An annual study conducted since 2015 among advertisers and media buyers shows that, at each stage of the podcast ad purchase funnel, interest is up significantly over the past eight years – even as actual spending on podcast ads still is yet to be meaningful.
The survey by Advertiser Perceptions, which included more than 300 marketers and media agencies during its most recent wave in June 2023, asks participants whether they have discussed podcast advertising for potential media investment, how likely they are to consider advertising in podcasts in the next six months, the likelihood of actually advertising in podcasts in the coming months, and whether they are currently podcast advertisers.
For both consideration and spending intention, the percentage of advertisers saying they “definitely will” consider advertising, or actually advertise, has grown to a nine-year high, according to an analysis in Westwood One's blog. For the former, consideration went from only 18% of the sample in 2015 to 62% this past June, while spending intention, at a 10% low in 2015, now stands at 58%.
Both discussion and current advertising saw a post-COVID bump in June 2022, which slipped a bit in 2023. Even so, discussion overall gained from 41% in 2015 to 77% in 2023, while those currently advertising on podcasts leaped from 15% in 2015 to 58% this year.
In most cases, the level of interest experienced a “pandemic pause” in 2020 before regaining steam, Cumulus Media/Westwood One Audio Active Group Chief Insights Officer Pierre Bouvard says, but the larger takeaway is, for all the increases at each funnel stage, the level of actual podcast ad spend doesn't match the interest.
“While this is all extremely encouraging for the podcast sector; when we look at the actual dollars spent, they are tiny and really not enough to make a meaningful impact on sales or brand effects,” he says, citing second-quarter 2023 data from Magellan, which measures thousands of podcasts and monitors all advertising brands to estimate actual ad spend.
Bouvard points out that based on activity in the top 500 podcasts, the average advertiser is only spending about $200,000 a month, with an average spend of just $18,000. “[That's] just enough to buy less than a million impressions, so these are, in essence, test buys, probably so small you can't even measure them with a brand study,” he says. “Brands might feel they are in the podcast pool, but they are just sticking their toe in the water.”
To turn the tide, Bouvard suggests a spending strategy that put network cable on the map 30 years ago, then-BBDO media head Arnie Semsky's “5% solution.” “Semsky reasoned 5% was enough of an allocation to generate meaningful impact,” he says, “[and] his brands hugely benefited from taking an early, bold, and strong position in a growing new medium, a lesson for the marketers of today. Marketers need to take 5% of digital budgets and put them into podcasts. The real issue now for the industry is not to get folks in the pool, it's to get significant enough spend really to be meaningful.”