8 Points About the Burgeoning Podcast Advertising Market

June 15, 2022

As podcast listening grows in the US, drawing an appealing audience for marketers, so does the size of the associated advertising market, estimated to soon account for 1 in 3 digital audio ad dollars. Now, a new study from the IAB and PwC adds to the body of research about podcast ads. Here are several takeaways from the report.

1. Podcast Ad Revenues to Double in the Next 2 Years

Podcast ad revenues eclipsed $1 billion for the first time last year, according to the report’s findings, reaching almost $1.5 billion. This year growth is expected to come in at almost 50%, to end the year at more than $2 billion. With healthy growth forecast for the next couple of years, podcast ad sales are predicted to reach $3 billion next year and more than $4.2 billion in 2024.

2. Financial Services is the Biggest Spender

In 2020 Direct-to-Consumer (DTC) Retail was the biggest industry spender on podcast ads, at 19% share of all revenues. Last year, though, the top spender was Financial Services, at 15% share, up from 12% the year prior, as DTC Retail fell to 11% share of ad spend.

Other top-spending industries on podcast ads last year included Arts, Entertainment & Media (11% share), CPG (8%) and Retail (non-DTC; 6%).

The study analysts also point out that the “Other” industry bracket has been rising over the past couple of years, from 8% of ad spend in 2019 to 19% in 2020 and 28% last year. This bucket is comprised by a growing mix of lower-spending ad categories such as Energy, Government, Non-Profit, Law, and Sports, and suggests that a greater variety of advertisers are getting involved in the market.

3. Podcast Ad Delivery Mechanism Shows “Dramatic” Shift

Whereas in 2019 ad revenue share was almost evenly split between dynamically inserted ads (DIAs – 48%) and edited-in/baked-in ads (52%), the pendulum has swung definitively in favor of the former since then.

To wit, in 2020 DIAs jumped to two-thirds (67%) of ad spend, and last year continued to soar, to 84% of all spend. The report says this “reflects the efficacy of automated, agile messaging delivery.”

4. Pre-Roll Ads Grow in Popularity

Another trend taking shape is a move towards more pre-roll ads. These accounted for less than one-quarter of ad spend share in both 2020 (22%) and 2019 (23%), but rose to one-third (32%) of ad revenue share by placement last year.

Mid-rolls are still the dominant form, tallying 64% of ad revenues by placement last year, but that is down from roughly three-quarters in each of the prior 2 years.

5. Announcer-Read Ads Also More in Vogue

Host-read ads constitute the majority of podcast ad revenues when sorting by ad type, according to the study. These have traditionally been found to be the most effective form of podcast ads.

However there does seem to be a trend towards announcer-read/pre-produced ads. These comprised 40% of podcast ad revenues last year, up from 35% in 2020 and 27% in 2019. Recent research suggests that advertisers perceive these to be as effective as host-read ads for brand advertising goals.

6. Which Goals Are in Mind?

As far as ad objectives, the study reveals that advertisers are fairly split. Last year a slim majority (52%) of ad revenues were for direct response (DR) campaigns, as opposed to 46% for brand awareness, 3% for branded content, and virtually nothing for product placement.

Not too much has changed on this front in recent years, although in 2019 the data indicates that there was a slightly greater skew towards direct response over brand awareness goals.

7. Most Sold Ads Are Now 16-30 Seconds

As this market matures, the study’s analysts note that “podcast ads are starting to mirror the digital industry-standard of 15s and 30s ad lengths.” Indeed, ads of up to 15 seconds constituted 16% of inventory sold last year, up from 9% in each of the prior 2 years.

Meanwhile, ads of 16-30 seconds rose to a majority (55%) of sold inventory, up from roughly 4 in 10 in each of the previous 2 years.

As as result, ads of 31-60 seconds, which had at one point accounted for a plurality of inventory, were down to 27% share last year, while those of 61-90 seconds tumbled to just 2% share from 15% in 2020.

8. Podcast Advertisers Committing to Longer Buys

Finally, advertisers seem more comfortable committing to longer periods. In 2021 annual buys accounted for half (51%) of podcast ad revenue by buy type, up from 42% in 2020 and 47% in 2019. As such, quarterly buys dropped to 28% of revenues, and remnant/transactional/scattered buys to 20%.

For more download the study here.

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