The Interactive Advertising Bureau/PwC’s sixth annual Podcast Advertising Revenue Study includes not only some milestones, like toping a billion dollars for the first time, but also some insights into how marketers are using the medium. Inside Radio sister publication Podcast News Daily asked Eric John, VP of the Media Center at IAB, for his take on the findings.
Podcast News Daily: How much do you attribute the growth to more people listening -- giving marketers the scale that they need?
Eric John: Continued audience growth is happening across the board in podcasting, fueled by a diverse landscape of content creators bringing scale for advertisers looking to engage with those listeners. And while audiences always follow content, there are other drivers of podcast growth such as increasingly sophisticated ad delivery and measurement solutions which enable advertisers to execute campaigns more efficiently across the landscape of publishers, networks, and creators. Maturation of measurement and attribution solutions is also helping advertisers scale their buys and validate the effectiveness of their podcast campaign ads, by proving results and return on ad spend.
Podcast News Daily: Can you explain the connection between the ad dollar increase and greater increase of dynamic ad insertion?
Eric John: Revenue wise, the IAB/PwC Podcast Ad Revenue Report shows a 71% increase in 2021 podcast industry revenue, and with continued growth of nearly 50% from this year into 2022. Those revenues reflect another key trend – full on industry adoption of Dynamic Ad Insertion (DAI), which has now expanded to 84% of ad revenue -- almost doubling in two years.
DAI is helping further accelerate podcast advertising by putting the medium on par with other digital channels that are transacted on an impression/CPM basis. DAI also makes it possible for creators to develop a host-read ad that can be easily deployed across multiple shows and episodes. Importantly from a revenue standpoint, DAI also allows advertisers to seamlessly refresh ads running in a creator or publisher’s back catalogue content, thereby opening up the same inventory to new campaigns over time. This is not something that can be done with embedded ads (that can only be replaced by editing and reposting the entire underlying audio file for a given episode).
PND: Do you see growth accelerating during the next few years?
Eric John: Last year's 71% increase reflects phenomenal growth that all digital media saw in 2021, partly attributable to the life and media habits that accelerated during the pandemic. While we don't expect to see the same rate of acceleration, we are forecasting growth of nearly 50% for both this year and next, and close to 40% growth for podcast industry revenue in 2024 reaching $4 billion by then, which would represent a more than 400% increase since 2020. It’s clear that the podcast industry will continue to see growth for the next few years.
It is important to understand that growth through the lens of audience engagement and the role podcasting now plays in people’s every-day lives. Nearly 60% of spoken word audio listeners say they believe that "spoken word audio is made for people like you," almost 80% of weekly podcast listeners say they have taken an action after hearing a podcast ad, and over 50% of those heavy listeners say they are more likely to consider buying from a brand they hear advertised on a podcast. As the Podcast Ad Revenue report shows, brands and agencies are responding to this engagement and receptivity to ads on the part of listeners by increasing their ad spend, and we expect advertisers to continue riding this wave for many years to come.
PND: Are there any hurdles and challenges you see still remaining for podcasters?
Eric John: One hurdle the podcast industry faces is a gap between the wide array of things that brands can measure and achieve with podcast advertising and what they actually know about those capabilities. There is still some education needed with brands and buyers about how to measure the kind of mainstream KPIs that are central to large brand ad campaigns before some of those brands fully embrace the medium.
Another hurdle the industry faces is in the area of podcast transcription, which is presently conducted in a chaotic, piecemeal fashion without any common standards or centralization. The significance of this is that it is very difficult for qualified third parties to do the important work of delivering podcast-specific brand safety and suitability solutions, which will be necessary to support the continued growth of podcast ad revenue, especially where image-conscious large brand advertisers are concerned. The good news is that buy-side understanding of the power and granularity of podcast measurement solutions is growing by leaps and bounds, as is industrywide interest in creating standards and a centralized repository for podcast transcripts, and buyers can afford to be patient given the success they are having.