What’s New in Podcast Advertising
While podcasts have grown more popular over the years, 2020 was the industry’s breakout year as the number of U.S. podcast listeners swelled more than 32 percent Y/Y to over 106 million listeners, or roughly half of U.S. digital audio listeners, per eMarketer. Podcast ad spend increased more than ten percent Y/Y to $780 million in 2020 while declining in digital radio, signifying just how swiftly brands pivoted amid changing consumer behavior due to less time spent commuting during the pandemic.
Looking ahead, we predict three key industry trends will continue to make headlines in the coming months as podcasts maintain surging popularity and marketers set their sights on uncovering the best opportunities for their brands:
An effort to quantify the pandemic’s lasting impact on audio consumption
Increased consolidation with more mergers and acquisitions (M&A) in digital audio
Developments in audio measurement amid greater pressure from advertisers
Before the pandemic, roughly half of digital audio listeners tuned in from the comfort of their homes, but with the decline in daily commuting and stay-at-home orders in early spring 2020, at-home listening accounted for nearly 70 percent of all audio sessions by May, according to Edison. Terrestrial radio had been in a slow decline for years, but behavior shifts spurred on by the pandemic accelerated this trend, with eMarketer now estimating that U.S. radio ad spending will drop by more than 25 percent Y/Y.
As offices slowly re-open around the country and commuters hit the road again, analysts monitoring the stickiness of certain pandemic-driven habits agree that terrestrial radio won’t return to pre-pandemic levels anytime soon — if ever.
Organizations like NPR that provide listeners with both terrestrial radio and digital alternatives were ahead of this trend and are using the events of 2020 as tailwinds to double down on podcast investments and explore new talent partnerships and technology to best satisfy the audio interests of NPR listeners. So far, this strategy is paying off: NPR’s podcast audience grew more than six percent last year to reach more than 13 million listeners, with downloads up more than 28 percent compared to 2019.
Bigger media and technology companies have taken notice of audio’s — and more specifically, podcasts’ — enormous potential, driving unprecedented M&A activity in recent months as tech giants jockey to become the number one podcast destination.
Amazon acquires Wondery, bolstering Amazon Music’s podcast offerings
iHeartMedia acquires audio tech company Radiojar and podcast network Stuff Media.
Apple purchases ScoutFM, while SiriusXM buys Pandora, Stitcher, and Simplecast.
Spotify buys The Ringer, Gimlet Media, Anchor, and Parcast, plus exclusive rights to podcasts by Joe Rogan, Kim Kardashian, and Michelle Obama.
This trend is likely to continue as industry leaders acquire smaller audio technology and production companies to bolster advertising capabilities and expand their podcast catalogs.
For now, Spotify maintains its dominant position with the highest podcast listenership in 2020, followed by Amazon, Apple, and YouTube, according to eMarketer, but the leader board could certainly shift in 2021.
Despite all the buzz, measurement continues to be a challenge for even the most sophisticated technology partners in podcasting. The Internet Advertising Bureau (IAB) has taken a leading role in providing a framework for buying ad space in podcasts, as determining ad engagement remains a challenge. The shift to streaming podcast episodes rather than downloading has expedited the search for the best solution that provides near real-time insight into podcast listenership and ad consumption.
Some of the most popular measurement solutions currently include:
Unique identifiers — Ties conversion back to podcast listenership via a vanity URL, distinct discount code, or customer phone number to enable advertisers to track visits, redemptions, or calls.
Brand lift studies — Partnerships with Acast and Megaphone and Nielsen to conduct podcast buy brand lift studies that track increases in awareness and intent.
Partner attribution technology — Integrations with partners like Podsights or Charitable can connect podcast downloads to visitors on the brand’s website, similar to CTR for display buys.
Post-checkout surveys and pixel-based tracking are also popular methods though neither guarantees near real-time insight of if or what particular podcast ad the listener engaged with or heard. We can expect advancements in podcast analytics and measurement this year amid increasing pressure from advertisers as more brands turn to podcasts as the viable alternative to terrestrial radio and a testing ground for engaging with new audiences.
Digital audio spend is expected to grow by nearly 45 percent to over one billion dollars in 2021, and with these benefits, it’s easy to see why:
Familiarity — Listeners are engaged with the content, and advertisers benefit from ad messaging that’s curated and produced to match the tone and context of the show or a specific episode.
Attention — Podcasts benefit from greater mindshare with their audiences thanks to reduced ad clutter and the ubiquitous nature of hands-free listening devices and ‘tune in from anywhere’ listening behavior.
Retention — Advertisers see the benefits of a podcast’s high share of voice environment where listeners are able to recall a message and take action. The IAB found that embedded host reads are more effective than other inserted ad types, with 81 percent of podcast fans taking action after a host-read ad is heard (action being anything from looking a product up online to connecting with the brand on social media).
As more listeners flock to the newest true-crime podcast or embrace a more snackable way to consume the news, we’re sure to see even more consolidation and developments in the coming months as digital audio continues to evolve, empowering nimble brand marketers with the flexibility to experiment, pursue new audiences and join in on the next chapter of digital advertising.
From PMG’s perspective, we will likely continue to see positive trends in digital audio, especially within the podcast space. For brands that are looking to focus on storytelling and increase consumer engagement, we recommend leveraging podcasts as a means to align their brands with well-known platforms, refined content, and specific niche audiences.
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With audiences tuned in, podcasts can be a mechanism to create new loyalty while also showcasing a brand’s stance on topical conversations. Consumers are embracing the medium and respective platforms at an unbelievable rate, and now is the time for brands to do the same.
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4 MINUTES READ | May 11, 2021