How fast is podcasting growing? So quickly that iHeartMedia CEO Bob Pittman told an investor conference on Monday that every time they try to project it, their numbers have turned out to be too low. “It's hot, it continues to be hot, the engagement is off the charts,” he told the Bank of America Securities 2021 Media, Communications & Entertainment Conference.
There is growing momentum for podcasting at iHeartMedia which reported its second quarter podcast revenue jumped 152% from a year ago to $53.4 million. That was better than the 142% growth rate of the first quarter. And for the first half of the year the company says its podcast revenue grew 147% to $91.8 million. Based on current podcast industry revenue forecasts, the numbers suggest nearly two of every ten podcast ad dollars spent in 2021 will be with iHeart.
Pittman told the Bank of America Securities 2021 Media, Communications & Entertainment Conference that iHeart is beginning to feel the impact of its combination of content – it now produces about 600 podcasts – and the ad tech platform that it has assembled. The latest piece was its $230 million acquisition of Triton Digital. It was the biggest deal iHeart has done in years and it may not be last.
“It's the final piece of what we're doing right now,” said Pittman. “Hopefully we're going to be smart enough to be doing other things and we're continuing to build a lot of things.” For an operation the size of iHeart, he said the question is always whether it is better to buy from the outside – or build internally. Either way, a decision to make the investment in podcasting is made a lot easier by the growth of revenue. Pittman credits the ad tech for allowing iHeart to sell more of its inventory.
“We can sell with our two thousand-person sales force, we can sell the big advertisers, and we can put together plans for some pieces which aren’t exciting enough to warrant that kind of conversation or rise to the level of spending time on that, but in the aggregate are very important,” Pittman explained. “They could go sell small podcasts, they could sell the episodes deep and the podcast, they can begin to sell things that aren't quite meaningful. And, you know, not only do we have some of that available for the electronic marketplace today, but I think we have more inventory we could create, if we decide that we can create the inventory and still hold pricing up.” It’s not just podcasting either. On broadcast radio, he said that could make the overnight daypart that few ad reps focus on. “It allows us to look for a lot of new places to find the revenue,” he said.
New subscriptions from Apple Podcasts and Spotify may offer a new way for some publishers to monetize their content, but Pittman continues to believe the advertising-based model is the future for the audio space. “The only one that's working today is the broad reach, mass distribution of podcast and advertisers support it. People are trying other models, but I can't see any success anywhere with that. In my experience as a marketer, I've never seen a case where people have had something for free, and to be able to charge for it,” he said. “I think one of the reasons you've seen such a tremendous growth in terms of monetization, which goes to the heart of your model, is advertisers are paying a premium – they're lining up for podcasting. They're paying CPMs that look like OTT, so there's no problem with that model. And you're seeing a number of podcasters even increasing their inventory, and there’s no pushback from consumers on that either.”
Under reorganization of how iHeart sells, Pittman also told investors that any of the company’s sales reps is now able to sell podcasts. He also expects to see podcast ad revenue growing, pointing out fourth quarter is typically the biggest.