Podcast ad revenue is projected to climb to $2.28 billion this year, a 15.9% increase compared to last year, and will top $3 billion by 2027, according to new estimates from eMarketer. The growth of podcasting is helping drive digital audio overall. The latest update says podcasting will account for nearly one in three digital audio ad dollars spent this year, and will exceed 36% by 2028, according to the forecast.
“In 2024, podcasts will surpass $2 billion in ad revenues for the first time,” says the eMarketer report. “We expect growth in podcast ad revenues to continue to outpace growth in the rest of digital audio advertising.” Podcasting is also expected to maintain its double-digit growth rate at least through 2025, according to eMarketer.
As podcast advertising continues to climb, eMarketer forecasts digital audio ad spending overall will also continue to grow during the next few years. It estimates $7.12 billion will be spent on digital audio this year, including not only podcast ads, but those also running on streaming radio stations, streaming music services, and the digital simulcast of broadcast radio stations. That is a 6.8% increase year-to-year, which eMarketer says is “more than offsetting a slight decrease in traditional radio advertising.”
Thanks to digital audio, the overall audio advertising market will continue to expand despite less being spent on broadcast AM/FM radio, according to the firm. It forecasts marketers will invest $17.61 billion on audio advertising overall this year, and that number will increase to $18.42 billion by 2028. Despite the continued, steady proliferation of digital audio, traditional radio will still generate roughly 60% of audio advertising this year, according to eMarketer. Digital, however, is predicted to account for more than 47% by 2028.
The updated outlook for the ad market also shows that audio advertising has shifted to digital at a slower pace that what has occurred in video as television advertising has shown double-digit declines in years when political advertising doesn’t fill in the gaps, while AM/FM radio has seen a more gradual, low single-digit erosion as digital audio advertising pulled away dollars from traditional radio.
“Despite impressive time spent, digital audio gets relatively few ad dollars,” reads the report’s executive summary. The typical consumer will spend an average of 2 hours and 42 minutes each day listening to audio in 2024, according to eMarketer — or 21.4% of total media time spent. But marketers allocate just 4.5% of their spending to audio, which eMarketer sees as an opportunity since by its analysis digital audio earns five cents of ad sales per hour of time spent, while digital video earns 28 cents and social networks 60 cents.
“As video formats suck in ad dollars, audio could be an opportunity,” its report says. “Traditional TV, for instance, will still capture 15.1% of media spend. The vast increase in video advertising, including an influx of ad tiers in subscription OTT, makes sense; it is effective. But its growth could also obscure the large audience and engagement that audio channels enjoy.”
Beyond digital audio, eMarketer predicts traditional radio revenue will slide 1.5% this year. That would be an improvement over last year’s estimated 3.5% decline. Longer term, it forecasts traditional radio advertising will dip below $10 billion for the first time in decades by 2027. This year, eMarketer estimates AM/FM radio will have a 59.6% share of audio advertising. By 2028, radio is projected to generate 52.6% of audio ad revenues.
“Radio advertising rebounded in 2021 and 2022, but we expect it to decline at a relatively smooth low-single-digit rate through the rest of the decade,” eMarketer says. “Overall, the drops are less severe than those for TV advertising. But cyclical events, such as the Olympic Games and U.S. presidential election years, create a much more jagged downward slope.”
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