U.S podcast advertising is poised to grow as much in the next two years as in the entire past decade, according to a podcast revenue study conducted by PricewaterhouseCoopers (PwC) for IAB, released during the association’s Podcast Upfront on Wednesday.
Podcast advertising revenue rose to $842 million in 2020, from $708 million in 2019, helped by a particularly robust, 37% year-over-year gain in the fourth quarter.
At-home podcast listening during the pandemic drove growth in content and audience size — with consumers integrating programming into many of their activities — and advertiser investment followed, despite a shrinking economy.
Importantly, bigger brands began discovering that podcast advertising can work across the sales funnel.
With a 45% share of podcast ad revenue in 2020, brand advertising is now approaching parity with direct response, at 51%. For example, while direct-to-consumer brands remained the largest spenders by category, with a 19% share, pharmaceuticals’ share more than doubled year-over-year, to 9%.
Leading audio platforms’ steady investment in new content and advertiser-friendly technology was an important growth driver.
Dynamically inserted ads, which enable ad placement at the point of listener download, increased share of revenue from 48% to 67% year-over-year, according to the report.
The capability and inventory available for dynamic ad insertion positioned podcasting as an alternative to media channels with longer production/lead times during a period when marketers needed to quickly pivot messaging.
In addition to the platform’s messaging flexibility, advertisers are continuing to increase investment in podcasting because “when they run an ad, the cash register rings,” summed up Eric John, vice president of IAB Media Center.
News continued to be the top content genre for podcast advertisers, with a 22% share.
Format-wise, announcer-read, pre-produced ads, which also put more control in buyers’ hands, increased their share from 27% to 35%. Host-read continues to represent more than half of revenue by ad type, illustrating buyers’ desire to tap the direct, influential relationship creators have with their listeners, the analysis notes.
Mid-roll spot placements continued to account for three-quarters (76%) of ad revenue.
Half of podcast ads were longer than 30 seconds. Sellers find longer audio ads conducive to creative storytelling, according to the report.
Looking forward, the report notes that podcasts, like other media, may see some decline in attention in the months ahead as consumers resume pre-pandemic activities, making it harder to capture listener attention.
With the transition to in-person activities expected to see stops and starts, advertisers should continue monitoring how and why audiences are engaging with their content, and have plans to optimize and promote content for in-home and out-of-home consumption to avoid audience decreases.
In addition, to realize the platform’s full potential, buyers and sellers need to collaborate to create measurement standards that go beyond server-side downloads and provide an audience-based, real-time view of content and ad interaction.
Advertisers should also prepare for continued M&A in the podcasting industry, and try to leverage partnerships with celebrities and influencers to create podcast-friendly experiences that engage broader audiences.
Buyers, as well as sellers, should be “aggressively” considering investment in continued innovation in podcast products, services and ad formats, advise the researchers.