AI and ad exchanges are helping podcast advertising grow — but who benefits most?

Podcast advertising has existed for more than a decade, but it is only just beginning to evolve. For much of its existence, it has resembled radio advertising more than other digital ad formats. A lack of scale has kept podcast advertising out of its digital prime. RSS.com and Spotify are poised to change that.

By automating ad creation and optimising inventory access, these companies are setting the stage for a more efficient advertising ecosystem from both the supply and demand sides. Doing so may democratise the audio advertising sector, thereby increasing the monetisation potential for the podcast industry. However, there may be a point at which scaling podcast advertising, especially through AI, begins to erode individual ad value.

RSS.com, not to be confused with the RSS Advisory Board responsible for developing RSS, has just filed a patent for “adaptive text-to-speech synthesis for dynamic advertising insertion in podcasts” (via Podnews). In other words, by “cloning” the voice and style of podcast hosts, RSS.com’s GOST.ai technology will help podcasters create authentic host-read audio ads at scale. 

Host-read ads are widely considered to be the most effective podcast ad format, but the time and effort it takes to record these types of ads — which are ultimately mini-podcasts in themselves — can be prohibitive. According to RSS.com co-founder Ben Richardson, the technology is ultimately meant to equip creators with tools that streamline their workflows while simultaneously increasing their value. The new format, cleverly called GOST-read ads, promises significant time and cost savings for both podcast hosts and brands, while also prioritising ethics and authenticity.

Spotify is trying to scale podcast advertising in a different way, introducing its own Spotify Ad Exchange (SAX). With this initiative, Spotify seeks to enhance the platform’s automated advertising capabilities, starting with video ads and eventually extending to audio inventory. Spotify is trying to capture a larger share of ad revenue from small- and medium-sized businesses, by making it easier for brands to spend efficiently on its platform.

This partnership with The Trade Desk, a leading ad tech company, marks a significant step for Spotify, connecting advertisers directly with Spotify’s inventory, and streamlining the ad-buying process. Spotify’s move to implement a supply-side platform (SSP) positions it to compete effectively against larger players like Meta and Google.

As RSS.com rolls out its GOST-read ads and Spotify expands its ad exchange, we can anticipate a future where podcast ads are more dynamic, personalised, and scalable than ever before. This growth reflects the broader trend of digital audio becoming a fundamental component of advertising strategies, offering brands a unique opportunity to engage with ever-more-targeted segments of consumers in a more intimate and impactful manner. Importantly, this growth also offers creators more time to focus on podcasting and less time on advertising.

However, scaling podcast advertising through AI and ad exchanges may also drive the value of podcast advertising down by inflating supply, lowering barriers to entry, and reducing ad costs. The diminishing effectiveness of performance marketing is a problem that many marketers face when running ads on Meta and Google, and that is because ads are inexpensive, supply is infinite, and competition for attention is fierce. 

On a per-unit basis, cheap and scalable advertising is a positive for small- and mid-sized businesses looking to run digital ads with minimal resources. In the long-run, that can ultimately lead to oversaturation and diminishing returns for advertisers of all sizes. Meanwhile, the companies that stand to benefit the most are perhaps the advertising exchanges themselves. The podcast industry will have to strike a balance between scaling podcast advertising in a way that preserves the essence of the host-read ad and maintaining premium value for advertisers of all sizes. Given the higher spending and earning audiences listening to podcasts, it will be a crucial line to toe.