Podcast advertising is winning over Madison Avenue, with more upfront buys: IAB
Despite COVID-19 making home the new office, podcast ad revenues are expected to climb to about $813 million this year, a 15 percent upswing over 2019, according to a new report released Monday from the Interactive Advertising Bureau.
Advertising on podcasts is no longer considered a “scatter” media purchase—when marketers make ad buys closer to a show’s air date—and are instead being included in annual media plans, the IAB says. The news suggests that advertising on podcasts has matured, as agencies are now committing large portions of ad dollars to the format upfront.
Last week, for instance, Omnicom Media Group said it would commit $20 million to advertising on podcasts through Spotify’s platform over the next five months. The IAB says that the proportion of advertisers who make podcasts part of their annual media buys has nearly doubled this year to 47 percent.
“Podcasts have proven to be more COVID-resilient than other ad formats,” says Sue Hogan, senior VP of research and measurement at the IAB. She adds that marketers flocked to digital audio shortly after social-distancing guidelines were put in place because "it allowed brands to quickly pivot and change their messaging."
Expensive ad format
The cost of running a podcast ad 1,000 times, also known as CPM, runs anywhere from $30 to $40, says Collin Colburn, an analyst at research group Forrester.
“Podcast advertising has exploded so much but the thing that is overlooked is they are expensive ads,” Colburn says. “They are way more expensive than Facebook ads, and those large [podcast] testing budgets are shifting to dedicated budgets.”
“From the consumer angle, people who tend to listen to podcasts skew heavily toward high income—$250,000 and between the ages of 25 and 45," he says.
Ultimately, the uniqueness of podcasting’s ad delivery—with hosts reading the ads—is largely responsible for fueling the format’s growth, bringing a level of authenticity not found in other channels, according to Colburn. “Consumers often want to show support for a show when hosts talk about their sponsors,” he says. “There are big brands that have been testing in this space because of that uniqueness and what you’re now seeing is they’re growing their budgets as they get into it.”
A shift in consumption habits
Although consumers began listening less in their cars and at work, the share of people listening to podcasts at home increased to 70 percent since social-distancing guidelines were put in place, up from 49 percent prior to the pandemic, according to Edison Research, a market research company that specializes in audio.
“More brand marketers are discovering that podcasts are not just good for direct-response advertising, and they are increasing their spend,” says Tom Webster, senior VP at Edison Research. “We have seen over the past several months increases in the consumption of ad-free, subscription content, a decrease in some ad-supported media such as terrestrial radio, and brands pulling back from Facebook advertising.”
Overall, download growth since the first week of January is up 31 percent and audience growth is up 13 percent through the week ending in June, according to Podtrac, which is widely used as the industry standard in podcast measurement data.