Commentary

Podcasts Attract Bigger Advertisers In More Upfront-Like Buys

On the surface, podcasts -- while rapidly growing -- tend to be small potatoes, even compared to other new digital media. Yet there is one advertising process that seems familiar.

According to the Interactive Advertising Bureau and accounting firm PricewaterhouseCoopers LLP, $313.9 million was spent by marketers on podcast ads in 2017 -- almost double the amount versus 2016, when the total was $169.1 million.

That is 0.4% of what marketers spent on TV, currently around $70 billion. Podcasts would be a smaller fraction of what is expected on digital media -- $107.3 billion this year, with the big tag team of Google and Facebook contributing $61 billion to that total.

But a key part of podcast buys is long-term planning.

Just like TV networks, 38% of podcast deals are made as upfront buys -- media deals done in advance for an entire season, according to an IAB executive.

That means securing key inventory placement in podcasts -- many popular ones have limited commercial inventory available. That has been a recent calling card for TV as well as in recent years.

Research also shows that a good chunk of podcast marketers' messaging comes from brand-awareness ads and branded content -- 35.7%. That is typically a large chuck of the biggest U.S. advertisers; it buy a lot of television. Many other digital media platforms seek those types of sponsors/marketers.

Now to be fair, this also means 62% of podcast buys are made on more short-term arrangements. But, unlike TV, the podcast business continues to grow -- thus more avails and more available viewers to target.

While the majority of podcasts are audio-only, many also include video and audio, giving rise to a TV-like comparison. Helping to boost things along for podcast usage are smart speakers/assistants like Amazon Echo and Google Home.

Two years from now -- in 2020 -- the IAB/Pricewaterhouse Coopers predict another doubling of ad revenue for podcasts to $659 million.

That's still a drop in the bucket compared to TV. But more major marketers will look to buy. That may result in more of an upfront market, especially if the scarcity play remains successful.

1 comment about "Podcasts Attract Bigger Advertisers In More Upfront-Like Buys".
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  1. Ed Papazian from Media Dynamics Inc, June 13, 2018 at 10:30 a.m.

    That percentage cited---38%---is, as you point out, Wayne, more like a  national TV scatter ratio for cable, not broadcast TV network, buys. Also, do all of these "upfront" podcast deals go sown at the same time---like the TV upfront?I tend to doubt that.

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