With an estimated monthly audience of 67 million Americans, podcasting shows formidable momentum in audience size and advertiser buy-in. Now, a first-of-its-kind forecast shines a clearer light on its strength as an emerging marketing medium. U.S. podcast advertising revenues are expected to skyrocket to more than $220 million in 2017, a staggering 85% increase over 2016’s $119 million.
The new numbers are from the first-ever IAB Podcast Advertising Revenue Study conducted by PwC U.S. and released Monday by the Interactive Advertising Bureau.
After 73% revenue growth to $119 million in 2016 (from $69 million in 2015), podcasting is on a torrid growth trajectory. Ad revenues have increased steadily, growing 228% on a quarterly basis between Q1 2015 and Q4 2016 or at a 19% compound quarterly growth rate. But despite the impressive double-digit annual increases, podcasting’s 2016 ad revenues significantly trail the $1.1 billion that digital audio ad formats earned in 2016 revenue, according to the 2016 IAB Internet Advertising Revenue Report. That report didn’t include 2016 revenues from the podcast ad market.
The IAB says the new forecast is the only analysis based on direct first-party data on podcast ad revenues. “This study is the first to directly survey the podcast industry’s significant revenue generators, which means it’s the most accurate view of the medium’s largest players compiled to date,” said Chris Kuist, senior VP, Research and Impact, IAB.
The report is based on historical data compiled from 20 of the industry’s largest players which are believed to make up a significant amount of the overall market while not accounting for 100% of it.
“These findings confirm that podcasting is experiencing impressive year-over-year growth, and we can expect even more gains on the horizon,” David Silverman, a Partner at PwC U.S., said. “The study also identifies key trends that should be on marketers’ radar screens.”
Among those trends are subtle shifts in the types of ads preferred by advertisers and the ways in which they’re delivered. Findings in both 2015 and 2016 show that marketers prefer ads read by podcast hosts to those that are pre-produced. But pre-produced podcast ads crept up slightly in 2016, accounting for 40% of ads, up from 37% in 2015.
The way that ads are delivered to listeners is also changing. Last year saw more revenue generated by dynamically inserted ads for the first time, which increased their proportion of ad spend by 51% from 2015 to 2016 to account for 56% of podcasts ads.
In another signal of podcasting being embraced by a wider spectrum of advertisers, direct response campaigns decreased from 2015 to 2016, as a percent of total revenue, while brand awareness campaigns increased and branded content made its revenue-generating debut. Still, direct response campaigns continue to be the most popular campaign type, making up 73% of ads. But brand awareness campaigns now account for one in four podcast ads and branded content has eked out a 2% sliver of the podcast ad pie.
The new study dovetails with the latest Nielsen Audio Today Report, which shows the profile of an average podcast listener is young, educated and affluent, making the podcast audience a qualified—and valuable—audience for advertisers and marketers.
Randall Rothenberg, president and CEO, IAB says the IAB-PwC report shows brands are taking notice of on-demand audio. “From the remarkable growth of podcast ad revenue, we’re seeing an ancient axiom being proved yet again: great rewards go to those who surprise and delight their fellow humans.”
The study was underwritten by IAB member companies that loom large in the podcast space, including Acast, Authentic (part of Podtrac), Gimlet Media, HowStuffWorks, Market Enginuity, Midroll Media, Panoply Media, Public Media Marketing (PMM) and Wondery.