Audio entrepreneurs Max Franke, the Managing Director of Axel Springer Audio.
Max Franke, the Managing Director of Axel Springer Audio isn’t shy about his ambitions (as you can read here). In fact his declared ambition is nothing less than becoming: “By 2025, we want to be the market leader for audio journalism in German speaking countries”.
So when the time came for him to spell out his vision for Axel Springer and podcasting, the New World Encounters audience was all ears.
Interest was all the more heightened because Axel Springer Audio was only founded last August, leading Franke to point out that “We identify as entrepreneurs. Which raises the question; ‘why are we doing this?’”
Part of the answer to which was a simple market assessment: “With podcasts in Germany the market is still in its infancy. So it’s not like it is compared to the United States. There are different numbers, but this one study suggests that some 17% of the German audience is using podcasts to date. This is a small amount but that makes it a market experiencing strong growth, which certainly makes it attractive to us.”
Strong growth but new hurdles
“One of the challenges we feel in audio or with podcasts is the barriers to entry are very low” Franke points out. While that might seem the opposite of a hurdle he clarifies why it complicates progress: “So every creator goes into the market and they cover all the niches which makes it difficult for us or for anybody to stand out with their products. Plus 95% or more of the shows don’t reach 10,000 plays per episode, which at least in Germany is kind of the crucial threshold to become relevant for the advertising market. So you have thousands of creators competing for the listeners’ ears and at the same time, we really have a monetization issue.”
As if the problems with entry threshold and profitability weren’t daunting enough, Franke points out that the competition isn’t just from kids in their bedrooms either.
“Most prominently we see the New York Times who did a series of acquisitions recently, and announced that they want to move forward with an audio first app. But we also see all the big tech companies joining the field here. So for example, Facebook announced a big audio offensive in April, and with Spotify, they invested more than 1 billion euros in audio or podcast infrastructure as well as original content. So why is that? Why is everybody doubling down on this?”
Why audio matters
Naturally Franke and Axel Springer have spent some time pondering the answer to that. “The first criteria is that listening is more convenient than reading and audio works everywhere. So we have these interstitial moments, when you’re in the car, in the gym, etc, where our traditional content – text content, video content – simply does not work. So audio gives us an exciting opportunity to extend our reach there in new usage situations.”
Nor is is just about the time of attention capture:
“Secondly listeners are more loyal than readers. Especially with podcasts being consumed a lot through headphones it’s a very intimate form: you have very emotional connections with the audience and with the content. Thirdly we are very excited about the storytelling opportunities with audio. As publishers, audio means an opportunity to reach other user segments, especially young and educated people that are sometimes hard to reach with our more established media brands.” As a kicker Franke pointed out that the increasing use of both voice control and voice search make it ever more relevant to be in the audio sphere.
Franke illustrated his point with the consumption pattern of a Danish audio startup called Zetland that had caught his eye in 2019. “They started with text only, and then continued by also offering all their content as audio. In a very short time usage patterns shifted towards audio to the point where 70% of all usage was audio.” Franke also cited the Washington Post finding that engagement with audio was three times higher than other media content; “so that’s why we decided we want to be in there and why we have the goal of being the number one in German speaking countries, with audio as a critical, crucial, core, part of our journalistic offering.”
Franke also offered up the little-known nugget that Axel Springer is in fact the ‘second biggest radio investor in Germany.’ But that is not nearly enough.
“We reach more than 20 million people daily, out of a total population of 80 million so so we have quite a strong footprint but these had no close ties with our editorial brands. So we formed a new unit, Axel Springer Audio, which we want to be a catalyst for audio – we want to be the audio lobbyists within the company. We have the capabilities, the knowledge, the access to talent, to produce better content, and we have different touch points within the group. So while we are a small unit, and we want to stay small, we work together with our portfolio of German brands to impact the product management side.”
Strategically the division has identified a number of core principles, largely influenced by perceived lessons drawn from Schibsted and the New York Times. “The first one is to turn our users into our listeners. This is really the product part. If you go on to our websites or into our apps at the moment, their audio has a very low visibility. So even if you are a fan of a specific format, you will have a hard time finding it. And if you do find it, the usability is quite weak.”
Realistically this is not an unfamiliar observation in many media, it’s the harsh facing up to facts and the willingness to do something about it that marks Axel Springer out here.
“We really want to give audio a digital home, which means an opportunity. 17% of Germans use podcasts – which means more than 80% don’t. They are our audience. And as soon as they become interested in audio, we want to make them a compelling offer directly on our website and not through third party channels.” Secondary marketing includes native advertising and branded content using audio, but in the end it’s content, content, content.
Content remains king
“At the end of the day, it’s about the content. We have this internal goal of every format as a startup. So if you launch a new podcast, this is the same as launching a new media brand – launching a new newspaper, or magazine. And we think that’s how you should attack it. So that means we have to really think a lot about the audience, the USP, the launch strategy of this format. Not only on our websites, but on third party platforms, so we need to further develop our distribution management with third party platforms such as Apple, Spotify and the like, but also new channels that we might not see yet.”
Personalisation and passion
One of the areas Franke’s division is looking to distinguish itself in, all while probing new product areas, is increased personalisation of products. Franke refers to the standard ‘blanket morning briefing’ which is the by-the-numbers drive time approach to audio but touches on how his team is doing things differently. “Every day we receive hundreds of reader emails and we answer all of them. We also ask readers questions. In the podcast we have a Digital Mailbox where they can record their opinions which we then use in the podcast. Another podcast is on football, where there is a very engaged Facebook group as a community. It’s invite only, but it’s really working. We don’t have the perfect recipe yet. But if I said there is one clear differentiating factor, it’s having a host that really embraces it”.
As part of that, analytics are key to enable data driven decisions with Franke emphasising the importance of audits in the assessment of any new product line but that doesn’t mean obsessing about profitability. There is a lot more that should be audited.
“To sum it up, yes, audio in Germany is still small. But we are not falling into the trap of ‘show me the money’. The market is small, yes, but it’s growing. And we need to look to the future; we see consumption patterns changing. It’s a very challenging market, but for a variety of reasons we think it’s very attractive, and by 2025, when we expect the market to be bigger and more relevant in Germany, we want to be acting from a position of strength.”
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