A majority of ad buyers plan to increase their spending on podcasts during the second half of the year. And despite smaller budgets, few will roll back their podcast spending. Those are two of the findings in a new survey conducted by the Interactive Advertising Bureau that shows most ad buyers will increase their digital spending in the coming months with dollars being shifted out of traditional media.
Less than half of buyers say they are confident about their second half budgets while brands continue to realign spending to attract consumers as the COVID-19 lockdowns are eased. More than half of respondents (52%) say they expect their podcast budgets will increase compared to a year ago. Nearly a third (31%) think budgets will hold steady, while fewer than two in ten (17%) said it is likely they will have less money to spend on podcasting.
Among those surveyed by the IAB, buyers predicted their podcast budgets will increase seven percent during the third quarter and edge up one percent during the fourth quarter.
The results are only slightly less bullish for digital audio ad spending, not including podcasts. The survey found 45% of buyers think they will spend more on digital audio, like the streaming music services and online radio, during the second half of the year. Nearly a third (31%) predicted a flat budget compared to last year, with about a quarter predicting they will need to trim digital audio ad budgets in the coming months.
But compared to podcasting, the projected budget increases will be larger for streaming radio and the online music services. Survey takers estimated their digital audio ad budgets will jump 15% during the third quarter and climb 4% during Q4.
Sue Hogan, Senior VP of Research at the IAB, said she is both “surprised” and “relieved” by what they have heard from buyers. “We are seeing that ad buyers are feeling pretty darn confident about second half,” she said. Podcasting has benefited during the COVID-19 crisis by its ability to quickly pivot messaging for clients, Hogan said during a webinar on Tuesday, including shifting to a host-read ad if need be.
The IAB survey found the most interest for boosting ad spending on digital video OTT services and social media, with digital outdoor facing the biggest cutbacks as the coronavirus has Americans spending more time at home. As a result, online video ad budgets will grow by double-digits, according to buyers surveyed, while digital out-of-home budgets will be cut by 15% or more.
Traditional media budgets are where the biggest squeeze could be in the coming months. Yet eight percent said they think their broadcast radio budgets will actually increase during the second half. Nearly a third (31%) said those budgets will hold flat. But six-in-ten (61%) of those surveyed by the IAB said their radio budgets for the second half will be cut. Buyers predicted they will shrink 18% during the third quarter compared to a year ago and decline 9% during the fourth quarter.
Hogan said the traditional numbers are like looking at a mirror where the reflection is the opposite of what the data shows for digital. “It’s just more flexible, it’s more agile, and you’re able to make changes a lot of faster in that space,” she said.
They survey of ad buyers, which was conducted May 28 to June 8 among 148 buyers, is the third conducted by the IAB to gauge the impact of COVID-19 on ad spending. Overall, ad buyers expect 2020 ad spend to decline 20% from last year due to the ongoing coronavirus impact. Yet amid that decline, they also report digital ad spending is growing. Buyers expect it to be up 13% during the second half compared to last year.
But gauging ad spending during a global pandemic is quite difficult and among those surveyed only 49% said they were confident in the stability of their second half budget. And even fewer are confident in 2021 budgets. “That kind of sets a tone for the rest of the year,” said Hogan. There may be some nervousness over recent protests among buyers, but she believes most second half budgets are firm enough to be spent.
The survey comes just ahead of this month’s scheduled IAB NewFronts presentations by several companies to top-level ad buyers. The podcast and digital audio presentations will be held June 24 with NPR, American Public Media, and others slated to present to advertisers during what has become a virtual event this year.
Hogan advised ad sellers to be “super transparent” on price this year, saying buyers are demanding more understanding of where dollars are going. “They really need that reassurance,” she said. Hogan said buyers are also seeking more flexibility on cancellations this year than in the past.