news when it announced it was putting aside $100m to address racial equity and justice.

Early stage VC firm Harlem Capital — which plans to support investments in 1k diverse entrepreneurs over the next 2 decades — received $10m as part of the program.

Last week, the Cupertino-based giant launched its inaugural Entrepreneur Camp for Black founders and developers.

The program selected teams from 13 app companies

Among the apps it will provide hands-on guidance to:

  • Film3D: Founded by 22-year-old Senegalese-Canadian Abdou Sarr, the app lets users “shoot 3D photos without special equipment.”
  • Health Auto Export: Founded by the Barbados-born entrepreneur Lybron Sobers, the app lets users easily and safely move health data between providers.
  • Bar Exam: Part of media tech company Culture Genesis (which owns leading YouTube comedy site All Def), this is a music quiz app.

Cedric Rodgers, a co-founder at Culture Genesis and Apple alum, tells The Hustle that key benefits of the program include “insights on app development and new features” as well as “promotion on the App Store.”

Congrats to the founders and developers!

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Email of the day
celebs

Zuck, Daniel Ek, Snoop, Sean Parker (Source: Kevin Mazur / Getty Images)

In 2009, Justin Timberlake Sean Parker — the Napster co-founder and one-time Facebook CEO — sent an email to Spotify founder Daniel Ek.

A decade prior, Parker upended the music world with the peer-to-peer file sharing service. Music copyright issues halted Napster’s journey, but Parker’s interest in the music industry never waivered.

The email Parker sent to Ek is well-regarded in product management circles for its insightful (albeit unsolicited) product feedback.

Here’s a small excerpt:

“Your design is clean, elegant, tight, and fast. While it’s clearly lacking some important features (the social stuff you alluded to, etc) I think you’ve done a great job with sequencing. You nailed the core experience around which everything else can later be built.”

One year after the email, Parker invested $15m in the music streaming service and joined its board. (He has since left it.)

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