Over the past year or so, the podcast advertising industry has gone into decline. Based on 2021 Interactive Advertising Bureau (IAB) and PwC data. US podcast advertising revenue studythere will be a significant surge in podcast ad revenue growth over the next two years.
U.S. podcast ad revenue rose to $1.4 billion in 2021, surpassing the $1 billion mark for the first time, up 72% year-over-year, according to the study. The IAB also predicts that the market will top $2 billion in 2022 and top $4 billion by 2024.
Eric John, VP of IAB Media Center, said: “The report points to significant growth going forward as advertisers buy podcast impressions at scale by tracking delivery, performance, recall and results. Consumers will expect cutting-edge solutions for brand security, audience targeting and measurement, and we look forward to working across the entire ecosystem to create standards that serve creators, listeners, publishers and brands.”
The study showed that the audio format is developing very quickly and is determined by three key factors. This includes a steady increase in podcast and content listeners, as well as increased use of automated advertising technologies and growth in ad spend in the Other categories, which have historically had lower spending volumes (sports, religion, etc.).
There is a surge in listeners and content, and advertisers are taking notice. Listen Notes it is estimated that there will be around 2.2 million podcasts in 2022, while other sources cite over 3 million podcasts. The number varies as many podcasts either have few episodes or may be inactive. EMarketer predicts US adults will increase their listening time by 15.1%.
Another driver of revenue growth is automated advertising technology. As technology improves, advertisers can now use podcasts to reach their target audience across a variety of genres.
For example, according to IAB research, pre-roll ads increased their revenue share to 32% from 22% in 2020. It was also noted that podcast publishers need to strike a balance between more ads and shorter ad lengths, while maximizing positions at the beginning, middle, and end of the video.
In addition, Dynamic Ad Insertion (DAI) increased to 84% of ad revenue, nearly doubling in 2 years. The ads read by the host and the announcer are mostly served through DAI (84% and 85% respectively). Many platforms offer dynamic ad insertion technologies such as geo-targeting and timed campaigns, as well as other simple tools for changing content and running different ads.
There are even such players Spotify which add features such as call-to-action cards and more interactive podcast advertising opportunities.
Using Spotify as an example, the company modernized podcast ads in 2020 after launch Insert streaming ads and announced a year later Spotify Audience Network, the first marketplace for audio advertising. Its ad revenue hit an all-time high in 2021, going from $745 million in 2020 to $1,208 million. Spotify CEO Daniel Ek confirmed the jump was mainly due to podcasts. The number of podcasts published on the platform also continues to grow, reaching 3.6 million in 2021.
A few months ago, in February, Spotify acquired podcast advertising companies. Chartable and Podsights in the hope of improving measurement and attribution. More than 1 billion dollars was spent on the purchase of various podcasts.
The IAB writes in its study: “As the industry increasingly embraces automation solutions, the need to continue to have a strong impact on consumers and therefore value to advertisers is paramount. Now that the majority of host-read and announcer-read ads are dynamically inserted, advertisers get the best of both worlds with podcast advertising: message credibility with the scalability/flexibility of automated purchases.”
Finally, new brands are investing in podcast advertising, especially in the Other segment, where the percentage of podcast ad revenue has more than tripled in two years. The “Other” ad category applies to energy, government, nonprofits, advocacy, technology, law, pets, sports, religion and spirituality, education, home improvement, gambling, and sports betting.
The IAB’s sixth annual U.S. podcast ad revenue survey is based on an online survey sent to industry experts in March and includes market size estimates for the United States, including companies not surveyed.
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