Online Audio Advertising Market Still Developing

| Author: Dave Nelsen | In Announcements, Events, What's New Print This Post

Given the still-nascent online audio advertising market, TalkShoe has decided to pause its TalkCash program. While we remain true believers in the concept, the primary purpose of this action is to allow us to focus our resources on continuing to enhance and grow our popular Community Calling service.

The original concept behind TalkCash was to share ad revenues with audio content creators (aka podcasters), creating an economic incentive to use TalkShoe. It turns out that most people engage in Community Calling for two other non-economic reasons: 1) to more deeply connect with people having like interests [as humans, it’s in our DNA], and 2) to share their voice [essentially the same force that drives blogging]. We estimate that on TalkShoe less that 10% of people are in it primarily for the money.

Two supporting data points: In the past 12 months, the percentage of unpaid host listens on TalkShoe has risen from 3% to 61%. And during the same period, the average time a caller remained on the phone has gone from 31 minutes to 51 minutes. Yes, this is my baby, but even I am amazed at this level of engagement with an “Internet” application.

One other relevant detail: TalkShoe has been paying a subsidized ad-share rate of $10 CPM (1 cent per episode-listen) to hosts. While we sell ads at $20 CPM and higher, we’ve actually been paying out far more than we’re generating due to limited ad inventory. At this time, there are more important things to spend our investors’ money on.

If you’re a casual reader not involved in driving Web2.0 and new advertising models, stop reading here.

For those of you actually interested in the guts of this stuff, read on. I’ll share insights gained through almost two years of testing and tweaking our online audio ad program (aka podcast advertising). I’ll cover Micro-Segmentation, Podcast Advertising Effectiveness, CPM Rates, Host Read Endorsement vs. Non-Host Recorded Ad Insertion and more. And I’ll tell you about a campaign worth $2,747 CPM.


TalkShoe has demonstrated that audio advertising can be very valuable when properly targeted to narrowly-segmented audiences. An example of this is my Cellar Dwellers Home Winemaking show. Brad Ring, the editor of WineMaker Magazine, emailed me after discovering the show on iTunes. He wrote something to the effect of “Dave, every one of your listeners is a perfect candidate subscriber for my magazine; let’s do a deal.” And even though I average just 500 to 800 unique episode-plays per week, we did. Anecdotally, it appears that a very high proportion of my listeners now subscribe to Brad’s magazine, although neither of us knows the exact numbers.

Now that I’ve seen it in action, the power of micro-segment targeted advertising is undeniable.

Podcast Advertising vs. Internet Advertising Effectiveness

I don’t know about you, but I’m getting pretty good at ignoring most Internet text and banner ads. I suspect that I’m not alone, as I’ve heard that Google’s click rates are dropping.

By comparison, Internet audio ads (my generic name for podcast advertising) have one big positive and one big negative. On the plus-side, our evidence indicates that people actually listen to them. When you turn on your iPod, you’re not talking so you listen. How many times have I heard an Acura ad on an NPR podcast, and yet I still notice them? Heck, as a lifetime Toyota/Lexus driver, I might even consider an Acura next time.

On the minus-side, unlike with Internet ads, an iPod provides no mechanism for clicking on something. Attention: Steve Jobs, entrepreneurs, and/or any venture capitalist; solve this problem and make a billion or two. Cell phones may be the key — texting a code or pressing a button on an Internet-enabled phone could provide for that immediate response. We need it.

Audio Advertising Rates

In addition to advertising for WineMaker Magazine, TalkShoe has run campaigns for Ambrosia Software,, Citrix Systems (GoToMyPC and GoToMeeting products), GoDaddy, PageFlakes, and a couple dozen individuals. Rates have ranged from:

• A low of 2 cents per impression to…
• A high of 5.5 cents per impression.

We also tried some “remnant” advertising at 0.3 cents per impression, just to prove to ourselves that it is a very bad idea and should not be repeated. Ads that aren’t relevant to a listener are simply clutter and diminish the value of the good stuff.

