NEW YORK (AdAge.com) -- Radio revenue could very well stay flat for the third straight year in 2008, but there's one sector in the audio industry that's getting attention from the likes of Acura and MasterCard: podcasting.
Although it's been ad-supported for a little over two years, podcasting only recently has built an audience with enough scale in key categories such as news and sports. According to Edison Media Research, more than 32 million people have listened to an audio podcast. And the medium's top two content providers, ESPN and National Public Radio, do the majority of their business by bringing in national advertisers to support their top-rated shows.
NPR, for example, helped pave the way for the market in August 2005 when Honda became its first sponsor to sign up for a podcast-specific deal, a trend that has since been followed by its Honda Motor Co. sibling brand Acura, UBS Investment Bank and MasterCard. As a result, the organization has been able to grow its total ad revenue from $18 million in 2002 to $46 million in 2007.
But a more Long Tail business has started to form within the more fragmented sectors of iTunes, which loosened its policy on ads in podcasts in 2005. Chris Spencer, CEO of Wizzard Media, a podcasting network with more than 35 of iTunes' top video and audio podcasts of 2007 in its stable, values the podcast-specific ad market at about $100 million. The figure comes closer to $300 million after streaming video is included in the mix, though he said it's difficult to gauge the specifics. "It is growing faster than anyone -- especially the big TV networks -- believed would happen," he said.
Or the big radio groups, for that matter. Only a handful of major radio owners have let their talent participate in podcasting, with Dennis Miller and Sean Hannity among the few nationally syndicated personalities available on iTunes. As the TV networks have seen with video on demand and streaming video, they risk decreasing the size of a live audience that can be sold to an advertiser at a higher premium for the sake of making content available to consumers whenever they want it.
But the experience of ESPN's "Mike and Mike" may change some minds. Traug Keller, senior VP, ESPN Radio, said the popular talk duo's ratings on the 350 ESPN Radio stations actually increased after their show was made available on iTunes, XM and Sirius satellite radio.
"Despite the fact that we're putting these guys out on more platforms, it's just old-fashioned putting out a good product as many places under the tent in whatever places they can take advantage of it," Mr. Keller said. Highlights from ESPN's podcast content soon will get even greater exposure when they begin airing on Saturdays and Sundays on ESPN Radio stations in early February.
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CORRECTION:An earlier version of this story said that Wizzard Media has more than 35 video and audio podcasts in their stable. As now stated, it should have read: "more than 35 of iTunes' top video and audio podcasts of 2007 in its stable."