U.S. podcast revenue is expected to reach $678.7 million this year according to the Interactive Advertising Bureau (IAB). That would be a 42% increase over what advertisers spent on the medium last year. The just-released IAB/PwC Podcast Advertising Revenue Study expects the pace of growth to remain strong with podcast ad market revenue forecast to surpass $1 billion by 2021.

The update comes with the final record-setting tally for how good a year 2018 was for podcasters. The IAB/PwC report shows marketers spent $479.1 million to advertise on podcasts, an uptick of 53% from $314.7 million in 2017. And between 2015 and 2018 the data shows revenue increased an even stronger 65%.

Digging deeper into 2018, the report shows among 22 companies that self-reported podcast revenue to IAB/PwC, there’s even more reason for podcasters to celebrate. Each quarter had more support from advertisers than the last with a 78% difference between the industry’s $64.4 million in revenue during first quarter and the $114.9 million pulled in during fourth quarter among this group of companies.

“The steady climb in revenues for the podcast ad market underscores the value of the platform’s flexibility and reach,” said David Silverman, a partner at PwC US. “Consumers are listening to podcasts wherever and whenever—from their morning workout to their evening commute—making it appealing to brands that want to reach today’s audiences.”

Direct response ads continue to drive podcast revenue with slightly more than half (52%) of the industry’s ad dollars tied to DR ads. But that hold on the medium is waning as more traditional brand awareness style advertising gains traction. The share of brand awareness ads jumped ten points during the past year, garnering 38% of industry revenue. More marketers are also relying on creating their own branded podcast content, although it remains a smaller piece of the revenue pie. Branded content accounted for 10% of industry revenue last year.

The data also shows cost-per-thousand was by far the most dominant pricing method. It was how 86% of podcast buys were made last year.

Retail Remains Podcast’s No. 1 Ad Category

Podcasting is by no means a mature medium, but there are glimmers that it will follow the norms of media advertising that have been true for decades—namely, that a majority of revenue will come from a handful of categories. The IAB/PwC report shows three-quarters of podcast industry revenue last year was derived from the top five categories. They were:

  1. Direct-to-Consumer Retailers (22%)
  2. Financial Services (21%)
  3. Business-to-Business (14%)
  4. Arts and Entertainment (10%)
  5. Telecommunications (7%)

Among the biggest ad categories, pharmaceutical and health care ad spending increased the most. The category soared 229% between 2017 and 2018. Travel and tourism ad spending doubled, while telecom spending grew 78%. There were a handful of pullbacks too, most significantly among automotive advertisers which cut their podcast budgets by two-thirds. Restaurant and beverage companies also reduced their podcast spending by slightly more than a third.

"Today’s technology has created an audio-first environment where audio is the preferred interaction—and consumers have put podcasts front-and-center," said Anna Bager, EVP of Industry Initiatives at the IAB. "Podcast storytelling is deeply engaging and provides marketers with a brand safe environment that enhances the appeal to advertisers.” In a statement she said the IAB will again sponsor the IAB Podcast Upfront this fall.

Download the full IAB/PwC Podcast Advertising Revenue Study HERE.