This startup wants to solve podcasting’s monetization problem
Agnes Kozera knows a thing or two about helping content creators monetize their content. In 2013, she and a co-founder launched Famebit, a platform that helped YouTubers match with brands that were willing to sponsor their videos. The company was so successful that it was eventually acquired by YouTube in 2016.
This year, Kozera and that same co-founder are launching Podcorn, a platform designed to help podcasters monetize their shows. Like Famebit, it will serve as an online marketplace where brands can post RFPs for projects and be matched with participating podcasters. I interviewed Kozera about why such a platform is needed, how the current podcast advertising landscape is flawed, and why podcasters with small-to-mid-sized audiences currently have such a difficult time finding sponsors.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find a transcript of the interview.
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This transcript has been edited for clarity.
Simon Owens: Hey Agnes, thanks for joining us.
Agnes Kozera: Thank you for having me.
We’re eventually going to start talking about this new podcast-focused company you started, but I wanted to start by giving people an idea of your background and your previous work, because I think it really informs what you guys are doing with podcasting. You co-founded a company called Famebit. What is Famebit?
Famebit is a marketplace that connects YouTube stars and brands for branded content. My co-founder and I started that company in 2013, and in 2016 we were acquired by Google. So that company is now part of YouTube and is thriving there.
And you were really young when you started that company.
Not very young.
I guess it’s all relative. But you were just out of college, weren’t you?
Actually I was in law school when I started the company. Prior to Famebit I had started a subscription commerce company sort of as a side hustle. Because I was a broke student and had no money for marketing, but I was watching a ton of YouTube, I decided to send my product to a bunch of YouTubers. That turned out to be wildly successful, because within three months I saw a 20x return on my little investment. A lightbulb went off and I saw an opportunity that other businesses would want to work with these creators but had no way of doing it, and also saw how manual and tedious the process was of trying to find the creators and contact them.
My co-founder had co-founded a different company, and we kind of said, if you quit what you’re doing then I’ll quit what I’m doing, and let’s do this company together. So we did. We got accepted to 500 Startups. That was our first venture. We’re both Canadian. We ventured out to the U.S. to do this. And it kind of grew from there.
So you guys were solving a problem where there were inefficiencies in the market. YouTube had a partnership program, but how successful you were depended on what niche you were in and what kind of scale you had. A lot of YouTubers were turning to brand partnerships, but there wasn’t a good way for them to hook up with the brands so they could team up for these one-to-one partnerships.
There were a lot of multi-channel networks and agencies that were focusing on creating content in-house, and providing some opportunities to the talent. But they were basically feeding opportunities only to the largest creators. And then on the brand side it was also hard for startups to work with creators because you needed really large budgets to work with a network. So we saw an opportunity to create a marketplace.
And then also, in terms of pre-roll ads for creators, we saw that the majority of the creators who were monetizing off of that were really large talent. Because it’s so heavily based on impressions, smaller creators didn’t have a way to monetize.
The issue was that brands really liked these intimate experiences and were even willing to go to smaller YouTubers that didn’t necessarily have a million subscribers. Because those small YouTubers didn’t have staffs, they didn’t have an ad sales team. So they needed a marketplace.
Yes. Essentially YouTubers were independent creators, and as a small business that was interacting with them directly, I saw that they were savvy enough to want to price themselves and dictate their own terms of working with brands, because they were in the best position to do so. They know how to create quality content. They’re the ones creating it. They’re coming up with the ideas. So it felt fair that they should be the ones deciding how they collaborate with brands and which brands. It made sense that there should be a marketplace where they could choose who to work with, they’re sending their own proposals, they’re pricing themselves and collaborating directly.
The platform allowed for a brand to create a request for a proposal. They’d list what they were trying to sell, and they could be matched up with a YouTuber within their niche. Or a YouTuber would make a bid on fulfilling that RFP.
Youtubers would send proposals to brands they were interested in working with, because the brands would post their campaigns on Famebit. And then once they were hired they could collaborate in a secure and safe work room. The money would be held in escrow. And then once it was completed, brands would have the opportunity to review the content, and once they approved it, that’s when we would pay the creators the money.
Famebit was eventually acquired by Google. You worked for them for a period of time. What was it like to go from a startup to working in this huge company?
I was at Google almost two years. It was definitely challenging. Going through an acquisition is challenging for a founder. The due diligence process was lengthy. We couldn’t share it with the team and we liked to be transparent. At the same time, once you get integrated, it’s also very different because you’re getting plugged into a much bigger machine and you also have the paradox of choice of what you’re going to plug into first and who you’re going to work with to have the most effective integration.
We were very successful. Famebit is very much thriving under YouTube. So it’s been a very good experience. And from a founder perspective, when you’re building your own company, you learn how to build a company, but you also learn how to scale, and the pains of that, and working with a lot more people.
What were you able to do with the product once you had the larger resources of Google behind you?
Scale to much more advertisers and also much more creators. It was YouTube, so any creators we didn’t already have on Famebit, we were able to very quickly scale into that. And also plugging into more analytics as well.
You left Google in 2018. You launched this new company, Podcorn, several months later. Walk me through how this idea came about for this company and the steps that led to where you are today.
