Jennifer My guest today is Marty Michael, CEO of the Headgum podcast network that includes about 30 shows, but more the point for our conversation Marty is also CEO of an online marketplace that Headgum developed called Gumball.fm.
You may have heard of Gumball, they’ve been getting a fair bit of press recently with the announcement of a $10 million investment. And what they do is streamline and automate much of the process for buying and selling host-read ads, which makes it viable for big advertisers to work with much smaller podcasters than before.
We dig into some of the problems with handling host-read ads manually, exactly how Gumball works for both podcasters and advertisers, which podcasts are a good fit for the Gumball marketplace, and some of the new features the Gumball team is working on this year.
You probably know that finding advertisers, pitching them, signing them, coordinating with them can be a slog and can take up a significant amount of your time. So I think Gumball is an exciting new service that’s going to help more podcasters bring on ad revenue for their show in ways that are much more viable and scalable than the current process.
Let’s dig in.
Why are people excited about Gumball?
Jennifer: Hi Marty. Welcome to Supercasters.
Marty: Thanks for having me.
Jennifer: You are the CEO of Gumball, which I've heard you describe as a host-read advertising marketplace. This is basically a place where podcasters and advertisers can connect to buy and sell host-read podcast ads. And the buzz I've heard about Gumball is fantastic. In fact, you recently raised a Series A round of funding that went over what you were looking for, right? You were looking for 8 million. You got 10 million in funding. Why do you think people are so excited about Gumball?
Marty: Well, I think the primary thing that we're building here is sort of an underserved market within podcasting. And so I think that when we show what we've built to not only investors but creators, podcasters and advertisers, the reaction is always the same. It's like, Whoa, why doesn't this exist in podcasting yet? So we've found our own little niche and it's really caught on on both sides of the market, so with advertisers and with podcasters. And I think that that's kind of the secret to what we're building really here is the standardization of the ad and being able to list real-time inventory and then having an advertiser come in ad that inventory to either a cart like an Amazon experience and check out with a credit card.
Jennifer: We'll get into the mechanics of it in a minute. But tell us a little about the backstory, where the idea came from and the company came from.
Marty: Before this, I was working in digital ad sales, was working at a website called CollegeHumor, and you may be familiar with it. It's no longer so RIP to CollegeHumor, but it was a website that did really well within the comedy segment. I was selling a lot of branded content specifically, so tapping into a creator from the platform, asking them to deliver a brand message to an audience who already knew and loved and trusted them. And through that process, I became pretty good friends with two of the creators on the platform. Their names are Jake and Amir. Turns out that they had a podcast outside of CollegeHumor called If I Were You, and I started helping them sell that. And I quickly realized that what we were selling there was very similar to what I was selling at CollegeHumor. It was a 60-second audio-based format that Jake and Amir would deliver a brand message to their audience who already knew and loved and trusted them.
The main differences were that at CollegeHumor, it would cost somewhere like $500,000 and take about three months to produce the video asset. And on the podcast side, it was roughly $2,000, we could turn it around overnight. Basically a lightbulb went off for me to say there is a huge opportunity here. Once bigger brands figure out that there's a much more efficient vehicle in podcasting than what they're spending in digital, there's going to be a massive influx of brand dollars to the space. So I asked Jake and Amir, I said, Hey, can we use your show as a flagship and ask a bunch of your friends and family to start shows and start a comedy podcast network.
And that's what we did in August of 2015. As we ramped that up over a few years, we quickly grew to about 30 shows and 10 million downloads a month. And what I realized was that this was a very manual process. There's a lot of back and forth between the creators and the advertisers to get this done, the host-read ad done. And so we were faced with a problem: We were either going to have to hire a bunch of people to grow the team and scale it appropriately past 30 shows. Or we could build a technology platform that would allow us to make our business more efficient, automate a lot of the manual process and scale past the 30 shows. And so we did the latter and we started building Gumball.fm And that's where the idea came from and kind of how it started.
What makes the host-read ad so difficult to scale?
Jennifer: What makes the host-read ad so difficult to scale?
Marty: Honestly, it's the manual process that goes into selling it in the more traditional way that networks are selling it and the way that Headgum was selling it originally. You get an RFP from a brand, you then have to source what shows meet the criteria of the demographics they're looking for. You send that list back to the advertiser. The advertiser then edits that list down a layer and then they send that edited list back to you. You then have to pull available dates out of some sort of Excel to send back to them. Those dates may be taken in the interim, while the advertiser is looking over the dates and selecting the dates that they want, and then they send that back to you to basically secure those and then move to an insertion order, which is the contract. And then you have everything after the contract, which is the copy points and the air check and the handing of those back and forth.
