Podcast advertising was the big winner among audio media during the second quarter, according to Guideline’s SMI. It says podcast billing soared 57% during the quarter, making it not only the fastest-growing segment in audio, but the best performer across all digital channels. Total digital audio ad spending grew six percent, as podcasting helped to offset lower spending in streaming audio, which declined 6%. At the same time, broadcast radio revenues fell 15%.
“The share of audio ad spend has definitely shifted in favor of podcasts,” says Darrick Li, VP Sales, North America Media Owners at Guideline. It first detected a majority tilt toward digital audio among national ad buyers during the fourth quarter of 2021 and says that continued for almost all the quarterly periods since. Li says podcasting is also benefiting from more programmatic advertising sales.
“That shift, while it's not specifically unique to podcasts, I think podcasting was a big beneficiary of it,” LI says. “Because there's been growth over the last few years of podcast, with more inventory, and more people talking about looking to other mediums and opportunities, as we're in a tougher state of the economy – and podcasts was a beneficiary of it.”
SMI says host-read podcast placement spend was up 91% during the second quarter, compared to the year prior.
The trend of some national advertisers shifting their audio buys from traditional to digital audio parallels spending shifts Guideline is tracking in television and digital video. That includes growth in programmatic ad buying and in the amount of inventory available via podcasts and ongoing growth in podcast listening.
Even with the gains made by podcasters, the first half of 2023 was challenging for ad-supported media as many advertisers sat on the sidelines during a period of economic uncertainty and rising interest rates. The new ad spending data from Guideline’s SMI backs up what podcast executives and radio groups have both been saying about the first half.
SMI data shows the total audio pie – inclusive of over the air radio, streaming audio, and podcasts – decreased 5% in the first half of 2023 compared to the same period in 2022. During the same timeframe, linear TV was down 10%, and magazines and newspapers decreased 18% and 17%, respectively. Total digital ad revenues, accustomed to double-digit growth, increased only 4% in the first half and out of home was up just 1%.
“There's a lot of volatility happening, especially this year in the ad market,” Li explains. “It started off very weak and continued weak in Q2.” It wasn’t until July that the total U.S. ad market rose 6.2% year-over-year for its largest increase since April 2022.
A Shift Toward Podcasts
Podcasting accounts for 29% of digital audio ad revenue. Streaming audio, which includes pureplays like Spotify and Apple Music and digital ads inserted into the online streams of broadcast radio, captured the remaining 71%.
“The share of spend has definitely shifted in favor of podcasts,” Li says. SMI data shows in terms of category spend, Tech continues to increase its share of all podcast investment, up eight points, and now accounting for nearly one in four podcast dollars in Q2. But Li thinks more brands are still waking up to the podcast opportunity.
“We're still in the first few years of podcasts exploding,” Li says. “There are certain categories that haven't yet tried it, and then this year they're really doing it.” He says that has been most noticeable in ad categories including consumer electronics, prescription drugs, health and fitness, and nonalcoholic beverages. “Prescription drugs is a category that you probably associate when it comes to advertising a lot to linear TV. But now thinking about podcasts, it was an opportunity for them to identify other ways they can get their message across, especially with a very engaged and very specific target audiences.”
Guideline’s SMI gathers data directly from the billing systems of the major ad agency holding companies along with the leading independent agencies in the U.S. As such it represents the biggest national advertisers. However, it doesn’t include the small, long tail advertisers that work with smaller independent shops. Importantly for radio, it does not include local advertisers who buy directly from local media companies. For radio, it’s a good gauge of transactional business placed by large national brands through the big ad agencies.
“I am very confident in my professional opinion that broadcast radio will not be going away,” says Li. From his perspective, Li sees a balance between traditional and digital audio platforms. “You're going to have some individuals that will never go back to broadcast over the air radio, they're going to stay in their streaming world. But there are others where the radio is still king, and they will never touch digital streaming. We are in the middle right now and we're going to start to see which direction it's heading in. Is podcast ad spending going to start to level out? Or are we going to see it continue to grow?”