Why Ritual is leaning into podcast ads to attract loyal customers

According to Justin Fredlender, Ritual’s vp of growth, podcasts are a great source of high-value customers. The customer lifetime value of its shoppers that come from podcasts are typically 20% higher than the company’s business average, he said. Thanks to its customer acquisition strategies, Ritual has amassed over a million customers and brought in over $100 million in sales in 2021

The use of podcasts as an advertising channel has been a growing trend amoung brands in recent years. Insider Intelligence estimates that podcast ad spending in the U.S. will exceed $2 billion next year. In Ritual’s case, its podcast ad spending has grown over 100% since 2019.

“We saw the opportunity to expand our reach into new diverse audiences,” said Fredlender. “As we’re growing as a brand, we just understood that there’s probably an opportunity to diversify into also just new channels in general.”

Indeed, the company has been investing in different channels in an attempt to grow its customer base. The brand first launched its podcast back in 2018, just about two years after its founding in 2016. In September, Ritual expanded beyond its primary DTC business by entering Whole Foods stores in order to acquire more customers offline. It has also been investing in TikTok, and has seen a 30% year-over-year growth in new subscribers coming from the short-form video-sharing app. 

For Ritual, podcasts make up a “meaningful portion” of its partnership budget. Ritual declined to share the specific details on how much it spends on podcasts specifically but said its partnership spend represents 30% of its media mix. Some of the podcasts it advertises in include True Crime Obsessed, The Mom Hour, Plantbased, Not Perfect and Is This Going to Cause an Argument.

“As we scale a lot of our digital channels, podcasts became a pretty apparent opportunity for us to test into,” Fredlender said. “Then as we’ve continued to test into podcasts, we’ve noticed a few things out of the channel. One is listeners of podcasts appear to be pretty loyal customers of our brands.”

When looking for a podcast to advertise in, Fredlender said that Ritual looks for creators that represent the brand’s core values. The company also looks for podcasts whose listeners are mostly located in the markets that it serves, such as the U.S., Canada and the U.K. Ritual also considers the listener demographic depending on the product it wants to promote.

For example, in an ad that was launched in late October, Ritual tapped The Mind Love Podcast with Melissa Monte to promote its multivitamins for women and its Synbiotic+ product. In the one-minute and 30 seconds long ad, the host touted some of the products’ health benefits, the studies around the brand’s products and the promotions available for listeners. 

Kimberley Ring Allen, founder of Ring Communications and professor at Suffolk University, said that podcasts can be an effective medium for capturing people’s attention. “It always comes down to us all being very distracted consumers,” she said. “At this point, we’ve been shoved ads in our social media feeds for so long, that we’ve kind of empowered ourselves to tune them out.”

She said that people can easily block or scroll past ads on social media. Podcast listeners, on the other hand, are often more engaged with what they are hearing. Additionally, she said running an audio ad is much cheaper to produce and run than other marketing channels.

The benefits that come from podcast ads have propelled several other brands into incorporating this channel into their marketing strategies. Parachute’s CEO Ariel Kaye told Modern Retail back in 2020 that it has been eyeing new shows to team up with. CBD brand Feals, on the other hand, said in 2020 that podcast marketing takes up about 30% of the company’s media budget.

This comes as traditional digital ads have become significantly more expensive and less effective. Edge experience company SimplicityDX said that merchants are losing $29 for every new customer it acquires, compared to $9 per new customer back in 2013. This has lead brands to move their ad budgets from channels like Meta or Google to podcasts and TikTok.

However, Allen said that the challenge for these brands testing out podcasts is to find a show whose listeners match their target demographic. As with any advertising channel, she said that these brands must also figure out a way to make an ad that will capture the listeners’ attention.

“You have to do the research and really find the podcasts that truly fit your story, share the same brand values that you have. That in turn, share the same brand values that your target audience has,” she said. “The first and most overlooked step is you always have to go back to your audience.”