Even higher rates can be justified where there is a good match between advertiser and audience (don’t miss the Brehm Vineyards example at the end).

A side note: As with Google AdWords, TalkShoe allows individuals to run online audio ads on a small scale; as low as 1,000 impressions for just $20. You simply can’t do that on offline channels such as radio. But many of these people didn’t understand how to craft a relevant or compelling message, nor did they execute sufficient repetitions. Even though most of us are experts in watching ads, creating them is a lot harder than it looks. Seriously, don’t try this at home!

Host Read Endorsement vs. Non-Host, Recorded Ad Insertion

We’ve experimented with two different approaches to podcast advertising working with Blubrry, a leader in host read endorsement, and Kiptronic, the torchbearer for non-host recorded (dynamic) ad insertion.

Host read endorsement has been the preferred model in radio for years. Rush Limbaugh gets probably a 30% premium for his personally voiced ads flogging the Sleep Number Bed because if you like Rush (or even if not), his endorsement is more likely to influence you. However, while this proven approach works for individual podcasters with substantial audiences, it doesn’t scale down very well to the network-of-lots-of-hosts model. The costs of matching a specific advertiser with a specific host, developing and delivering the message, and then verifying effective delivery, just don’t make sense on a small scale for a network. How would an advertiser even choose the hosts to whom they’d hitch their reputation? They’d have to find 100 hosts to reach 100,000 listeners. It’ll never happen.

To me it’s obvious that non-host recorded (dynamic) ad insertion is the path for a network! Among other reasons, over 30% of TalkShoe’s episode-plays are for recordings more than a month old (the legendary “long tail”). Only by putting a fresh ad in an old recording can you monetize it. Believe me - the folks who made “Snakes on a Plane” won’t still pay you for running their ads today.

Matching is done based on category (e.g., sports) or topic (e.g., winemaking), and listener demographics (age, gender, etc.) and location (derived through IP address). It’s far better than radio and will get better still.

By the way, ad insertion technology still needs to be enhanced in two other ways: 1) interstitial insertion (in program, not just pre-roll and post-roll), which we know our friends at Kiptronic are all over, and 2) a comprehensive “Audio Ad Words” type marketplace for buying impressions. Come on Google; unleash your dMarc technology on the Internet for podcasting. We want it; we need it!

Critical Mass (Audience)

It may be obvious, but a certain scale and a certain level of automation are required in order for micro-segmented advertising to be meaningful and cost-effective. You can’t pay a salesperson to chase deals that generate $10 - $16 per week (that’s what it would cost WineMaker Magazine to advertise on my show at 2 cents per impression).

TalkShoe is now delivering more than 12 million unique episode-plays annually and we can see that our business will become more valuable per unit as we grow to 50 million or, better yet, 100 million unique episode-plays. There’s a definite knee-in-the-curve where growth drives “extra-linear” value (I’d say “exponentially”, but that connotes hype I am trying to avoid).

Inventory Utilization (Emergence of the Online Audio Ad Market)

As all of the airlines know, having a seat on a plane is one thing; filling it is another. The third quarter of 2007 was TalkShoe’s best yet, when 23% of episode-plays carried paid audio ads. However, fast growth in episode-listens makes this number hard to keep up with.

Advertisers generally targeted “categories” rather than individual shows. The Business, Computers, Education, Sports, and Technology categories were most popular. I expect us to average 20% utilization over time, but with less interest in advertising in Politics, Arts & Entertainment, Pets, or Government categories (poor demographics or too controversial). The Religion category is a wild card.

To repeat the subject of this post and not to be forgotten is that the online audio advertising market is still in its infancy. A lot of work needs to be done to establish credible case studies and compelling ROI data. But it’s not all bad news. TalkShoe is using its unsold inventory to drive its own growth and it’s working! Last quarter, volume was up 70% over the previous quarter.

