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Digital Audio Ad Spending To Jump 16% in 2021, Predicts eMarketer.

Digital audio ad spending, including both audio ads streamed and video and display ads on mobile apps, are projected to grow at a faster pace this year than last. Analysts at the media research firm eMarketer forecast digital audio services ad spending will reach $5.59 billion in 2021, a 16% increase over a year ago. “It will be an acceleration of growth,” said eMarketer forecasting analyst Peter Vahle, who noted on a company podcast that the pandemic cut 2020’s growth rate to 7.5%. “Last year it slowed down a little bit,” he said. Digital audio ad revenue totaled $4.82 billion in 2020 according to the firm.

During the next five years eMarketer expects ad spending tied to digital audio to continue to grow, albeit at a slower pace. By 2025 the firm forecasts spending will hit $7.89 billion in the U.S.

Vahle is also bullish on broadcast radio. “I know a lot of people that pretend that traditional radio doesn’t exist or is a thing of the past, but it is very much alive and well and most Americans listen to traditional radio frequently,” he said. He said the personalities he hears on streaming radio is a good reminder of why broadcast radio is “such a great medium.” He credits AM/FM’s continued dominance to an appetite among consumers for “casual” and “passive” content. “For AM/FM that appeal still holds,” said Vahle, who predicts broadcast radio will remain the most listened-to audio format for the foreseeable future.

Yet eMarketer estimates broadcast radio ad revenue declined 28% to $10 billion in 2020, down from $14 billion a year earlier. And it forecasts that $10 billion figure will hold for the next several years.

“In 2021, digital audio will hit a milestone. It will reach 50% of traditional radio advertising dollars,” said Vahle. “It has definitely accelerated by the pandemic and those market conditions.” He thinks the increased focus by the big radio groups on digital will also help to grow that segment.

In a forecast released last month, eMarketer said it remains convinced podcasting will top a billion dollars in revenue this year as it forecast $1.28 billion in total podcast ad revenue for 2021, a 41% year-over-year increase. It is also larger than the $1.1 billion it projected last July.

Analysts estimate about one in five digital audio ad dollars last year were spent on a podcast. This year it will be one in four. And during the next few years that is expected to continue growing. By 2024, eMarketer predicts 29% of digital audio ads will go to podcasts.

For the first time eMarketer has also released a revenue outlook specific to iHeartRadio. “They seem to fly under the radar a little bit. Their broadcast radio is such huge business, but they’ve really been ramping up their digital properties,” said Vahle. He said eMarketer estimates iHeartMedia had more than $300 million in digital ad revenue in 2020, up 26% over 2019. And they expect that it will top $380 million this year, a projected 26% year-over-year increase.

The company has not issued its own projections, but executives have said they see no slowdown in growth.

No forecast has been issued by eMarketer for social audio platform Clubhouse or Twitter Moments, but Vahle said he expects the first ads will be host-read ads similar to podcasting.

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