The way we stumbled onto this idea was that we were looking at podcasting and saw it thriving, but we saw a lot of similar trends unfolding that we saw in the early days of video. For instance, there are over 750,000 podcasts, but 85% of them still don’t monetize. So there’s a huge opportunity there. We saw that on the brand side, the problem is even more fragmented than the early days of video because there’s no single ad network, like a YouTube, where podcasters can monetize just off of ads, but also where brands can go and contact podcasters directly, even through a manual process. On that end, the problem is much bigger.
The opportunities for monetization for podcasts through ads are very much traditional dynamic ad insertions, whether they’re pre, mid, or post-roll. So we saw an opportunity to actually make brands part of the conversation, versus traditional ads. For podcasters, the opportunities to monetize aren’t just based on impressions, but they’re also based on other factors such as the type of content they’re creating or their expertise in that area. We’re using machine learning to match both sides.
YouTube and podcasting are a little different in that YouTube has captured a huge part of the market, and everything was played through YouTube, meaning it could introduce a partner program that scaled across the entire platform. Podcasting is more fragmented. Apple Podcasts has 50% of the market, but it’s not really helping podcasters monetize at all. It’s acting as a kind of benevolent overlord. You have some smaller players, like Anchor, that are allowing people to opt in to networks that are like YouTube’s partner program, but they only have like 1 or 2% of the podcast market. In some ways, do you think this is a slightly more difficult space to move into because it’s a little bit more fragmented than the YouTube ecosystem?
I don’t think it’s more difficult. The opportunity is bigger. Even from an inventory perspective, podcasters are very eager to monetize. So from that perspective, the opportunity is huge. Because the focus has very much been on dynamically inserted ads, not very well integrated into the content, there’s an opportunity to centralize monetization in a much bigger way than with video and provide a lot more creative ad formats, and provide more ease of use, and truly build liquidity within this space.
Yeah, I think from an analytics standpoint, because there are many distribution channels, there are a lot of challenges, but that’s the exciting opportunity, that you could really build something unique here.
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Ok, back to our scheduled programming…
Based on what I’ve heard, if you’re an independent podcaster, and you want to sell advertising, you want to try to make it into one of these podcast networks like Midroll. But they’re prohibitively difficult to get into because you need to have at least 50,000 downloads per episode. Have you found that to be true with most of the existing podcast networks out there?
Absolutely. And I think that’s the problem with the traditional ad format, is that it’s very heavily based on impressions. It doesn’t account for your topics or the evergreen nature of content and all these other factors that make creators really great. Through our experience in video, we saw how much greater native converts for brands, because they are part of that content. With podcasting, creative formats for native advertising have not been defined yet. When you looked at YouTube, you had lookbooks, tutorials, unboxings, reviews, all these types of content that brands could be incorporated into natively. With podcasting, that doesn’t exist. Right now it is very much based on how many monthly downloads do you get, and are you eligible for traditional ads, because are you going to drive enough impressions for brands. What we want to do is provide brands a way to conduct an interview, where it’s much more inquisitive, it’s not just pushing products, but podcasters and brands get to create something really unique together. And that will make a lot more podcasters eligible for that and will be a lot more valuable to brands too because it won’t be as disruptive to the listener.
With your platform, you’re really courting the podcaster who has this super loyal audience with a few thousand listeners, but doesn’t have a large enough audience to get into one of these ad networks — right now they have to do their own ad sales or turn to a platform like Patreon.
Essentially, the platform is for everyone, but we’re certainly mindful of the smaller and independent podcasters. It’s not so much about how many listeners you have but how engaged they are with your content. For instance, if you are a podcaster that talks about ecommerce, you might partner with a brand that’s a shipping solution for ecommerce brands, and you might talk about the best resources for getting an ecommerce business off the ground. That’s a better fit for the brand and the podcaster. So even though you might not have 50,000 downloads, you’re talking about a topic that the brand’s industry inherently cares about, so it’s a better fit.
Can you walk me through the process of using Podcorn, both from a podcaster’s side and the brand side.
So the way it’s going to work is that the brand will sign up to Podcorn. They’ll create a campaign and pick different creative ad formats that they’re interested in. And then we will match podcasters based on different criteria to the opportunities. Once they’re matched they can send audio proposals to the brands. The brands can see who sent them proposals, what they’re offering to do, and once they decide to hire a bunch of podcasters, the platform is made for scale. So we’re encouraging brands not to hire just one super big podcaster, but many. So you can spread your message in different formats across different podcasts.
Once hired, the podcaster and brand get to collaborate in our workroom. Similarly to Famebit, the money will be held in escrow throughout the campaign. But obviously there are a lot of different factors because there are a lot more distribution channels. But once the content is agreed upon by the brand, then it gets distributed through the platforms.
When you say work together in your work room, is that like a Slack channel where they can banter around ideas about what the podcaster can say?
Exactly. It’s basically a safe place to exchange information, to ask different questions, to see the calendar and schedule when things will be released. It’s basically a way for them to keep track of everything going on in the campaign.