The Most Effective Advertising Ever

So here’s the story of what may be one of the most effective “ads” in the history of the world, on TalkShoe or anywhere else (a claim that I realize can’t be fully proven, but hang with me). In early 2007, a listener sent me a bottle of wine he made from Peter Brehm frozen grapes. It was fabulous, comparable to the best wines I’ve ever tasted. If you’re not familiar with them, Brehm Vineyards grows fantastic grapes and freezes them when they ripen each fall. That way, a winemaker can buy them and get started any time of year.

On January 16th, my wineaux partner “The Other Guy” and I bought Brehm grapes and broadcast the first of six episodes about “Frozen Grapes”. We involved listeners and participants-by-phone in vicarious winemaking with our own Brehm grapes. By the time of episode six on February 20th, at least a dozen listeners had written to say that they too purchased grapes from Brehm. With only 1,547 episode plays during that period, we generated at least $4,250 in sales for Brehm Vineyards. On a CPM basis, that’s $2,747. That’s the power of micro-segmented advertising.

The Bottom Line

So I’ve seen the future of audio advertising. It’s still lacking an instant click; dynamic interstitial insertion is not yet widely used; and no automated marketplace has achieved either full functionality or critical mass. But the ads are relevant to me and they work! As TalkShoe grows and the market develops, we’ll unpause our TalkCash program for the 10% of you who want to “broadcast yourself” and get paid! Until then, just enjoy actually talking with your online friends and groups.


Want to Be an Entrepreneur? Eight Lessons I’ve Learned (Part 1)

| Author: Dave Nelsen | In Employee Blogs Print This Post

Last night, I was the featured speaker at one of the coolest events in Pittsburgh, the EnterPrize Business Plan Competition Awards (Phase II). In its 10th year now, it’s run annually by Melissa Unger of the Pittsburgh Technology Council (I think that’s the nation’s largest association of tech companies – and it’s in Pittsburgh; who knew). Promising business plans are judged by experienced entrepreneurs and the winners receive money and lots of positive PR.

Anyway, I was asked to share eight lessons learned from my 14+ years in startups. It’s not a comprehensive list, just some things that were top of mind at the moment.

1. I make a lot of red wine (note to the BATF – it’s less than the 200 gallon annual “personal” limit set by law). Right now I’m fermenting fresh Malbec, Cabernet, and Merlot grapes that I got from Chile (another note: If you like wine and have not seen the movie “Sideways”, add it to your to do list immediately). Anyway, most winemakers would agree that 90% of what makes quality wine happens in the vineyard. It’s the sun & the moon, the microclimate, the soil (collectively called “terroir” – pronounced tair-WAH), training & pruning, etc. The winemaker influences only about 10% of the finished product through his/her process, selection of yeast(s), oak barrels, etc. But guess what? The growers, who contribute 90%, have a profit margin averaging just 5%-7%; the winemakers, who contribute just 10%, have a profit margin averaging 30-40%. The lesson: In any supply chain, be the one who is closest to the customer.

By the way, vines under stress produce the best grapes. I’m wondering whether there’s a corollary for start-ups.

2. The #1 most important skill for an entrepreneur is the ability to present. More than any other single activity, you’ll be selling – selling to potential investors, selling great candidates on joining your fragile upstart, selling to key customers, and especially selling yourself, because a business plan rarely plays out exactly as planned and you’re the person your stakeholders will be relying on to figure out “the line through the rapids” as my last company co-founder Andy Fraley always said.

Mikki Williams (possibly among others) once said that the definition of sales is “the transfer of enthusiasm from one person to another.” If you can’t do this excellently, don’t start any business other than a self-funded sole proprietorship.

When selling, I always remember one other thing that Mikki said; every person on earth listens to WII-FM – “What’s In It - For Me?” Make sure it’s obvious and compelling to them. It’s not about you.

3. This one is going to sound really cliché, but mathematically, 99% of companies violate it. The idea is to hire the best, meaning the top 1%.