Typically all of that happens in some sort of Excel or over emails and it's really, really time draining. That process can take up to a month to complete, depending on how fast the advertiser is moving and how fast the podcaster can get back to you. With our system, we basically decrease that month-long process into about 30 seconds. In just a few clicks, you can search for the shows you're looking for. You can then see their inventory, add it to your cart and move to a contract phase or check out with a credit card. So it's made it a lot more efficient for us. What you're seeing in the industry as a whole as these larger networks are basically needing to secure the largest content possible because they're not looking to solve this problem with technology. They're looking to solve it with scale.
Basically, they're looking to say, hey, we can sell one ad unit for a million dollars. We don't need to sell all these hundred thousand download shows for $2,000 each. It's not worth our time anymore. And so that middle band of shows is becoming very neglected in our space. And with a platform like ours, we can work with the largest show in the space, and we can let them keep more of their money because we built the technology to help them support that. But also we can work with thousands of middle band shows as if we only still had 30 because the process is so much more efficient. People can come in, they can buy at scale across those middle band shows, and they can do that efficiently to get the results that they're looking for. Be able to test and see what shows are working and move on to like year-long contracts from there. So that it's really changed the way that advertisers can spend on a wider variety of size shows.
Jennifer: So what I'm hearing is that at the upper end of the scale where, you know, the big podcasts are commanding these huge audiences and these huge ad rates, it's still cost effective for the advertiser to go through this manual process to find those big fish. But when you get further down in the funnel, repeating that process over and over again, as you say, at scale, just becomes untenable. Is that right?
Marty: Yes. Also there's a really key component here that you have to remember, and that is that the reason advertisers and creators both love the host-read ad is because it's just as effective for Conan O'Brien to read to his 5 to 10 million listeners. Like that connection that he has with his audience is just as authentic as someone who has a 10,000 download show. The sticky part is that it's much more difficult to buy 1000 shows that get 10,000 downloads than it is to buy one Conan. So the path of least resistance for an advertiser is to sell that Conan show to their brand to say, hey look, this is who we should be spending with. When in reality, there's a lot of efficiency that can be had with the connection that the host-read has with all of the different sized shows. So with a platform like Gumball, you can actually efficiently do that. You can add Conan's show, but then you can also add 15 other shows of different variation of sizes that are going to get you the same results because you're tapping into that emotional connection that the host has with their audience.
How does Gumball work for a podcaster?
Jennifer: Let's say I'm a podcaster. Want to be on the Gumball platform. Walk us through the process of what's involved in setting up an account and how do I go about offering my ad space?
Marty: The only qualification that we're looking for out of the gate is that you have a minimum number of downloads. That minimum is 10,000 downloads. And the reason is that if your show is smaller than that, it's really hard for the advertiser to fully digest the data to see if the read was successful or not. So having that minimum audience size is important to the advertiser. Once you've met that criteria, you can just sign up on Gumball dot fm as a podcaster and it puts you into our waiting list and we have a team of people on the business development team who are going through that waiting list, having calls with the shows, certifying some data, and then quickly getting you your profile set up so that it's listed and your inventory is listed to advertisers. Now we have a bunch of advertisers already using the platform. We started as Headgum. Back in 2015 there were probably 10 places you could buy a host -read ads from, Headgum was one of them. So we've been working with all of the advertisers in the space for the last seven years. We have over 400 advertisers currently in the marketplace using the platform. So once you get your show listed, you're exposed to all those advertisers.
Jennifer: Are there any subject matter topics that would not be a good fit for you or another reason besides size that you might reject a podcaster?
Marty: No. In fact, we think about it quite the other way around. And one of the things is we have a lot of people who are applying to be on the platform. It's more about listening to the advertisers and what their needs are so that we can prioritize onboarding that content to the platform because we know that it will see success once joining. So we kind of flip that 180. But all segments here are important to us and we want to continue to build out scale at each of those segments. But as we move, there's more levers in play than just what podcasters are applying.
Jennifer: And as the podcaster, I'm assuming there's a place for you to upload what inventory you have available, dates, rates, all of that stuff.
Marty: Sure. When we're bringing your show on to the platform, you upload your RSS feed and we pull most of the information from iTunes. So all the category information, your basic demographic information, and then we verify the download information with your hosting platform and then you're basically set up. So we work with you to identify if your show is embedded or dynamic, and then we decide how many ad slots. If you've already been running ads before, we just ask you what how many ads you've been running. And we set those up. So every single week you'd have a set number of ads that are available for purchase and the downloads would be dependent or the impressions would be dependent on the size of your show.
How much do podcasters get paid on Gumball?
Jennifer: Do the podcasters set their own rates as well?
Marty: Yeah. So we work with the podcaster to come up with some sort of floor rate, basically an initial testing rate. And then as your demand is increased, your CPM goes up as well. Shows that are in really high demand have really high CPMs, and the shows that are new to the platform and looking to get tested more often start towards their more floor CPM. So our CPMs range on the high end, could be $55. On the low end is somewhere around $20.
