Audio advertising is again growing and analysts at Magna are crediting podcasting with helping spur renewed interest in the medium. The media buying agency says the overall audio sector posted 2.4% growth in advertising revenue during the first half of the year with total billings of $7.8 billion. Magna’s update says sales of ads on podcasts, streaming radio and other digital ads increased 12% in the first half to $1.5 billion. But it’s podcasting that it is most bullish about. “As a quarter of all Americans are now listening to podcasts weekly, more and more major consumer brands are taking notice and starting to include podcasts in their audio campaigns,” says Magna, the media buying unit of global ad agency IPG. “National brand’s ad dollars, adding to the core podcast users (DTC and direct response), will help increase ad sales by +27% in 2020 to $850 million.”
The audio slice of the U.S. advertising pie expanded in the first half of the year, according to ad giant Magna. Digital was a big reason, but perhaps more significant was broadcast revenue grew too in Q2. Its analysis of the radio market shows total broadcast ad revenue increased for the third consecutive quarter, climbing 0.7% during the April-June period. That’s mostly due to a 0.6% gain in national and network sales while local ad billings remained flat with a year ago.
Based on an analysis of media owners’ financial reports, Magna estimates the U.S. ad market accelerated off of last year’s gains and grew 7.6% to $107 billion during the first half of 2019. It credits especially strong growth rates in the finance, retail and travel categories. The Direct-to-Consumer (DTC) brands that power podcast revenue also spent more.
It’s enough of a tailwind heading into the second half, when even more spending occurs, for Magna to revise upward its outlook for the full year. It now forecasts total U.S. ad spending will increase 6.3% in 2019. That’s more than a point above the 5.1% growth rate it projected in June. “The U.S. ad market had a great first half thanks to a strong economic environment as well as media innovation and a dynamic technology vertical,” Létang said.
In a report issued by Magna recently, it told Madison Avenue just how important podcasting is becoming as a medium. It projects podcasting will capture an 8% share of the audio market within the next five years—or twice its current take—as more brand advertisers embrace on-demand audio.
Magna forecasts U.S. podcast advertising revenue will total $680 million this year, a 40% growth rate compared to 2018. And within the next five years Magna expects that number to top $1.2 billion. Today that means podcasting is just 4% of the total $16 billion audio advertising market and 20% of the $3 billion digital audio marketplace. But the report says the data suggests “massive room for growth.”
On a recent episode of the Magna-produced Floor 9 podcast, Magna Executive VP Vincent Létang said what’s attracting advertisers to podcasting is a highly engaged listener in an uncluttered environment. Plus skipping ads is difficult. “Another big driver is the demographics of podcast listeners are very attractive to brands,” he explained. “Those demographics are sometimes hard or expensive to find elsewhere.” He said the data shows podcast listeners tend to be younger, more affluent, and better educated than either radio or television consumers overall.