Have you ever heard the expression that “The cheapest man pays the most?” You should be very frugal (see Part 2) but not when hiring. I always aim to hire “top1%ers”. Such folks will cost you 20%, 30%, or 40% above market average compensation (maybe more), but they will be 2X, 3X, or 4X more effective in their jobs – better ideas, more productive, fewer mistakes, and better teamwork. From a value perspective, it’s a no-brainer. My fifteen-person TalkShoe team can beat a one-hundred-person division of almost any big company every time. Yet our total payroll cost is far lower than theirs.

4. On the topic of hiring, your most important hire will be your product manager. If you don’t have one, I’m confident that you’re wasting your money doing the wrong things at the wrong times. And you’re very likely committing the cardinal sin of being sales-driven or customer-driven.

Wow, that sounds contrarian, but it’s not. A product manager should be steering the ship that is your company, determining what is delivered, when, for whom. A product manager will look at the market and see not individual prospects, but rather market segments - large groups of prospects that can be served with a similar product or service. A product manager will balance current customer needs, against competitive threats, against new opportunities, against available resources and timeframes. A product manager will create written “requirements” and schedules before development work is started, so that you don’t waste time building the wrong things and constantly reworking them. And finally, s/he will strategically price your offerings to optimize revenue and profit margins. In differentiated businesses, cost-based pricing died long ago; the way to go is value-based pricing.

Come back to see the other four lessons learned in “Part 2”.


For the love of podcasting

| Author: Dave Nelsen | In Contributors, Podcasting News Print This Post

Mark Hopkins writes about how relevant and powerful online audio continues to be on Mashable today:
“Of course Mashable Conversations listeners (and most Mashable readers) are pretty familiar with our love for the audio format, but there’s still a fair amount of naysayers out there who Internet video is killing the radio star … It isn’t that we think one form is superior to the other - in fact, we’re pretty in love with both forms of Internet media entertainment.”

Mark posts Mashable Conversations regularly on TalkShoe.


Chatfest with iJustine, Win a FREE Flipvideo.

| Author: Aaron | In Announcements, Hosts in the News, What's New Print This Post

Justine will be giving away a Flipvideo on tonights (Monday May 11th, 2008) special Mother’s day Chatfest. Join her here for the chat and even call in and talk.

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Connecting With Others Who Share My Interests – WOW!!!

| Author: Dave Nelsen | In Employee Blogs Print This Post

Most of us have a few things that we’re REALLY interested in. For me, it’s running, skiing, mountain biking, and especially home winemaking. Probably like you, I spend a lot of my online time pursuing these passions.

Have you noticed how the Internet has evolved? Not long ago, everything was static. Yes, it was amazing that you could find so much information but it was largely “read-only”. Now, everything is interactive.

I used to visit great winemaking sites like I still do that occasionally but now every few weeks I schedule a TalkShoe community call to talk and chat with other winemakers online: Cellar Dwellers Home Winemaking

This is both amazing and exhilarating. One night, a world expert on oak barrels called in. In making red wine (and some whites including Chardonnay), oak is incredibly important. It was one of our longest group calls ever - hours - just incredibly interesting if you’re a winemaker. (Note to non-winemakers; I realize that you think I’m whacko at this point, but toasted oak is just splendid if it’s from Hungary or France).

Another evening, a winemaker called in from New Zealand (with ShoePhone, it’s free to call from anywhere on the planet). After comparing notes about winemaking and talking about the beauty of his country, we agreed to send bottles of our respective wines to each other. While I thoroughly enjoyed tasting his wines, let me warn you not to make such a pact. It cost over $100 to send two bottles of my wine to NZ and, at least in PA you have to lie to the UPS guy, telling him that you’re shipping “olive oil”. I worried that the BATF was watching my every move (and now they probably are).

Truly connecting with people who share our interests is one of the most satisfying experiences in life. The genius of TalkShoe, and of the Internet in general, is that it can almost magically help us make these connections.


