The gap between digital and AM/FM radio continues to close, at least when it comes to where national advertisers are placing their dollars. According to Standard Media Index, while both segments have seen double-digit growth during the past year, the rate digital advertising spending increased is triple the rate and is now approaching parity with broadcast radio in terms of national ad dollars.
The SMI data excludes local ad dollars, which represent the majority of radio ad spending.
SMI says that while broadcast radio’s national ad dollars increased by a respectable 14% year over year during 2021, national advertisers boosted their spending on digital audio by 43% compared to 2020. The gravitational pull toward digital is not limited to any one ad segment, according to SMI. It says ad categories such as consumer packaged goods, technology, financial services, and entertainment/media are all now allocating more of their national ad budgets to digital audio than to broadcast radio.
The SMI figures for digital audio include spending data from streaming services, the online simulcasts of broadcast radio and what it says was the biggest factor in the exponential growth last year – podcasts. The firm says national marketers increased their podcast ad spending 68% last year versus 2020. And podcasts now account for eight percent of all digital audio ad spending.
Driving those numbers are what national advertisers are paying for podcast ads. The average CPM for digital audio overall is $17. But SMI says podcasts now lead all media categories in CPMs at an average of $26. That tops even premium video ads on OTT, which have an average CPM of $25.
The growth was led by host-read placements, which were up 199% last year according to SMI, as well as pre-recorded audio spots, that grew 74% year over year.
“Podcasts are not a new format, but over the last several years and especially during the pandemic, consumer consumption has accelerated, and advertisers are following their audiences to the channel,” said SMI President Ben Tatta. “Due to their highly-contextual ad formats, such as custom/native spots and host read-ads, Podcasts are commanding heavy premium CPMs, with some such as Ladygang and Shattered Glass at $96 and $63 respectively.”
Another reason marketers are embracing digital audio is the return on investment. The bedding brand Sheets & Giggles spent $30,000 on digital audio ads during January and nothing on social media, despite having spent $200,000 a year earlier on Facebook and Instagram ads. CEO Colin McIntosh told the Wall Street Journal that while sales declined ten percent, the company’s advertising costs were slashed by 75%. “That was a huge signal for me that we’ve been spending on the wrong channels,” he told the paper.
The data comes from Standard Media Index’s new Digital Audio Advertising Spend and Pricing Solution, which launched Monday. It is based on actual spend data from SMI’s pool partners of major holding companies and large independent agencies, representing 95% of all U.S. ad spending.