While half a billion users are on social networks, billions of people are on portable devices such as mobile phones. One company hoping to be the provider of advertising solutions to major media distributing their shows is Volomedia, a provider of advertising in podcasts. Joining Bambi Francisco to talk about Volomedia is CEO Brian Steel.
BF: So your company helps major media companies make money off of podcasts. I saw that on your Website. So at one point podcasts were really popular and then they went through some kind of makeover. Podshow is now Mevio. Then there was Podtech, which was sold for a song, and the "pod" thing kind of went away. It strikes me that maybe podcasts aren't getting the same viewership that they were supposed to. But you probably have more information than I.
BS: I don't want to start of by contradicting you but although a lot of companies in the space have evolved. The space has grown tremendously. So last year alone the industry estimate suggests that there over 10 billion podcast downloads. And video is the rapidly growing portion of that. So a lot of the video is what consumers are discovering online. They want to take it offline and consume at a time shiftable or play shiftable manner and take advantage of higher-quality viewing alternatives instead of waiting for things to buffer online or watch things in a smaller window like all the things that we're used to. So podcasting has actually been exploding. We've seen publishers in our network with two, three, and four times growth in just the same shows last year that have all contributed to this ten billion podcast number in 2008.
BF: Now compare that to how many streams were last year. Is there a way to compare how big the viewership for podcasts is verses viewership for streams?
BS: Well it's to be very different.You have to remember that when people are online, they tend to be in a random, browsing, grazing mode and when people are consuming a podcast, you are subscribing to a show that you already know that you like. You're downloading, and watching on your PC, or on your iPod, or your iPhone. So it's a very different set of metrics, which is a reason why Volomedia came into being. It's recognizing in order for major publishers to integrate these online and offline worlds to take what's really an asynchronous world of downloadable media and bring in the same sort of consumption of metrics that are being demanded by both publishers and advertisers online that was going to take a special kind of technology.
BF: Sure, when you work with major media, you basically take their product and you distribute it across your distribution network, is that it?
BS: That's the great thing about our model. We are not in the distribution game. These companies distribute their own media so we are providing advertising and reporting solutions. And what that means is that you are still getting your MSNBC, Meet the Press, Nightly News with Brian Williams. You're still getting that from wherever you are getting that - from their Website, iTunes, etc. But what we're doing is we are inserting the ads and then tracking the consumption of those ads. And we are also aggregating and selling advertising inventory because a lot of them even the major ones don't have enough to respond effectively to the advertising RFPs that are out there.We help by aggregating content in verticals such as news and information and gaming as well.
BF: Well interesting that you say that they don't have enough inventory. But from what I see, there is a flood of inventory out there.
BS: That's online.
BF: So you're saying there is demand for more podcast inventory?
BS: A typical publisher in our network might have several million downloads a month of their shows. And when you do the math, on the advertising, CPM on the exertion rate for an individual publisher that's not necessarily going to be enough to compete effectively for an RFP from an ad agency who is looking to spend a hundred to two hundred thousand dollars with portable media. So we can help them by aggregating that content with similar content from other major publishers.
BF: How do you price that? Is it a CPM?
BS: Yes it is a CPM-driven business. So, if we're selling inventory on behalf of the the publishers, that's CPM based sales to the agencies and the marketers that they represent if we're inserting ads that they sell, that's also a CPM based insertion fee. So either way the business works out the same for us at the end of the day and so we're actually agnostic as to who is selling the ads.
BF:And where do you see ad rates? How has that been going for you?
BS: Incredibly static. In fact I ask our ad team every week and say, "Are you sure we can't sell more ads if we drop the price a little bit?" And they tell me that we are not getting any push back at all. Downloadable media is very different because you are subscribing to media that you know and you already like and so you have a personal relationship with that content and your level of engagement is much higher. So when you do the research, it's about 68% in downloadable media verses 21% for online and 10% for television. So it's a much more affective median for brand advertising to be in. So when you have this rare inventory and an effective use of it, you can command high CPMs. Our average CPM is about $30.
BF: Wow, that's incredible. You were brought into the company about a year ago to take the company to the next level. What is that?
BS: The next level? Well the next level is really scaling. So I arrived and there was like most things version 1.0 technology across the board, so over the last year we've been building version 2.0 to really allow the company to scale and so in the beginning the company was like a version of a science fair project , you ant to see if it works, you wan to see if people consume the product but then when you start meeting with success you go, "Uh-oh" you better go scale.
BF: Are you doing some fundraising too?
BS: We're actually done with our fundraising so we are all set. Knock on wood. So the focus is on execution. Hands down. Signing up publishers, selling ad inventory and scaling the business.