Lucy Walsh joins TalkShoe on Monday nights!

| Author: Aaron | In Announcements, Hosts in the News, In The News, What's New Print This Post

Lucy Walsh, right off her appearances on MTV’s Rock the Cradle, will be hosting a TalkShoe call every Monday night at 10:00 PM Eastern, 7:00 PM pacific. Join in live to listen to what Lucy has planned next. You can text questions or even call in and talk to Lucy. To participate go to . To call in dial 1-724-444-7444 enter Call id 5829 (LUCY) on your phone.

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Why Be an Audio Dude in a Text & Video World?

| Author: Dave Nelsen | In Employee Blogs Print This Post

As the founder and CEO of TalkShoe, I’ve been podcasting for more than two years. Well, more like live, interactive podcasting — what we call “Community Conference Calling”.

Anyway, to the point of this post, most people communicate online using text. Think: chat, SMS, email, writing on friends’ walls, commenting on blog posts, typing in a forum, or dozens of other flavors of text. If not texting, we’re sharing photos or videos. So why use our voices on the Internet; meaning literally?

Here are the four things that I love about voice:

1) Voice is a much richer form of communication. Text does a poor job of conveying emotions, even with smiley faces. I want to actually hear that you’re enthusiastic, or sad, or sarcastic, or whatever. Hey, our DNA has been wired to TALK across 100,000 years, whereas text is a newfangled tool we haven’t yet fully mastered.

2) Voice is immediate and CAUSES new ideas. How many times have you been talking with a group of people and had totally new ideas emerge — ideas that were not from any ONE person? It’s the wisdom of crowds, to cite a great book.

3) It’s easier to talk than type. No explanation necessary, or at least I don’t have the time to write one out here.

4) (This is the most IMPORTANT one) There’s a big difference between our eyes and ears. When we read text or watch video, we can’t do much else, at least not competently. But when we listen, we can still do almost anything else.

The world is insanely busy these days, yet we all have more time for “multiplexing” audio. So if you’re an audio dude (AKA live interactive podcaster) you can talk to people — live and recorded — as they drive, exercise, mow the lawn, whatever… without having to compete directly with other activities. It makes them much easier to reach and that’s the whole point.


MTV camera crew visits Jesse Blaze Snider during Jesse’s TalkShoe show (featuring Dee)

| Author: Aaron | In Announcements, In The News, What's New Print This Post

Jesse Blaze Snider’s show on TalkShoe continues to a attract a growing number of fans of comic book writer, musician, and MTV “Rock the Cradle” contestant, who talk and text live with Jesse on Sundays each week at 10 p.m. ET.

Jesse’s depth of knowledge on a range of eclectic issues is impressive, and he always holds his own. If you haven’t done so already, check him out on TalkShoe.

This past weekend, during a special Saturday edition of Jesse’s Talkshoe broadcast, Jesse’s father – rock legend Dee Snider of Twisted Sister – phoned in for a candid give-and-take with his son.

A MTV camera crew was there as well, recording Jesse as he chatted live with his father and his fans on TalkShoe.

Tune into MTV’s “Rock The Cradle” this Thursday, April 24, at 10 p.m. ET. And keep tuning into Jesse’s show on TalkShoe!


Jesse Blaze Snider from MTVs Rock the Cradle, LIVE on Sundays!

| Author: Aaron | In Announcements, In The News, What's New Print This Post

Come join in on Jesse’s live internet radio on Sundays at 10:00 PM eastern / 7:00 PM pacific. He will take questions about what is going on with MTV’s Rock the Cradle or anything you want to talk about. You can listen along, text chat a question or even call in and talk with Jesse. To call in dial 724-444-7444 and enter Call ID 1000# or click this link -


Special Jesse Blaze Snider Call for MTV!

| Author: Aaron | In Announcements, Hosts in the News, In The News, What's New Print This Post

Jesse will be doing a special TalkShoe call tomorrow (4/19/2008) at 2:30 PM Eastern/ 11:30 AM Pacific. Come join in and talk with Jesse as MTV films him for this week’s episode of Rock the Cradle. Click here to join in .


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