Despite worries about a recession, national advertisers continued to pour their money into podcasting during the first quarter. Standard Media Index says national audio ad spending on podcasts grew 43.7% year-over-year during the first quarter. The gains come as SMI says digital audio had a 55.4% share of national audio ad dollars during the quarter, with broadcast radio accounting for a 44.6% share.
Darrick Li, VP of Business Development & Strategic Partnerships at SMI, says the number confirms there has not been any sort of pullback in advertising on podcasts due to economic pressures and says they have even seen double-digit growth in the spending shares for categories including technology, consumer packaged goods, financial services, and retail.
SMI says podcast ads have seen growth during first quarter across all types of creative executions, with pre-recorded spot spending up 46.9%, spending on host-read ads up 30.7%, and spending on sponsorships and branded content up 51.4% in Q1 compared to a year ago.
Li says the trend of some national advertisers shifting their audio buys from traditional to digital audio parallel spending shifts SMI is tracking in television and digital video.
For now, podcasting has only about a quarter of national brands’ digital audio investment. SMI says streaming audio still has the lion’s share of ad spend of digital audio with a 74% share. But Li thinks that gap could close somewhat in the years to come.
“Podcasts are very connected to the user in the audience, because it's geared to a specific topic or conversation,” he says. “What appeals to advertisers is being able to demographically target their advertising message to content. So I think naturally, because of that, you're going to have that ability to see a larger share of spending go towards that.
SMI says digital audio – which includes spending on things like the webcasts of radio stations, streaming music services, and podcasts – is experiencing gains more broadly. The firm says $2 billion of national ad dollars was spent on digital audio during Q1 versus $1.8 billion for broadcast radio.
“The pandemic accelerated a shift to digital audio,” Li says. “What the pandemic did was accelerate consumer behavior around being able to stream audio on-demand. We are now used to opening Spotify or iHeartRadio and listening to the content that we want. And the ad spending has shifted in favor of that as well.”
He says another factor that has accelerated the shift toward digital is that a lot more people are using their connected home devices, including smart speakers. “That has allowed for advertisers to reach those audiences with messages across all types of digital platforms that stream audio,” Li says.
Broadcast Radio Still Has Strong Appeal
SMI first detected a majority tilt toward digital audio among national ad buyers during the fourth quarter of 2021. After a brief comeback for broadcast, during each of the past four quarters its calculates more national audio ad dollars went to online audio than to broadcast radio.
SMI’s numbers are based on national advertising buys with data it captures from actual agency invoicing data from all the major holding companies and most major independents, representing about 95% of national brand ad spend. The figures do not include local radio buys, which account for the vast majority of broadcast radio revenue.
Although Li doubts the trend lines will revert back in favor of broadcast, he thinks a number of strengths for AM/FM radio remain. That includes its massive audience reach and dominance in the car, as well as broadcasting’s ability to reach audiences with different demographics and incomes.
“I think the shift is going to continually grow in favor of digital audio. Do I think radio is going go away? That's a definite ‘no’ as well,” Li says. “It's going to stay for a very long time in the foreseeable future. You're always going to have AM/FM radio stations that appeal to different music genres and they are going to have advertising tied to them.”