Podcasts have emerged as a major new category in media/entertainment/news/education etc. We have seen huge deals for big podcast hosts like Bill Simmons and Joe Rogan, both of whom did transactions with Spotify for nine-figure amounts. But as Spotify (and surely others to follow) lock-up top podcast content to strengthen their subscription offerings, we stand to lose something awesome about podcasts which is the ability to listen to them for free on any platform we choose.
But the counter weight to this trend is the growing size of the “live reads” ad market. This is when a podcast host reads out an advertisement on the show. This has been a staple of talk radio for many years. I remember Howard Stern doing live reads for LoJack back when Howard was on CBS Radio. Live reads are powerful and a form of influencer marketing. If you love Howard and he waxes eloquently about LoJack, you love LoJack. Or so it seems.
The live reads ad market for podcasts was in excess of $700mm in 2019 and seems headed to a multi billion dollar ad market in the coming years. So there is certainly a lot of money out there for podcast hosts who want to stay free and independent, or are emerging and building an audience.
And that is where Gumball comes in. Gumball is a marketplace where advertisers post live read ads and podcasters pick them up and read them on their shows. Ad-buying opportunities within podcasts have historically been manual and limited, not unlike the process of purchasing web ads pre-2000. As podcasts continue to gain market share, Gumball’s self-serve ad marketplace has the opportunity to be as transformative to the podcast industry as Google Adwords was for web ads.
Gumball is a subsidiary of the Headgum podcast network. Headgum is a network of owned and operated comedy podcasts as well as third party podcasts that join the Headgum network for distribution and monetization (via Gumball).
USV has been looking for an opportunity to invest in podcasting that fits with our thesis and we found it with Headgum and Gumball. We like the way that Headgum’s owned and operated content, its Headgum network content, and its monetization platform Gumball all fit together and enhance each other. We made an investment in Headgum recently and blogged about it on the USV blog this morning.