Dynamic insertion is starting to become a lot more prevalent, but a lot of independent podcasters don’t have that kind of sophistication. Are these old-school host-read ads? Does dynamic insertion play a part in this?
No. We’re not doing dynamic insertions for the reason that we feel it’s more disruptive to the listener and less effective for the brand. The content that is placed dynamically is usually not related at all to what the podcast content is about. What we’re doing is a lot more natively integrated in the sense that it does live forever in the content, but it’s not necessarily a script where the host reads a script. It’s created much more collaboratively. It could be an interview where the brand actually appears on the podcast. It could be a roundtable discussion with a bunch of experts within the brand’s field. It could be a brand series. It’s much more native content than ads that don’t relate to what the podcast usually talks about.
One thing that ad buyers struggle with is that they need scale. It’s not worth it for them to spend time with a bunch of small podcasters that only have 5,000 listeners. They want to be able to buy against 30 of those podcasts. Does the tool offer them anything that allows them to scale in that way?
The point of the platform is it allows you to collaborate with many podcasters at scale. The platform is designed to make it easy for you to work with many. In that sense you can do a lot of different things. You could do some host read ads, you could do things that are more integrated. The idea is that you work with a mix of podcasters, not necessarily all small or all big. You get a diverse mix and then you get to integrate into topics that relate to your podcast.
How hands on the brands want to get, it’s up to them and the podcasters. It’s designed for scale in the way you work with podcasters, but it is very much a one to one relationship. You can hire podcasters on a calendar basis, buy them out for several months in advance. Once you agree on what it is that they’re doing for you, it becomes a lot easier.
You guys are using machine learning, in the sense that the podcaster doesn’t need to spend all day on your platform looking for bands to bid for. You guys are emailing them when a brand that they might match with uploads an RFP.
One of the things we learned with Famebit and doing video is how important matchmaking is, and making sure the podcasters don’t have to look through hundreds of brand campaigns that might not be relevant to what they’re working on. We’re matching them based on certain criteria so they can see certain opportunities and also for brands, likewise, we want to ensure that they’re getting relevant proposals from the podcasters. It’s basically to streamline everything, not waste a lot of time, and ensure for podcasters make sure they have a higher rate. At the end of the day we want to ensure a healthy balance within the marketplace.
Have you officially launched?
We haven’t launched, but podcasters and brands can sign up at Podcorn.fm. We’re doing beta testing right now and then launching in Q4 to the public.
What are you doing right now to bring them to the table?
We’re working with a bunch of brand partners and podcasters on early partnerships and early campaigns that we’re leveraging as case studies to show the market of its effectiveness.
What’s typically needed from the podcaster from an analytics perspective? The advantage you had with a YouTuber was that some of the analytics were public. You could see how many subscribers a YouTuber had and how many views a video had. And even on the backend, because YouTube was an all-in-one platform, all the backend analytics were standardized. With podcasting, you’d be using different hosts. Different platforms give you different analytics. How do you verify and report so that these brands know that if someone has 5,000 downloads per episode that the brand can verify that.
So we’re definitely pulling accurate information on the standard analytics that’s available to all podcasters. How many downloads and listens they get. We have our engineering team working right now on how we can get more granular, but I think our core focus with launch is to really show the value of native content creation and show the value of podcasters irrespective of their number of downloads.
One of the things we learned with videos is that you can’t measure everything, and a lot of aspects of doing native involve getting brand ambassadors and building a lot of brand affinity. So there are things you can’t measure for. But we’re definitely trying to get granular analytics for brands, but it hasn’t been our core focus. Our focus is gaining liquidity in the marketplace.
That’s a big challenge that influencers are dealing with, the verification part. Do you think that will be a huge piece of the puzzle?
I think it’s a very important piece of the puzzle. We’re working on getting very granular, so we’ll definitely get there. But the gap in monetization is so huge that we really want to focus on showing the value of native and of all these channels.
Do you think a lot of the early adopters will be direct response advertising where they can give a discount code so there’s at least some level of measurement of the ROI?
Yeah, I think that’s very true. With our other platform we had a lot of direct response advertisers. But a lot of brands care about the niche of the channel and the expertise of the creator. I definitely think direct response is big, but I think there are a lot of sophisticated brands now that have worked with YouTube creators and influencers on Instagram. They’re understanding the value of native content beyond just direct attribution, and what it means to align yourself with another expert’s message who already has a very dedicated and loyal audience.
Is your longterm ambition just to be a marketplace to connect advertisers with podcasters? I could see other synergies where you could connect podcasters with producers or interview guests or create some kind of membership platform on top of this where listeners could donate. Or do you just want to swim in this specific lane?
We definitely want to become the leading marketplace. We want to open it up and learn from the community. We’re very open to shaping in new ways and adding new creative formats, but we definitely want to stick within the marketplace and build out tools to scale efficiency around that. Whether it’s building more native distribution tools where it becomes easier to promote that you’re doing with the advertiser on Podcorn. Those are the things we want to focus on.
We’re starting our work with independent podcasters. We’re definitely going to spread out internationally. There are a lot of opportunities in the Asian markets where podcasting is already very big. We have lots of global ambitions, but a lot of it will be around building more tools for efficiency.
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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.
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