Podcast ad revenue at iHeartMedia catapulted 184% during the quarter as the company says not only did its portfolio of shows grow along with the popularity of podcasting, but so did advertiser demand. Third quarter podcast revenue totaled $64.2 million compared to $22.6 million during the same period a year ago. The company is now on track to have more than $200 million in podcast revenue this year with the business already at $156 million through the first nine months of the year.
“Our podcast business continues to reach new levels for revenue, profitability, listenership and downloads,” said CEO Bob Pittman. He told analysts during a conference call Thursday that iHeart’s podcast revenue gains far exceeded the 60% industrywide growth estimate for third quarter released by Magna.
“It is clear evidence that we continue to gain share. And I think that is really the flywheel effect that we have,” said Pittman. “And no matter how much money people bring to the party to play in the podcast game, the reality is it's about having a hit show.” He also noted that iHeart has two and a half times as many ranked shows as its closest competitor across Podtrac’s 19 genre categories. “We also have the most shows with over one million downloads. These stats highlight the breadth and depth of our leadership position and the power of the flywheel effect that comes with it,” said Pittman.
Despite having more competition in podcasting as rivals like Spotify, Amazon and SiriusXM jockey for deals with some of the biggest producers, Pittman said iHeart has also been able to leverage its top-ranked position to hold down expenses.
“Every creator who comes to podcasting has a dream of having a hit show. The best way to get a hit show is to start with the biggest podcaster publisher, which is us. We tend to get first look as a result of being the biggest,” said Pittman. “And by being number one and probably getting more looks at product than anyone else, we're able to be pickier. And given our kind of economic position, we're able to say no to something that doesn't make sense. And really carefully watch the economics and not fall into the trap some people do of chasing profitless prosperity. You're not going to see that from us.”
Reflecting how significant podcasting has become at iHeart, the company says its digital revenue increased 77% to $205.8 million during the third quarter. But when podcast dollars are subtracted, digital’s growth rate would have fallen back 51%.
Pittman said that while iHeart’s podcast business “understandably gets a lot of attention,” he noted its digital business overall is seeing a “strong” performance. “This strong outperformance is driven in part by the fact that we have the largest audio sales force in the United States, executing our strategy of any seller anywhere can sell anything, supported by our unique technology,” he said. “We are the only audio player in broadcast or digital that has broad national reach in addition to an unparalleled local footprint.”
To that end, the Multiplatform Group, which includes iHeart’s lineup of 850 radio stations and its live events, is still more than three-times the size of digital, however. The company said revenue on that side of the business increased 19% during Q3 with broadcast radio revenue up 20% compared to a year ago.
Billings from its SmartAudio sales platform – which sells the same broadcast inventory using data and digital ad tech – jumped 43%. It will include a new Triton marketplace starting in January that will also include podcasting and digital audio inventory.
“We're talking about the first truly integrated audio marketplace in which you will be able to buy one set of audiences cohorts on an integrated basis across podcasting, digital radio, into broadcast radio using SmartAudio,” said Pittman. “That gives us and the audio industry a great new tool to bring money broadly into this business.”
Overall, the company reported total third quarter revenue grew 25% year over year to $928 million. “COVID, of course, continues to affect the country. While its human and social toll is real, the advertising revenue impact appears to be behind us,” said Pittman. “Supply chain issues are also making headlines, but they have not had a material impact on our business.”
Post-Cookie Ad World
As new privacy safeguards have the digital ad world preparing for life without cookies and mobile IDs, Pittman said the company is well positioned to benefit from what will be a significant change in digital ad targeting. With all the first party data the company has collected on iHeartRadio users, combined with investments in data, analytics and technology, it can now target “cohorts” or like-minded groups such as auto buyers or new parents – across audio platforms.
“We believe that cohorts are replacing one-to-one marketing, and we think we are well positioned for the shift toward data-infused ad buys due to the changes in privacy restrictions and other factors,” Pitman said. “We see the world moving past one-to-one targeting, past cookies, past mobile IDs and toward premium platforms that are brand safe, measurable, and that have real scale like ours.”