WARC’s latest Global Ad Trends – Podcasts report forecasts that global audio advertising spend on podcasts will reach $1.6B by 2022. That is nearly double the amount ($885m) expected to be invested this year. It will account for 4.5% of the audio market which includes broadcast radio and online formats such as in-stream ads.
“Podcast advertising holds great potential”
The reports states, “Much of this money is coming from brands’ experimental budgets. Advancements – such as more accurate, real-time audience measurement and programmatic ad trade – are required for this nascent format to unlock future growth.”
Podcast advertising holds great potential as it enables brands to reach a highly-engaged, young and affluent audience via a medium they have an affinity with.James McDonald, Managing Editor, WARC Data
The US is the world’s largest market for podcast advertising. In 2018, it accounted for about 61.8% of the format’s global spend ($402m). The IAB expects this to grow by 28.0% to $514.5m this year.
According to Edison’s 2019 Infinite Dial survey, 51% of Americans have heard a podcast, 32% listen each month, and 22% each week. This makes for a weekly audience of 62m.
“The value exchange between podcasts and sponsorships”
A recent global survey by GlobalWebIndex found that “63.1% of podcast listeners are under the age of 34, and 33% are educated to degree level or higher.”
According to the WARC report, “78% of podcasts listeners say they do not mind ads or sponsorship messages because they know they are a means of supporting the content.”
Moreover, recent research by Edison had 54% of listeners say that they were more likely to consider a brand following a podcast ad. Nielsen research shows that 62% of listeners correctly recall a podcast ad. And nearly 70% said that the ads increased their awareness of new products or services.
McDonald says, “The majority of listeners understand the value exchange between podcasts and sponsorships, so brands need to establish a credible relationship between their messaging and the tone of the content to be effective.”
He adds, “Smarter, real-time audience measurement and programmatic buys,” will help “propel investment growth.”
“Fundamental to retaining effectiveness”
According to the 2018 IAB & PwC, Podcast Ad Revenue Study, around 66.9% of podcast ads in the US are read by the host. Further, 58.3% of podcast ads are integrated into the content.
Unlike radio, there is less competition for attention, and as such, the best podcast promotions seek to chime with the tone and blend into the experience, rather than disrupting.Global Ad Trends – Podcasts, April 2019 by WARC
The report states, “The relationship between listeners, hosts, and advertisers is core to the medium, and the establishment of a credible relationship between the voice of the host and the brand sponsoring – the host being able to veto the sponsor – will be fundamental to retaining effectiveness.”
“Unlock future growth”
According to GlobalWebIndex, 53% of podcast listeners use YouTube, followed by Apple (28.8%) and Spotify (28.3%). The report showcases Spotify’s strategic moves to become the dominant player.
The company recently acquired podcasting firms Gimlet Media, Anchor, and Parcast. It is also investing in the creation of original podcast content through its in-house unit Spotify Studios.
Original content will help Spotify reduce royalty costs for podcasts. The company plans to monetize podcasts through brand sponsorship and programmatic advertising. User data can help in ad targeting, as well as creating personalized playlists to increase engagement.
It’s still early days as far as podcast measurement tools are concerned. Last year, NPR released a tool called Remote Audio Data (RAD). The tool allows producers to insert ID3 tags within the audio which returns anonymized listener data. The WARC report suggests, “The development and effective harnessing of such tools are key if podcast advertising is to thrive in the future.”
Click here to download WARC’s Global Ad Trends – Podcasts
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