Riding the Podcast wave - ad revenues up 48%, digital critics listen up
IAB US has just released its 4th Podcast Advertising Revenue Report which shared details of the market in 2019 as well as guidance for 2020. The headline was that the podcast market experienced incredible growth last year, with advertising revenue increasing 48% from 2018.
Now I know the digital critics will be the first to pipe up and say “those digital folks and their meaningless big numbers” so let’s put this in context. Podcasting represents under 1% of total digital advertising revenue in the US, but based on the numbers in this Report, it’s now the fastest growing segment of the market and the outlook for 2020 is further solid growth despite COVID-19.
Although we don’t currently have market revenue tracking for podcasts in Australia, our IAB Audio State of the Nation Report released in February 2020 found that the number of agencies regularly considering podcasts as part of integrated campaigns rose from 5% in 2016 to 33% in 2019. This would suggest that the sector advertising revenue trends will be somewhat similar.
Revenue considerations aside - there were five key points in the Report that caught my eye and should be of considerable interest to Australian agencies and marketers:
1. US advertisers are supporting news: When it comes to investment in the medium, news and current affairs is the number one content genre, with the share of dollars invested in this genre increasing from 13% to 22% over the last two years. It’s clear that advertisers are creating ads to suit these environments and supporting the development of these podcasts. Locally a raft of news podcasts launched in Australia recently and hopefully they will receive the same support.
2. Spot lengths are allowing creative freedom: Over 4 in 10 podcast spots last year were between 30 & 60 secs allowing for the inclusion of some great copy. Attention opportunities anyone? I have to admit though that I do worry for the 10% of podcast ad spots that were over 60 seconds. While these could be wonderful in the hands of a clever integrated host read, they would definitely be painful for the audience if not executed well.
3. Direct to consumer investment will help sustain growth during 2020: In the past I’ve openly praised the Australian podcasting market for driving brand spend so effectively compared to the US market which has been heavily reliant on performance dollars and direct brands investment. But the current market is favouring the US mix of advertisers for podcasts, with US 22% of podcasting revenue in 2019 derived from direct brands, many of these health & wellness, and home & appliance brands. It will be interesting to see if there is an increase in direct brand investment in podcasting in Australia in 2020.
4. Podcasts are being included in long term planning: In a market that appears to be dominated by short lead time investments, it is interesting to see annual deals with podcasts made up 47% of investment in 2019. That’s nearly double the share compared to 2018.
5. Host Read Formats Dominate: One thing that surprised me was the amount of revenue in the US driven by live host read ads increased slightly from 63% in 2018 to 66% in 2019. By contrast the Australian podcast market, while having a strong base of local content has a hefty number of audiences listening to overseas podcasts and are increasingly inserting different ads suited to different geographies.
Over the last year we have seen healthy increases in podcast listening time, which despite a slight dip as commuting time went down during COVID lock downs, is now steadily increasing again as we adjust our routines. This along with the data from the US report points towards podcasting being one of the few areas that will see an increase in advertising investment in 2020 and investment that supports the development of new content.