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WARC’s Global Ad Forecast Sees Podcast Revenue Climbing 19% In 2022.

The global economy is offering plenty of mixed signals, but the direction that podcasting is heading is clear to WARC. Its latest update on the global ad market says podcast advertising worldwide is on track to grow 19.3% this year to $2.6 billion. And its early outlook for 2023 includes more growth. WARC estimates podcast ad revenue will climb 8.1% next year, hitting $2.8 billion.

James McDonald, Director of Data, Intelligence & Forecasting at WARC, says podcast advertising is growing along with acceptance of the format. “Listeners have been found to not only understand but accept the value exchange of podcast advertising when it supports the content, and this can be a potent draw for brands as audiences often have a deep engagement and affinity with shows,” he told Digiday.

Overall, WARC says global spending on advertising is on pace to rise by 8.3% to $880.9 billion this year, boosted by a positive first half for ad agency holding companies and a jolt from the U.S. midterm elections and the men’s FIFA World Cup in Qatar this November. But after that, WARC’s latest forecast calls for growth to cool down to 2.6% in 2023, as advertising outlays are inhibited by slowing economic conditions and the blocking of third-party cookies online.

The new projections, based on data from 100 ad markets worldwide, reflect a slowing economy around the globe. It amounts to a downgrade of 4.3% to 2022’s growth rate and 5.7% to 2023’s prospects, compared to the previous global forecast released by WARC last December. Taken together, the new forecasts translate into a reduction of almost $90 billion in growth potential for the global ad market this year and next.

Total audio revenues are forecast to grow 7.2% this year, with online experiencing the largest year-over-year growth (+25.6%). Not only are podcasters benefiting but so is audio streaming overall. WARC estimates streaming ad revenue will climb 27.7% this year.

The interest in podcast ads among clients led the media buying shop Ocean Media to launch a podcasting-focused team. CEO Jay Langan told Digiday that after testing a few shows for the car selling website Vroom, the brand achieved 10% more efficiency in its upper funnel metrics and 43% more efficiency in the lower funnel.

“We’re pretty bullish on just the continued growth around podcasts,” Langan told Digiday. “In the last couple years, a lot of the audience members have just gone through the roof.”

Broadcast radio is more tempered this year with global radio ad revenue forecast to increase 3.2%. Audio is forecast to be flat in 2023 with radio down 2.4% and online up 10.1%.

WARC says very few product sectors are cutting advertising investment. Of the 18 categories monitored, all are on track to increase ad spend this year – except automotive. Only four categories are expected to cut spend in 2023: transportation & tourism (-0.4%), alcoholic beverages (-1.1%), financial services (-4.5%) and automotive (-12.4%).

The technology & electronics sector – the third largest of the 18 monitored by WARC – is forecast to lead growth this year and next (+25% in 2022 and +11.5% in 2023). It is followed by the pharmaceutical & healthcare sector, which is set to ramp up by 11.0% this year and another 7.5% in 2023.

Retail is the largest category monitored by WARC and it is set to increase advertising investment by 6.8% this year and 3.6% next year, despite retailers seeing tighter margins from the wrath of inflation.

“With the growth rate of global output now set to halve and acute supply-side pressures fanning inflation, the economic slowdown has removed close to $90 billion from global ad market growth prospects this year and next,” says McDonald. “Yet brands are still spending as the COVID recovery continues, and global ad trade remains on course to top $1 trillion in value by 2025. Platforms with rich sources of first-party data – most notably Amazon, Google and Apple – are well placed to weather future headwinds by offering measured performance in a climate where return on investment becomes paramount.”

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