With more Americans listening to podcasts than ever before, podcast advertising revenues are also on the rise, with just 22 companies self-reporting revenues of $344.7 million in 2018, in a market estimated to total $479.1 million (up 53% year-over-year). These figures come from a new report [download page] from the IAB and PwC, which also forecasts podcast ad revenues for the self-reporting companies to reach $694.0 million, in a market estimated to exceed $1 billion by 2021.
For this year, the report forecasts the total market estimate (not just the 22 surveyed companies’ self-reported revenues) to reach $678.7 million, representing an expected increase of about 42%. So, what is driving this growth? Below are 5 highlights from this newest study.
1. Dynamically Inserted Ads Are Growing In Use
While about half (51.2%) of podcast ads are baked-in ads (ads which are part of the published podcast content and, therefore, remain throughout the lifetime of the podcast), dynamically inserted ads (pre-recorded ads inserted into the podcast file through an ad server that can be changed throughout the lifetime of the podcast) are gaining in popularity. In just one year, dynamically inserted ads’ share of the total has increased by 17% (from 41.7% to 48.8% share).
Host-read ads remain the ad type of choice, representing 63.3% of podcast ads in 2018. However, this is actually a slight decrease from 2017 when about two-thirds (66.9%) of podcast ads were host-read as opposed to announcer-read/pre-produced ads or supplied ads (radio/non-radio). Previous research has indicated that host-read ads tend to perform the best with podcast audiences.
Meanwhile, longer ad lengths seem to be preferred by advertisers. Three in 10 (30%) ad spots were 60-seconds in length in 2018, followed closely by 90-second spots (27%). While advertisers are choosing to go with longer ads, they should also consider that podcast listeners are willing to tolerate more ads. Westwood One found that listeners felt that four ads in a 60-minute podcast was appropriate.
2. The Shift Towards Brand-Related Ads Continues
About half (51.6%) of podcast ad revenues were from direct response ads last year. However, direct response ads are on a steady decline, falling from 73% of revenues in 2016 and 64.2% in 2017.
Picking up the slack have been brand-related ads, which are on the rise. In 2018, 38.2% (up from 29.2% in 2017) of podcast ad revenues were derived from brand awareness ads and 10.1% (up from 6.5% in 2017) from branded content. If this trend continues, it is likely that brand-related ads could surpass direct response ads in the next year.
3. Most Ads Are Sold/Purchased Quarterly
There appears to be a trend away from purchasing ads annually (37.5% of ads purchased this way in 2017 vs. 24.3% in 2018). Last year, more ads were purchased on either a quarterly (38.2%) basis or remnant/transactionally (33.8%), with programmatic also seeing a lift (2.3% of ads in 2018 vs. 0.7% in 2017).
The dominant pricing method remains cost per thousand (85.7% share). As cost per acquisition and series ownership ads declined in significance in 2018, flat fee pricing more than doubled to 11.9% share of ads.
4. News/Politics Generates Largest Percentage of Revenue
On the publisher side, news/politics/current events podcasts experienced a considerable increase in captured ad revenues. At 18.4% this program genre accounts for the largest proportion of podcast ad revenue generated. In fact, news/politics, along with comedy, business, education, and arts & entertainment accounted for two-thirds (65.7%) of ad revenues captured in 2018.
Although the news/politics genre garnered the largest percentage of revenue, a separate study by Nielsen found that it ranked 9th out of 14 genres when households containing a fan of this type of listening were counted.
5. D2C Retail’s The Biggest Advertising Category
On the advertiser side, direct-to-consumer (D2C) retail was the business category which accounted for the largest percentage of spend last year (22.2%). The report also points out that of the 13 business categories examined, the top 5 (D2C retail, financial services, B2B, arts and entertainment and telecom) constituted about three-quarters (73.7%) of the total ad revenues in 2018.
To read more, download the report here.
About the Data: Market sizes are estimates compiled using survey and other quantitative data. Self-reported figures from 2018 are comprised of data from 22 companies that generate revenue from podcast advertising in the US, compared to 19 companies in 2017.