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U.S. Podcast Advertising Revenue Hits $1.4 Billion in 2021, On Way To $4 Billion By 2024.

In a milestone for podcasters, the industry surpassed the billion-dollar mark during 2021 as podcast advertising grew at twice the rate of the overall internet ad market. The Interactive Advertising Bureau says total podcast ad revenue was a record $1.4 billion during 2021, a 72% year-to-year increase that easily outpaced the 35% growth rate for total internet ad spending.

The sixth annual IAB U.S. Podcast Advertising Revenue study -- prepared for IAB by PricewaterhouseCoopers -- credits the gains to more people listening to podcasts, which is attracting larger budgets from existing advertisers as well as new advertisers across multiple ad categories. It also credits improving ad tech, in particular dynamic ad insertion, that is making podcasting more enticing to marketers.

The IAB report shows that not only was 2021 a record-setting year, but the fourth quarter was also a record-breaker for the podcast industry. During the final three months of last year, advertisers pent $326 million on podcasting. It was a 51% year-to-year increase, and it easily shattered the previous quarterly record of $242 million set during Q3.

“Everything right now is aligned to drive growth. There’s more engaging and diverse podcast content than ever, and that is translating into larger, more attractive audiences,” said Chris Bruderle, VP of Research & Insights at IAB. “But more than anything, podcasting has proven that it can deliver beyond direct-to-consumer advertising to support brand-building and drive business outcomes.”

The spectrum of ad categories directing dollars to podcast is expanding and increasingly looks similar to more established media channels. The IAB says financial services was the largest single ad category last year, contributing 15% of total podcast ad revenue. Direct-to-consumer retail and arts, entertainment and media tied for second place at 11%, followed by consumer-packaged goods at 8%.

The days of a few categories dominating the medium are over, however. The IAB says the share of ad revenue generated within categories with traditionally lower spend volumes has more than tripled in just two years, from 8% to 28%.

Host-read ads continue to dominate, making up 55% of ads versus 40% that are pre-produced or announcer-read. The prior year’s numbers were similar, but the report shows announcer reads are slowly growing. It may also be why ad length continued to trend shorter than in previous years. But the IAB says the most dramatic change was how the ads were bought.

The share of ad revenue served through dynamic ad insertion has almost doubled in two years to 84% as now both host-read and announcer-read ads are largely being served that way rather than being “baked in.”

Dynamic ad insertion may be creating greater scale, flexibility, and targetability for advertisers, but the shift is for the most part not having an impact on how podcast ads are bought. The IAB says 94% are still based on a cost per thousand pricing model rather than a flat rate for series ownership. And last year a majority of all podcast ads (51%) were sold as annual buys. The IAB says that shows a return to pre-pandemic levels, likely due to less market volatility. It also reports the number of brand awareness ads (52%) versus direct response (46%) was nearly identical to the prior year.

One thing not taking off is programmatic sales, which accounted for 1.7% of total revenues last year. “Podcasting continues to lag far behind the rest of the digital ad ecosystem in leveraging programmatic advertising,” the IAB report notes.

Looking ahead, podcast ad revenue is forecasted to nearly triple to $4.2 billion during the next three years. PwC estimates total industry revenue will grow 47% this year to $2.1 billion --- and then top $3 billion in 2023 and $4 billion in 2024.

“The report indicates significant growth ahead, with advertisers buying podcast impressions at scale while tracking delivery, effectiveness, recall and results.” said Eric John, VP of the IAB Media Center. “Buyers will expect advanced brand safety solutions, audience targeting, and measurement, and we look forward to working across the ecosystem to create standards that serve creators, listeners, publishers and brands.”

The report includes several recommendations for podcasters, including improving the data capabilities for advertisers, paying more attention to brand safety concerns, and developing more automated buying solutions.

As in prior years, the IAB report is based on data reported from podcast companies as well as a quantitative survey sent by PwC to industry experts in March to understand 2021 podcast advertising revenues and trends, as well as forecast revenue growth for the next three years.

Download a copy of the IAB’s U.S. Podcast Advertising Revenue Study HERE.

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