Jennifer: And what's nice about this is that there's no negotiation with the advertiser, right? As the podcaster they're not like pitching you well, what if we bought six? Could we get a lower rate? There's none of that negotiation.
Marty: No, not that the podcaster is dealing with. There are some relationship-based advertisers that we tend to work out some deals with from time to time, but it's never something that the podcaster has to worry about.
Jennifer: What if the podcaster does not like one of the advertisers for some reason? Like no way, I don't want X advertiser on my show.
Marty: Once a campaign gets booked, it notifies all the podcasters who are included in that plan, and then they have a 48-hour window to decline that ad. And if they decline, it simply just takes it off of the campaign for the advertiser and refunds the advertiser the money. Look, we're dealing with the host-read ads. We don't want a situation in which the host doesn't feel comfortable endorsing the brand because they're putting their voice against it. And they're basically saying to their audience that they love this product or that they believe in this product. And so we want to make that feel as authentic as possible.
How does Gumball work for advertisers?
Jennifer: Okay. So tell me how an advertiser would find your show.
Marty: The way that it works is an advertiser comes in and they land on the Browse Podcast section. They are then usually carrying some sort of demographic information with them that they're looking for. So let's say it's a female show that reach a female audience age 18 to 34 in the comedy segment. You can push all of those buttons in the search criteria and it will filter in real time the shows that meet that criteria. And then from there, you can see the list of shows. You can hit a little button, a plus button, and that brings you to the show profile, that shows you the available inventory. And then you can start adding those spots to your cart. And then once you're satisfied with that show, you can go back to the roster of shows that you were just looking at from the filter. And you can click into another one, do the same thing, or repeat that process until you're satisfied with where your cart is. And then at that point, you can check out.
Jennifer: So the the advertisers can sort of browse the podcasts that are available and put stuff in their cart to buy. Is there any opportunity for podcasters to indicate hey here are the brands that I'm really interested in or I think would be a good fit for my show?
Marty: Yeah, we do it both ways, actually. So here are some advertisers I think are a good fit, and here are some categories that I would just never want to work with. And one of the cool things is that when an advertiser logs in, we know what the advertiser is and what category that they operate in. And so if they're let's say a CBD company is a good one of like a fringe that some people don't want to work with. So if you're a CBD company that logs in and you're looking at all the shows, it's not even going to show you the shows that have indicated they don't want to work with CBD companies. So there's a bunch of logic built into this system to avoid all sorts of different double bookings from the same category too. So like if you already have a CBD advertiser booked on one week on your show and another one comes in, they're not going to see available inventory for that week. So category exclusivity is a big thing. There's just a ton of logic that we built in based on what we know from selling ads for the past seven years, which I think does also separate our business from a lot of others. But to get back to your original question, yes, we have a sales team in place, and their job is to get as many advertisers onto the platform and using the platform as possible. But also if there are brands that are flagged by podcasters that they're interested in, we're certainly happy to help facilitate that connection and at least notify the brand that that show is on the platform and they can find it there in their inventory there as well.
How does Gumball streamline ad production?
Jennifer: We've covered the first part of the process, which is just finding the available inventory and making that purchase. Now we get into okay so how are we going to get the copy? How are we going to do the air checks? So tell us about Gumball's involvement in that part of the process.
Marty: Once a campaign is booked, it becomes a campaign on the advertiser dashboard and then they get notified that they need to start uploading their copy points. So in that campaign, you have every single ad that was purchased listed out based by show in chronological order, and you have a button there where you can just click in and upload your air copy. And that has different boxes for the promo code, the unique URL, if you're using either of those and then a section for copy points. We typically ask for 3 to 5. We don't really want a script because we think that that diminishes the value of what the host is actually delivering, which is their voice to their audience who already knows and loves and trust them. So we ask for like 3 to 5 copy points.
Once that is all uploaded, then it automatically gets relayed over to the podcasters and in their dashboard they have their weekly schedule when they're releasing their episode, what ads they need to read for that week, the amount of money they're getting paid for each of those ads, and then also the copy points. So the information they need to be able to do a good job to read that ad. Once they read the ad, there's another box right next to it for uploading to aircheck. So once that gets uploaded and the ad goes live, that then gets relayed automatically over to the advertiser. So back in their dashboard where they uploaded their copy points, right next to that is a button that's grayed out until the ad goes live and which at that point they can listen to the aircheck. So all of that is automated. We don't put our hands on any of it anymore.
Jennifer: That's awesome. But you say they don't hear the aircheck until the podcast episode goes live with it.
