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. While new ad spending data from Guideline’s SMI backs up what radio groups have been saying on results calls, it also shows that audio fared better than other media channels during the first six months of the year.
Data from SMI provided to Inside Radio 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%.
Breaking down the audio pie into market segments, podcasting was the big winner with ad billings shooting up 57% year-over-year. That made it the fastest growing of all media types and all digital channels. Streaming audio was down 6% and overall digital audio advertising (streaming audio and podcasts) grew 6%. Over the air broadcast radio revenues fell 15% in the first half, contributing to the 5% total audio decline.
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.
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%.
Shifting Ad Pie
“The share of audio ad spend has definitely shifted in favor of podcasts,” says Darrick Li, VP of Business Development & Strategic Partnerships 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.
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.
“I am very confident in my professional opinion that broadcast radio will not be going away,” says Li. “I'll say the same about broadcast and cable linear TV – they won't be going away anytime soon.
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?”
Pulling back to view the total U.S. ad industry shows it faced headwinds coming into 2023 when compared to 2022. “We saw through our data that 2022 was still a strong year, especially the first half of 2022,” Li says. That was coming out of the pandemic, and a year and a half of a struggling, weakened ad market. “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.