Podcasts are continuing to enjoy robust and strong growth. With a marketplace rich in creative and niche content, the burgeoning audio medium presents plenty of opportunity that more advertisers are beginning to recognize. As a result, more companies are investing some of their ad budgets into the channel.
Earlier this summer, the Interactive Advertising Bureau and pWc released their second annual joint study of podcast revenue. The report was first executed by the IAB’s Audio Industry Working group in 2017. To gather data, the IAB worked in partnership with companies that sell ads on podcast platforms.
The study was designed to keep participants anonymous and only release aggregate data. It also only provides a snapshot of podcasting revenue in the United States.
Based on the findings in the report, companies and brands are seeing the value of advertising on podcasts. There are a number of key findings to come from this year’s study, but here are some major insights to digest.
The podcast industry has its eyes on becoming a billion-dollar industry within the next few years. By 2020, revenue for podcasting is expected to grow 110 percent to roughly $659 million. In 2017, total US podcasting advertising revenue was at $313.9 million.
Reported revenues from publishers that participated in the survey have increased by 275 percent over the last two years. Actual podcasting ad revenue in 2017 came out to 17 percent above the self-reported estimate of $220 million in last year’s study.
Direct response continues to be the most preferred form of advertising for brands on the medium, representing 64 percent of all podcast ad campaigns. However, its use did decrease year over year, down from 73 percent in 2016.
The slight decline of direct response ads is likely the result of brands experimenting with other types of campaigns. Awareness ads were the second most popular form of podcast advertising for a second year in a row and their implementation rose from 25 percent in 2016 to 29 percent in 2017.
CPM is and continues to be the standard pricing model of choice for most advertisers. Eighty-five percent of all podcasting ads were purchased on a CPM basis. Most ad buy deals incentivize advertisers to lock into agreements at an annual rate by offering up front discounts.
Endorsements from show hosts are the most popular kinds of ads. Host-read ads represented more than two-thirds of all advertisements in 2017. The second most popular ad type were announcer/pre-produced ads, which represented roughly 33 percent of revenue generating ad types.
A little more than a dozen content genres were measured in the study. The top four genres comprised more than 50 percent of all advertising revenue. Those subjects were arts and entertainment, technology, news/politics/current events and business.
Thirteen industries were analyzed as major podcast advertisers. The top four categories represented nearly 60 percent of all ad revenue. Those industries were financial services, retail (direct to consumer), arts and entertainment and business-to-business.
In spite of the impressive year-over-year growth the IAB/pWc study demonstrates, the upside of podcasts still remains high. Most brands and companies are still just investing in podcasts with the experimental portions of their budget. But as technology advances and the discoverability of content improves, the demand for podcast ad inventory will only continue to rise.
“These strong numbers speak to advertisers’ increasing recognition that podcasts provide a powerful platform for reaching and engaging audiences,” said Anna Bager, Executive Vice President, Industry Initiatives, of the IAB in an official press release. “Advertisers that range from traditional financial services to direct brand retailers are tapping into the medium’s highly engaged audience…”
To read the full report, click here.