Marty: Yeah. So in this industry we still don't have a pre-review system in place. And so what we don't want is an advertiser listening to it and then asking to make tweaks before because that's a lot of work for the creator. And we've established that if the the creators that are on our platform do a really good job with their ad reads. If for some reason there is a mistake that is made, a misspelling or a mispronunciation of something specific that is really crucial to the brand, we either try and edit and fix it in real time to make it re-upload the correct way. Or if it's been too long and something drastic has happened, then we just offer something called a make good and we give them a free spot in the future where we fix it.
Jennifer: And how much does Gumball take from the transaction?
Marty: We take a revenue share and that revenue share is built in with the creators and it varies depending on the relationship with the creator for selling their content exclusively or not exclusively. There's a variation, but at a minimum, the creator is keeping 70%.
Jennifer: You said you have 400 advertisers using the platform right now. Looking at your website, you list some of them. These are like the who's who of names for podcast advertisers. We've got Netflix, Blue Apron, Squarespace, Peloton. Do you have smaller niche podcasters as well or are you really targeting those mass market advertisers?
Marty: Yeah, look, we work with over 400 advertisers. We want to feature the biggest brand names on the website so people get excited. But we work with all sorts of up and coming DTC brands. We're also working with a bunch of larger, bigger brands like you mentioned. So we have a nice healthy mix. And the beauty of what we built is that it works at scale for any size advertiser. You can be somebody coming in and spending $5,000 or you can be somebody coming in and spending $5 million. And the ease of use of the platform allows us to facilitate both of those in tandem without having to worry about the size of the advertiser, which is really unique to what we built versus the old school style of really only focusing on catering to the largest size of both sides of this market.
What does the future of advertising hold for long-tail podcasters?
Jennifer: A good fit for your platform is 10,000 downloads per episode plus. What do you think the future holds for podcasters in that long tail who are wanting to monetize with ads, knowing that, you know, Gumball is really sort of the first foray into automating and scaling this kind of thing. Long tail I would describe as like a thousand downloads to say 100,000.
Marty: So as we look to the future of what's happening to this, what you qualify as longer tail, but like this 1,000 to 100,000 downloads show is that they're going to continue to kind of be dropped out of these more established networks due to the fact that they these older networks, they have they have a scale problem where they can't grow past a certain number of shows efficiently without having to hire a bunch more people to support that process. So what they do instead is they offer tens of million dollar deals like Joe Rogan or the like to join their network and or their sales outlet. What we built allows us to get away from that, allows us to service all of those mid-tier shows. So I'm banking on the fact that we already have filled a nice niche and that our opportunity will continue to only get bigger.
Jennifer: It sounds in some ways like you're disintermediating the networks, right? Like if someone is really using that network for access to advertisers, you fill that slot beautifully. There are also some other advantages to using a network like promo swaps within the network. Are you thinking about those at all for Gumball?
Mart: Yeah, that's another reason we raised money is we've only had one engineer this entire time building this platform. His name is Andrew Pyle. He was the CTO of Vimeo, the video platform. He was like their first employee. He was the CTO there for 10 years, he had 100 engineers underneath him by the time he left. When he joined us, he really wanted to get to coding again. But now we're moving so quickly that he needs help again. And building product and new features is something that we're really excited about. So he's already added three team members to his team and they're hitting the ground running. And one of the product features that we're building currently is going to be the ability for podcasters to raise their hand within their own marketplace to say, hey, I'm interested in your show. Would you want to do a swap with me? Because, look, we are well aware that the number one gripe that shows are talking about besides monetization is growth. And when we can help grow a show, it benefits both of us because at the end of the day, we're taking a small percentage of what they make so that if they can make more money by growing their show, by selling ads for more money, that only benefits both of us. So we're investing in that.
Jennifer: What other kinds of goodies do you have on the roadmap for the next 6 to 12 months?
Marty: Oh man. I don't know how much I can fully divulge here. We're really excited about the cross-promotion thing. We're really excited about building tools that allow both sides of this market to more effortlessly use Gumball as a one-stop destination for their monetization needs. I think there's still some fragmented parts of this ecosystem that live outside of Gumball, and I'd like to try and make sure that we can bring as many of those into the fold as possible. But we are 100% focused on this host-endorsed message and the ability for our creator to tap into this relationship with their audience. So when we think about our business, we're never focused on what are all the ways these shows can make money? We know that our specialty is in host-read advertising. So that's where we will remain sitting.
Jennifer: Thank you for joining us today, Marty.
Marty: Thank you for having me. This was fun.
Jennifer That was Marty Michael, CEO of the Headgum podcast network and the Gumball.fm marketplace. Are you excited about this new marketplace for host-read ads? Tweet us @supercast and let me know you’re listening, and what you think of this episode.
Until next time, I’m Jennifer Tribe. Thanks for listening.