Advertiser nervousness about a recession continues to fade and as consumers keep spending, so do marketers. Magellan AI says podcast ad spending in the U.S. increased 24% between the first and second quarters, with each month posting better results than the one before it. Based on that momentum, Magellan AI projects the podcast ad market is on pace to grow by a third in 2023.
In its quarterly review of the ad market, Magellan AI says the top ten advertisers during the second quarter spent an estimated $105 million. That was on par with what was spent during the first quarter. The ad monitoring firm says seven of the top ten advertisers were also top spenders during Q1, led by BetterHelp. The online mental health service was the top spender in April, May and June, and by the end of the quarter it spent an estimated $29.6 million on podcast advertising.
Amazon ranked second each month, and that is where it landed on the quarterly ranker, with an estimated $16.9 million in spending. Magellan AI says HelloFresh, which ranked No. 3 in each month during the quarter, was the third-biggest spender overall, with $12.7 million invested in podcasting during Q2.
Despite the familiar names, two new brands appeared on the list of biggest spenders during the second quarter. Magellan AI estimates Google spent $6.9 million on podcast ads, while Apple invested $6 million and Instacart spent $5.8 million. All three brands were not on the list of top spenders during the first quarter.
Spending remains highly concentrated, however, as Magellan AI’s analysis shows that during the second quarter $4 of every $10 in podcast ad spending went to the top 500 shows. It also says that advertisers spent an average of $200,000 per month on podcasts in the top 500 compared to $29,000 for shows that ranked between 501 and 3,000.
During the second quarter Magellan AI says it detected 2,465 new brands advertising on podcasts for the first time. They spent an average of $18,000 on their inaugural campaign. Sports continued to be the most popular genre bought by new brands during Q2 with 662 new brands in the genre. Yet one of every ten newbies included News on the media plan, accounting for 403 new brands.
As the number of new brands across all genres decreased quarter-to-quarter for every genre except News, it put more focus on growing dollars from existing users of the medium. The analysis shows that during Q2 the brand awareness advertisers increased their spending by 51% year-to-year while direct response advertisers grew their spending by 31%.
The report also shows that during the second quarter direct response ads made up half of overall podcast ad spending, while brand awareness accounted for 47%.
Podcasters have Americans’ generosity to thank for part of the second quarter growth as the fastest-growing industry was gifts. Coming in a period with Mother’s Day and graduation season, Magellan AI says the gift ad category more than doubled quarter-to-quarter with spending up 133% to $6.9 million during Q2 with brands like Etsy, Aura Frames, Storyworth, and Skylight Frames leading the way.
The consumer services and software ad category is much larger, but its growth was a still-impressive 65% with total spending in the category climbing to an estimated $50 million. The education category grew by nearly as much, increasing 64% to $28.3 million. There were also big gains in travel (+50%) and alcohol (+48%) category spending compared to Q1.
In terms of how many different brands were advertising on podcasts during the quarter, Magellan AI says business services and software retained its top spot with 831 different brands detected. That was an increase of 175 new brands. Other big contributors included food (650 brands), financial services (645) and TV and film (534).
Magellan AI’s analysis shows the share of 30-second ad units jumped to 41% during Q2, marking the first time this metric has surpassed 40%. That may be a factor in why ad loads increased too. Based on its analysis of more than 136,500 episodes of more than 40,000 shows, Magellan AI says the average ad load increased to 5.97% of episode time. That is up from 5.55% during the first quarter when advertising is typically the softest. Despite the uptick, the average ad load remains relatively flat when compared to ad time on podcasts a year ago.
Download a copy of Magellan AI’s Quarterly Podcast Advertising Benchmark Report HERE.