Podcasts are hot. Red hot.
A new study released Monday by the Interactive Advertising Bureau (IAB) reveals that podcast revenues in the US have broken records, bringing in $314 million in 2017 — a full 86 percent more than in 2016, a year that also saw steady gains in the industry.
IAB and PwC’s second annual Full Year 2017 Podcast Ad Revenue Study: An Analysis of the US Podcast Industry also found that self-reported year-on-year revenue was $257.4 million in 2017, a 117 percent increase from $118.8 million in 2016.
The study is based on self-reported data from companies that generate revenue from podcast advertising in the US and a survey of leading industry players.
Direct response ads made up the majority of category revenue but dropped from 73 percent of total revenues in 2016 to 64.2 percent in 2017. Brand awareness (25.4 percent to 29.2 percent) and branded content (1.5 percent to 6.5 percent) ads saw gains this year.
Integrated ads (also known as edited-in or baked-in ads) were the most popular type of ad delivered in 2017, increasing from 43.6 percent to 58.3 percent. Two-thirds of the ads deployed this year were host-read.
Other significant findings show that of the 14 podcast genres measured, arts and entertainment generated the most revenue, with 17 percent. Technology programming was a close second (15 percent), with news/politics/current events (13 percent) and business (11 percent) following behind.
In terms of spending, the report found that financial services advertising led the way (18 percent), closely followed by direct-to-consumer retailers (16 percent) and arts and entertainment advertisers (13 percent).
Podcasts for the win
The report confirmed that podcasts are continuing to grow in popularity and appear to be becoming a viable investment for advertisers for some time to come.
Looking over the past few years, self-reported revenues have increased a whopping 275 percent from 2015. Self-reported podcast advertising revenue grew 94 percent between the end of 2016 and end of 2017.
Anna Bager, executive vice president of IAB’s Industry Initiatives, told me, “Marketers are recognizing that podcasting’s advertising approach is highly personalized and impactful.”
The report shows that two-thirds of podcast ads are host-read, which means the host weaves the ad into the programming, aligning brands directly with favorite personalities — a major benefit to marketers looking to truly connect with consumers.
Voice and audio are becoming central to interactions with everything in the home from smart speakers to appliances, smart TVs and home audio systems. In the car and on the move, consumers listen to and interact with their content using voice and audio. As audio becomes more and more important in the media landscape, today’s marketers can take advantage of this shift by investing more in platforms such as podcasts that enable them to take advantage of these new content consumption patterns.
“This report confirms that podcasting is an extremely viable option for advertisers,” Mark McCrery, chief executive officer of Authentic and Podtrac, said in IAB’s summary of the report. “More and more advertisers are discovering that podcast advertising delivers great impact for their campaigns and repeat advertiser confidence is high with 38 percent of podcast ad spending coming from annual upfront buys.”
Hernan Lopez, founder and chief executive officer of Wondery, an IAB member company, told me, “This tells us two things: (a) podcast ads work — since existing podcast advertisers, who mostly measure their results on strict performance goals, are increasing their spend; (b) brands ignore podcasts at their risk.”
Sheldon Smickley, founder and CEO of Podible, applauded the findings but noted that the industry still has some way to go:
It’s incredible to see the growth of podcast advertising. Right now 71 percent of inventory is for direct response. Once the measurement and transparency challenges have been solved, we believe larger brands will make up the majority of spend, and that estimated revenues will be much larger as podcasts become a tool within a CMO’s aresenal.
Currently, podcast advertising relies on the archaic use of unique URLs or special codes to measure performance. The expectation that a user will memorize these codes and enter in the URL is not realistic.
Unlike digital advertising there is no way to tell if a user heard an ad and purchased later. This is why a direct relationship with the user and app is imperative because of the use of the mobile ad ID to gain a true understanding of advertising performance and ditch the use of special codes.
IAB member companies Audioboom, Authentic, ESPN Radio, Gimlet Media, How Stuff Works, Market Enginuity, Midroll Media, National Public Media, Panoply, Podcast One, PMM, Turner Podcast Network, Westwood One, WNYC Studios and Wondery underwrote the study.