Podcast’s growth continues to show a “bright opportunity” for local radio in the future. That’s according to BIA Advisory Services which has just issued a rosy outlook for local online radio ad sales. It forecasts the segment—which includes both streaming and podcasts—will grow at an average annual growth rate of 8.1% to reach $2.1 billion by 2023. “Podcasts hold potential for local radio ad growth,” the firm says.
BIA’s 2019 Local Ad Forecast says local online radio revenue is on track to rack up $1.6 billion in ad sales in 2019. By 2023, that will reach $2.1 billion, due in part to the continued growth of podcasts and streaming. “Local online radio is growing substantially,” says BIA.
The local media research firm expects the largest increases in online radio ad spend in 2019 to include professional and trade schools, education support (such as tutors and prep services), insurance, financial services and home remodelers, according to its latest forecast.
High single-digit gains for online radio are expected to offset a modest 1% drop in over the air radio in 2019, which will see “slight growth in overall revenue” for the broadcast radio industry. AM/FM radio is expected to cordon off 9.8% of the local ad pie this year, or roughly $14.5 billion.
Like the recent report from the Interactive Advertising Bureau (IAB), BIA sees podcasting as a major contributor to digital audio’s steep upward trajectory. The IAB reported digital audio ads totaled $2.25 billion last year, compared to a $1.8 billion finish in 2017. “Digital audio is now a significant piece of the pie,” said Sue Hogan, Senior VP of Research and Measurement at the IAB. “Part of that is due to podcasts. It is not the only reason for growth in audio, but it is a significant reason.”
U.S. podcast revenue is expected to reach $678.7 million this year, per the IAB/PwC Podcast Advertising Revenue Study, a 42% increase over what advertisers spent on the medium last year. By 2021 the IAB expects the podcast sector to surpass $1 billion.
According to the IAB and PwC study, dynamically inserted ads are growing in use among podcasters but baked-in ads still represent the majority of ads delivered in 2018 with sixty-second ads being the most used. The majority of ads are still bought on a quarterly basis with programmatic on the small side of buys but growing.
Nearly one of every five dollars spent on podcast advertising last year went to shows in the news, politics and current events category, up 38% year-over-year per the IAB/PwC report. Comedy was the second-biggest recipient of advertising dollars, commanding 14% in 2018, a 31% year-to-year increase. The rest of the top five ad categories were business podcasts (13%), education (11%) and arts and entertainment (10%). The IAB/PwC report showed 65.7% of all ad dollars spent on podcasting went to those show genres.
BIA’s U.S. Local Advertising Forecast 2019 offers a five-year forecast of the top media including direct mail, local video, online/interactive newspapers, mobile, radio, out-of-home/OOH video, directories, social and local magazines.