The Growth of Podcast Advertising
By Conor O'Malley |
Tuning into one’s favorite podcast is often a solitary pleasure—listening done while doing chores, exercising or on a daily commute. However, one thing is increasingly certain about the medium and its future: if you’re a fan, you’re not alone. Podcast listening has recently exploded, driven in part by a wealth of varied programming and the pandemic that compelled us all to search for fresh forms of entertainment. In fact, 41 percent of the US population, approximately 116 million Americans, now listen to a podcast monthly, a number that’s increased by 61 percent in the last three years. This popularity directly coincides with an increase in podcast ad revenue. Here’s what you need to know.
The growth of audio is without question. Podcasts initially experienced a slight dip in downloads as people stopped commuting during last spring’s lockdown, but those numbers rebounded to new highs by the second half of the year, according to measurement firm Podtrac. There are now over 850,000 active podcasts, which means content exists to match every consumer’s taste. News podcasts (think The Daily from The New York Times, On the Media from WNYC, Embedded from NPR) continue to generate the most revenue for advertisers, at 22 percent market share. The podcast audience has also changed. Approximately 70 percent of the US population now knows what a podcast is, up from 64 percent in 2018, which proves this platform is going mainstream. From a gender and ethnicity point of view, listeners have grown more diverse, trending toward a demographic makeup that more closely resembles the American population, especially among Hispanic listeners.
Tech Advancements Lead to Ad Sales
Podcast advertising has been historically hard to sell, because statistics like downloads, impressions and actual time spent listening were difficult to measure, due to the fact that these audio episodes are typically downloaded instead of streamed. But all that changed last year, as podcasting ad revenue rose 19 percent to $842 million, driven by a 37 percent spike in the fourth quarter. That’s compared to the $479 million marketers spent on podcast ads in 2018. What’s more, sales are expected to surpass $2 billion by 2023, according to a study by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers. “Podcast listeners have shown that—even when working from home—podcasts are a preferred medium,” said IAB Vice President Eric John. “Advertisers are benefiting from new technologies developed to serve these marketplaces, to make podcast advertising more dynamic and measurable than ever before.”
Case in point: the use of dynamic ad insertion (DAI), which gives program makers the ability to swap an old ad for a new one without re-recording or re-uploading an entire episode. That means a fresh ad can be stitched into a podcast made five years ago, and any user who downloads the old podcast will hear the new spot rather than the one first used. DAI alone increased share of revenue from 48 percent to 67 percent last year, indicating that marketers crave flexibility when it comes to podcast media buys. Announcer-recorded spots also spiked from 27 percent to 35 percent, with those host-read ads ranking as most popular and comprising over half of total sales. Length likewise matters. Half of all podcast ads ran 30 seconds or more, because longer spots make room for the type of creative storytelling that’s appreciated by lovers of this medium.
Brands Get Onboard
An important development in the podcast space involves brand advertising, which made up 45 percent of total ad revenue in 2020. That’s not surprising, given that a 2019 survey from Edison Research and Triton Digital found that 54 percent of listeners were likely to consider a brand after hearing it advertised on a podcast. DTC brands maintained the highest market share at 19 percent, while pharmaceutical companies more than doubled in share year over year. The takeaway? Big brands have heard the podcast siren call and they’re eagerly buying in. Mountain Dew recently went one step farther by launching its own podcast hosted by comedian and influencer Druski, whose Instagram followers currently total 2.4 million. Dubbed “The Dew Zone with Druski,” the eight to 10-episode series aims to blend professional basketball trivia with human-interest stories by detailing the lives of NBA players while hosting guest athletes and celebrities. The podcast will run on all major platforms, including Spotify, Apple and Stitcher. Millennials and Gen Z members comprise 49 percent of monthly podcast listeners, according to Statista, making this direct form of audience engagement even more attractive for Mountain Dew.
When all is said and done, podcasts are fun. They’re political, funny, scary, informative and deeply personal to listeners. “Advertisers love the flexibility to adjust their messaging on the fly,” said the IAB’s John. “And most importantly, brands are continuing to shift to podcasting simply because it works: when they run an ad, the cash register rings.”