No matter how you slice the data, automated buying of digital audio is up – way up. Programmatic revenue is growing by triple-digit percentages, driven by increases in both supply and demand and steadily rising prices.
John Rosso, President of Market Development at Triton Digital, broke out the numbers during a presentation last week at Jacobs Media’s Virtual Tour of CES for Broadcasters. The data reflects only transactions made on Triton’s programmatic exchange and not from competing marketplaces. But the trends are “representative of the entire market,” Rosso said.
From 2018-2020, total global spending surged 213% on programmatic digital audio, meaning ads bought on automated machine-based ad exchanges. “This dramatic increase comes at a time when most of the volumes were booked directly through agency trading desks and not through sales representatives,” Rosso explained. According to its website, Triton’s exchange includes 3,740 live and on-demand audio stations from across the globe.
Behind that vigorous increase in spending was a major upsurge in inventory, meaning audio publishers were making more units available for automated purchase. On Triton’s exchange, the number of ad impressions rose 109% during the two-year period.
Rosso said the increase was driven by two factors: an upwelling in available supply and an increase in demand among buyers.
But the growth in the number of impressions accounts for only half of the revenue growth. Triton’s data also reveals a substantial increase in unit price with the average clearing price of inventory up 49% over a two-year period.
When programmatic buying first arrived at audio, many feared it would lead to a “race to the bottom” in pricing. “That’s not what we see in the audio business,” Rosso told the Jacobs crowd. “Clearing prices in our exchange have been steadily increasing since our launch in 2013.”
Zooming In On 2020
The pandemic-triggered economic downturn of 2020 did little to dampen ad buyer appetites for digital audio around the world. Spending climbed a staggering 341% last year, despite a minor dip in March and April, largely due to the impacts of COVID-19 on both audio content consumption and advertising. There was another dip in July, a normal seasonal fluctuation due to the Fourth of July 4 holiday in the U.S., when listening patterns are highly disrupted. From there it’s pretty much a straight climb.
“When we overlay the inventory required to soak up this growing demand, we see that the trends line up almost exactly until August or so when they start to diverge due to a tightening of supply,” Rosso explained. Inventory became more scare in August, causing prices to soar. By the end of 2020 the average price of digital audio ad inventory globally was up 26% compared to January. “Normal marketplace dynamics of supply and demand play out in real time, impressions by impressions,” Rosso explains. “As inventory tightens up, advertisers have to pay more to clear.”
One of the big drivers in the growth was new advertisers using programmatic digital audio advertising for the first time. Big household names like T-Mobile, Dove, Starbucks, Vicks and Vonage transacted this way for the first time in 2020. In fact, two of the top 10 spenders in Triton’s 2020 tally were new to its exchange last year: P&G’s Vicks and Comcast.
Another growth driver in 2020 was more demand-side platforms joining Triton’s marketplace. DSPs are software used by ad buyers to place buys programmatically. (Triton’s marketplace serves ad seller only.) When the two platforms transact, ad buys are made. During the past 18 months, 10 DSPs joined Triton’s exchange, including big players like Adobe Advertising Cloud, Amobee and Centro.
Despite record spending by campaigns and PACs in the 2020 elections, political was not a factor in soaring programmatic audio. Only 0.4% of buys transacted were from political/government entities, up from 0.2% in 2019. Why is that? Publishers were reluctant to purchase political advertising via programmatic channels that wasn’t hand-carried by a rep. That means 2020’s growth in programmatic digital audio “was all driven by advertisers in other categories,” said Rosso. “And they should not suffer that same kind of post-election year pullback that you expect with political advertising.”