John Fix, the executive who pushed Procter & Gamble to make a return to radio nearly seven years ago, and in doing so made the CPG giant the biggest advertiser in the medium, has taken stock of the podcast business and came to a simple conclusion. “I see no structural barriers in this industry for mass adoption of podcasting,” he told ad buyers Thursday at the IAB Podcast Upfront.
Fix, who recently retired from P&G and is now a consultant to media companies, says it took him five years to convince the team inside the consumer products company to invest in audio advertising, and his advice to brands today is not to take so long to come to the same conclusion.
“I'm a huge advocate of audio,” Fix said. “If you're testing audio and you failed the test, you need to ask for help in partnership to figure out how to do it right. It is not an indictment of the media.”
The IAB reported Thursday that podcast ad revenue grew five percent to $1.9 billion in 2023, and it projects the industry’s ad revenue will increase 12% in 2024, with total revenue on track to surpass $2.1 billion.
“Podcasting has been on a very serious hot streak the last few years – and all of this remarkable growth vaulted podcasting to the top of the digital marketing ecosystem from a revenue growth standpoint, representing the fastest rate of increase in any digital channel,” IAB Media Center Director Matt Shapo said. And while podcasters faced what he said was a “challenging” year in 2023, data so far in 2024 shows business is picking up.
Data from Guideline shows podcast ad spending was up 21.7% during the first quarter of the year, outpacing the growth in streaming audio (+19.3%) and all other digital media. The data represents large holding company and independent agency bookings and so it's not reflective of the entire market, but Shapo said it is “a great indicator of podcasting strength moving forward” in 2024.
‘We’re Not At The Mountaintop’
With audio receiving only a 9% share of total ad spending according to WARC, Greg Glenday, Chief Business Officer at Acast, says there is plenty of advertising tailwind. “Only 14 of the top 100 advertisers have really done anything more than a test budget,” he said. “The good news is we know they're coming.” Pointing to data showing 36% of Americans have not yet listened to a podcast, he said the industry has a lot of room to grow its reach too. “We are at Basecamp. We're not at the mountaintop,” Glenday said.
Yet that proverbial mountain is not small. Edison Research says 135 million Americans listen to podcasts each month. Conal Byrne, CEO of iHeartMedia’s Digital Audio Group, says that’s remarkable in light of the fact that the level of engagement is not falling off as more casual users join in.
“Americans are spending 122 million hours a day listening to podcasts,” he said. “It’s more than any form of social media,” Byrne said that when surveyed, people say they are spending less time with social media in order to spend time listening to podcasts. And 60% of folks who have listened to a podcast have bought something because they heard about it on a podcast. But Byrne said the biggest reason for marketers to give podcasting a test is data showing that if they move 5% of their social media to audio first, their social media campaign performs 83% better.
“Just test it,” Byrne told buyers. “When you see time shifting like actually people moving attention from social media to podcasting, your marketing spend should too.”
Acast Senior VP Veronika Taylor says buyers should also look beyond the biggest shows. “We continue to see that many smaller podcasts are able to more deeply connect with their listeners leading to longer listen-through rates, lower skip rates, and more effective conversions,” she said.
Fading iOS Impact
The annual pitch of podcasting to marketers comes at a time when download numbers are smaller than they were in the past, as the result of changes to how catalog episodes are treated in iOS 17. While most podcasters have seen a 20% to 40% shrinkage in their downloads, some have had been hit even harder, especially those with large back catalogs. But with the vast majority of Apple devices now running on iOS 17, the message to ad buyers Thursday was the worst was behind the industry, and the resulting numbers they will now use to plan and buy their campaigns on are an improvement.
“In the long term, it's going to be good for everyone,” YAP Media Network CEO Hala Taha said, adding it won’t come without some adjustments. “For publishers, the surprise loss in downloads will result in adjusting previously booked contracts. For advertisers, closing the gap between downloads and true listenership will increase performance.”