A sleeping giant in podcast advertising may not be very big at all. As the industry closes in on a billion dollars in ad revenue – possibly as soon as this year – the overwhelming majority of that comes from national marketers. Small and medium sized businesses are still largely on the sidelines, but Borrell Associates says if similar patterns hold with other emerging media, local advertisers may follow their lead in the years to come.
With a projected 17.8% increase, streaming audio/podcasting is among the channels poised for the largest growth in 2022 according to Borrell’s forecast. That would follow what Borrell estimates will be a 24.7% growth rate for digital audio this year.
Borrell Associates CEO Gordon Borrell says that national trends have typically been a “precursor to what happens to local” explaining on a webinar Tuesday that the embrace by national marketers of social media, and more recently digital video, has paved the way for local spending. “Now that’s pushed down to podcasting and streaming audio,” he said.
What may work to accelerate that trend is an overall shift to digital media. Borrell projects two-thirds of local ad spending will go to digital media this year and by 2025 it estimates that share will climb to 72%. By that point, Corey Elliott, Executive VP of Local Market Intelligence at Borrell, thinks that while the numbers will not be growing at the same pace, the conversation will likely shift. “We'll still talk about individual media, but maybe we aren't going to compare digital versus non-digital too much anymore,” he predicted.
For now, the podcast ad spending numbers remain fairly small at the local level. Borrell’s latest survey of small and medium-sized businesses found nine percent of local businesses are buying streaming audio and podcasting. They report spending an average $2,200. That compares to an average $30,000 in spending for broadcast radio.
“It is really, really small, almost non-existent at the local level,” said Gordon Borrell of local podcast advertising. He is also not yet ready to predict whether it will grow into a meaningful revenue source for podcasters. “A big issue is whether there are the relevant pieces of local content that can be done in a podcast that people would actually listen to,” he said. “But it's not for lack of effort. There are a lot of people trying to tackle local.”
Beyond podcasting, Borrell Associates predicts total local ad spending will climb 6.4% in 2022 to $138.9 billion. That is on top of what it estimates will be a 9.9% growth rate this year – the strongest since the recovery period after the Great Recession.
But there will be a wide gap between online and offline spending. Borrell predicts ad spending on digital media will grow 9.1% next year compared to a 1.3% growth rate for traditional media.
Borrell’s data is different from some other forecasters because it is derived from expenditures by local businesses, not revenue from media companies. Its forecast also takes into account local employment data, retail sales, SEC reports and other financial documents, COVID hospitalizations and deaths and an ongoing survey of local businesses.