The Interactive Advertising Bureau says podcast ad revenue grew 19% to $842 million last year. And the trade group sees even stronger growth rates on the horizon, with revenue forecast to top $1 billion in 2021 and to double to $2.2 billion by 2023.
“It’s pretty clear that podcasts are becoming a big part of media brands and buyers’ planning and execution,” said Eric John, VP of the IAB Media Center. “While podcasts have been growing by leaps and bounds, this past year we saw critical mass and the revenue numbers point to that.”
Last year’s growth rate was smaller than the 48% recorded in 2019 as digital media was not immune from a pullback by some marketers. But the IAB and PricewaterhouseCooopers, with whom the trade group produces the report, estimate revenue will leap 60% this year.
“It’s a perfect storm of a lot of good things happening,” said Chris Bruderle, Senior Director of Research & Analytics at IAB. “The big audio platforms have doubled down on the investment in podcasting from a content and from an ad tech standpoint. And consumer adoption continues to grow.The combination is really putting this platform poised to do exceptionally well.” He credits podcasting’s flexibility and shorter lead times for helping weather the pandemic impact last year and going forward he expects marketers to hold tight to that control.
Beyond the sheer volume of ad dollars spent, the report also highlights evolutions in how ads are purchased. For the first time, the IAB says most podcast ad revenue is tied to dynamically inserted advertising as baked-in ads went from a majority 52% share in 2019 to represent just a third of ads in 2020.
“That tells me that brands and buyers know there’s an audience but also know there’s opportunity to reach them with the right message and the right time,” said John.
The IAB report also shows host-read ads continue to dominate with 56% of revenue coming from that form of creative. But sales of announcer-read ads rose by nearly 30% last year and revenue from client-supplied ads increased 50%, both likely tied to a greater number of brand advertisers moving into podcasting.
John thinks the host-read ad remains one of podcasting’s most valuable tools, and come at a higher price point too. But he sees changes coming in how they are executed. “I think the dynamically inserted ads are going to come together with the power and intimacy of the host-read ads – that’s the sweet spot,” he predicted.
The data shows brand advertising was responsible for 45% of podcast ad revenue last year, with another 4% tied to branded content. Direct response ads – which have been the industry’s bread and butter for years – still accounted for a 51% share of revenue. But that’s the smallest number on record, as it fell from 53% in 2019.
News podcasts captured the biggest share of ad dollars last year with 22% of all podcast ad revenue going to shows in that category. Comedy remained second at 16% while the Science genre quadrupled its share to 12%, driven by a crop of coronavirus-focused series.
Retailers remained the largest source of podcast advertising with one in five ad dollars coming from those marketers, although it was down slightly year-to-year while pharmaceutical more than doubled its share to 9%.
Meanwhile, programmatic platforms still control just a sliver of all podcast sales. The IAB says 2.2% of podcast advertising was sold through programmatic channels last year, which was down slightly from 2.9% in 2019.
Despite that, as more podcast companies consolidate and look to create efficiencies, John thinks the use of programmatic platforms will expand. Clients will push for it too. “Brands and buyers will want that efficiency that they currently apply to other digital media,” he predicted.
The fourth annual podcast revenue report, which IAB produces with PwC based on data it collects from podcast companies, includes a range of other snapshots of the industry. That includes more ads being sold on a cost per point basis than a flat fee, with ads in the 16 to 30 second range the most common last year. Nearly a quarter (23.2%) of ads were sold using geo-targeting. And 9% of revenue came from video podcasts.
IAB executives will detail their report at Wednesday’s IAB Podcast Upfront.