There’s little doubt 2020 will bring growth in podcast revenue. The big question is whether it will be the year the industry tops the $1 billion mark or will that threshold wait until 2021 to be crossed.
During the first half of 2019, total digital audio ad dollars – including podcasts – reached $1.2 billion, up 30.1% from a year earlier, according to the Interactive Advertising Bureau. “Podcast advertising revenue represents a small but rapidly growing proportion of audio ad spend,” said IAB VP of Mobile Zoe Soon. The most recent year-end tally was in 2018 when podcasters reported $679.7 million in revenue. Soon notes the IAB projects the billion-dollar line will be crossed by 2021.
A big driver of that growth is that the complexion of marketers is rapidly evolving. Conal Byrne, President of the iHeartPodcast Network, said big brands are finally embracing podcasts. “For the first five or six years of podcasting, the brands that advertised in the medium were almost entirely direct response clients. Now, as podcasting gets more sophisticated in terms of data and targeting, bigger brands are entering the space,” he said. “That’s a huge shift and will be a big contributing factor as the industry doubles and triples in size in the next few years.”
Helping that momentum is what’s happening in digital audio advertising overall, as live streaming services such as Spotify, iHeartRadio, Pandora and Radio.com attract more attention. Soon predicts the rate of growth for digital audio ad revenue will double this year and exceed $3 billion. “Smart speakers represent the fastest growing technology of all time, including smartphones. This is a big driver of growth in audio listenership and advertising revenue,” she said.
Matt Cutair, CEO of the Global-owned audio advertising platform DAX, agrees smart speakers are helping propel audio forward. But he sees podcasting’s gains as more than just being driven by new gadgets.
“Despite being around for almost a decade, podcasts have finally entered the mainstream media. With more investment, podcasts are growing in popularity,” said Cutair. “Publishers are producing podcasts to reach new, younger and hard to reach audiences that don’t necessarily engage with other mediums. What we’re seeing is that podcast listening is incremental to radio and in some cases, publishers are producing podcasts as spin-off content to their core media.”
Yet for all of podcasting’s growth, Borrell Associates CEO Gordon Borrell cautions that radio companies need to remember that new digital formats don’t have the same lucrative business models as over-the-air broadcasting. “History tells us that it will be nearly impossible to replace ‘old media’ revenue dollar for dollar with new methods of distribution,” said Borrell. “There's a new business model beyond advertising and sponsorships, and it'll be difficult for the radio industry to break that mindset and discover a new way to monetize audio programming.” He thinks a great opportunity would be for podcasters to strike alliances with wireless carriers and subscriber platforms to add to their revenue, not unlike the fees that television stations get from cable and satellite TV providers. “The benefit of podcasting currently inures to the wireless data provider, who gets paid by consumers' voracious use of data. So why not make a deal with wireless providers to allow ‘free’ access to Radio.com to, say, Verizon wireless customers,” Borrell suggests.
More Focus On Measurement
Kurt Kaufer, a partner and CMO at Ad Results Media, the performance marketing agency that buys both podcasting and radio, thinks 2020 will be the year that the industry moves toward adopting a universal digital measurement methodology. “Advertisers are hungry for more accurate data, and with the advent and adoption of pixel-based technologies this year, I believe we are only going to see that appetite rise,” he said in Forbes op-ed. Kaufer said tools such as vanity URLs, promo codes and surveys have been “fairly accurate” in figuring out whether a podcast ad has worked in the past, but digital-based measurement may help quiet any remaining skeptics. “These types of measurement tools can help materially drive up interest and demand from enterprise brands, shift dollars from other mediums into podcasting, and prove podcasting's dominance as an ad channel,” wrote Kaufer.
In recent weeks Triton Digital joined the parade of companies that have begun tracking podcast listening. It joins other including Podtrac, Nielsen and Edison Research, each using different methodologies. To provide podcast advertisers with attribution data, others are working to link listening and ad exposure. For instance, Podsights’ performance dashboard allows an advertiser to see in real-time how many times a podcast episode has been downloaded, what the estimated reach of the campaign is, how many listeners added the product to a cart, how many actually bought the product, and what the company’s revenue from those sales was.
“Podcasting has come a very long way in the last few years in terms of data and analytics,” said Byrne. “When we talk to advertisers today, we don’t even talk in terms of downloads—we talk about ad impressions delivered. We provide dashboards to clients that look and feel like the digital media dashboards they’re used to. We now have geotargeting, audience targeting. There’s a ton more data and analytics if clients want it.” iHeartMedia was among the companies that have signed on to Nielsen’s podcast service that aims to deliver program-level analytics. “We are one of the first big podcast networks at scale to bring geotargeting to market. It’s nothing less than a game changer, a seismic shift even in just the last year,” said Byrne.