Global podcast ad revenues to boom to $1.6 billion by 2022

24 October 2018 5 min. read
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Though audio podcasts have been around for over a decade, only in recent years have they acquired the financial infrastructure and network structures to turn them into big business. According to PwC’s Global Entertainment & Media Outlook 2018-2022, podcast ad revenues will grow at a 29.7% CAGR to $1.6 billion in 2022.

Podcasts have essentially brought radio shows to younger generations, but people download or stream audio files on their phones or other devices. Starting in the mid-to-late 2000s, podcasts have rapidly proliferated in quantity, and in the formality of their organization. Most independent shows that got their start in the early era have been wrangled in podcast networks that can better sell a package to advertisers, like a TV network selling advertisers on their strong package of shows. Popular networks include Maximum Fun, Earwolf, and All Things Comedy.

Popular show formats include talk shows (WTF with Marc Maron, Norm Macdonald Live, Joe Rogan Experience), true crime (Casefile, My Favorite Murder), bad movie reviews (The Flophouse, How Did This Get Made?), history (Hardcore History with Dan Carlin, Presidents Are People Too!), and general interest (Radiolab, This American Life). However, whatever one’s interest, there’s probably a podcast out there for it.

Rewind to 2013, and podcasting ad sales were still nascent, totaling $45 million compared to the $40.2 billion radio ad sales market. The extreme popularity of NPR’s investigative journalism series Serial in 2014 gave the industry a huge amount of listeners and press, and made media buyers take notice, according to PwC's Strategy+Business magazine.Revenue streamAccording to an Interactive Advertising Bureau (IAB)/PwC report, podcast ad revenues in the US reached $314 million in revenue in 2017, up 86% from the $169 million posted in 2016. Globally, PwC’s E&M Outlook projects podcast ad revenues to reach $650 million in 2018, growing by a robust 29.7% CAGR to $1.6 billion in 2022.

The biggest reason that ad money is moving to podcasts is that they now have a big enough audience. The amount of people that listen to at least one podcast per month surged from 23 million in 2013 to 78 million in 2017, according to the Outlook. Meanwhile, there are more than 500,000 podcasts, with many touting high-quality content, production values, and strong audience bases.

The strong growth of podcast revenue won’t necessarily bite into radio ad revenues. 2018’s global radio ad revenues were a massive $45.2 billion in 2018, and will continue to grow to $48.6 billion in 2022 – a more modest growth of 1.9% CAGR, though obviously originating from a massively larger revenue base than podcasting. Podcasting, as such, won’t eat radio’s lunch in the way that internet media formats and classifieds have destroyed print media. Of the various media formats, only magazines and newspapers will see continued declines in ad revenues between 2017 and 2022, according to PwC.Segment compound annual growth rateAside from raw listener numbers, the appealing demographics of podcast listeners is another factor attracting advertisers to the medium. According to a 2018 survey from Edison Research and Triton Digital, consumers aged 18-34 are most likely to be monthly podcast listeners, with 16% of that Gen Z/Y cohort having an annual household income above $150,000, and 27% holding a four-year college degree.

Furthermore, advertisers are less hesitant to invest in podcasts now that there is richer data and analytics to show figures beyond simple download numbers. Apple now provides an analytics service that tracks playback metrics, and the analytics have shown that most audiences listen to 85 and 90% of a show, and don’t necessarily skip through ads.

Two-thirds of ads in podcasting take the format of host-read advertisements where the hosts tacitly or explicitly endorse the products, according to an IAB/PwC study. Many of companies advertising on podcasts are internet-based and/or disruptor brands looking to connect with young audiences – brands like Squarespace, Casper, Mack Weldon, and Blue Apron. If it’s a comedy podcast like The Flophouse, advertisers are willing to let hosts riff on the messaging – making the ad into a sort of entertainment itself – and making users less likely to ride the 15-second fast-forward button. Otherwise, one might miss Flophouse co-hosts Stuart Wellington and Elliott Kalan making fun of Dan McCoy for only needing half the portion size of Blue Apron recipes in the wake of a painful divorce.

Larger, more established firms are also wading into the podcast scene – including Gillette, Ford, and IBM. Stricter guidelines and standards set down by the Interactive Advertising Bureau that edge out duplication and false downloads will further attract big company ad dollars – confident in the more accurate and deeper audience data they receive.

Meanwhile, Strategy+Business relates that new ad formats like dynamically inserted advertising (which inserts ads at the point of download rather than within the podcast) can provide advertisers with a surer promise of eardrums – like an unskippable Youtube ad at the beginning of a video that can’t be ad-blocked.