Podcasts: The fastest-growing media trend in ‘23
It’s safe to say no channel has impacted brands and their media decisions in the 21st century to the same extent as social media. And today, it’s unfathomable that a brand would exclude a social media platform from its strategy and investment.
However, in recent years, the most noticeable surge we’ve seen in media buys and advertising is singing a different tune.
From what we’ve heard from our client discussions to general industry buzz, podcast advertising now represents the fastest-growing media channel for brands—doubling rates for total internet ads. And this growth shows no signs of stopping. Over the last five years, spending on podcast advertising campaigns has seen over 300% growth, with that figure projected to break $2 billion for the first time in 2023.
The emergence of podcasts as a dominant media channel opens new opportunities for brands, but the competition for ad slots is also heating up. So, let’s examine podcast advertising—the latest growth and how it works.
Podcast advertising growth
Several factors have positioned podcasts for significant growth. Although this channel has been around for some time—the first recognized podcasts began launching in 2004—it wasn’t until more recently that it grew into today’s influential and revenue-generating medium. In our experience, there are at least four factors responsible for the podcast advertising growth trend:
- Consumer popularity—In 2006, only 22% of adult U.S. consumers even knew podcasts existed—a figure that didn’t climb above 50% until 2016. But by 2022, roughly four out of five U.S. adults were aware of podcasts, and more than 82 million people have listened to them. People now discuss podcasts in the same vein as their favorite TV shows, and brands garner a similar level of prestige for advertising on select programs, as in television.
- Marketing channel maturity—Every media channel must reach a certain maturity before advertising on it begins growing at accelerated rates. This depends on the number of listeners and brands advertising on podcasts reaching a “critical mass” that enables more granular audience targeting capabilities, tracking metrics and buying opportunities.
- Technological innovations—In addition to growth making podcast advertising more viable, the emergence of dedicated technology platforms that enable brands to conduct media buys more easily and with more insight help accelerate the channel’s value.For example, Liquid Agency’s partners have begun seeing seven to 10 times the web traffic after audiences have listened to a podcast ad compared to watching a pre-roll video or viewing a display ad.
- The channel’s connectivity with listeners—Characteristic of podcasts, the channel’s audio format and direct engagement with listeners provides a more connective, intimate and resonant experience compared to “2D” alternatives like digital display ads. There’s simply more for listeners to “touch and feel” with the medium than with many alternatives.
Podcast channel maturity and technological innovation
It’s somewhat difficult to predict when a marketing channel will reach a level that unlocks advertising viability and growth. Obviously, audience numbers play a significant part; but on the media-buying side, a few capabilities need to emerge:
- Tracking and attribution metrics—Radio provides one of the best comparable legacy channels for analyzing podcasts. Historically, tracking radio program listeners to determine demographics has always been a challenge—as has attributing consumer response and buying behaviors influenced by radio advertising. But the digital nature of podcast delivery has enabled better tracking and attribution when combined with other available data.
- Audience segmentation—When television viewers tune into a national program, they don’t all see the same ads when the show cuts to commercials, thanks to regional targeting. With podcasts, the number of listeners and advertising brands (along with listener data gathering) now enables better targeting—”chopping up” audience segments and selling access to them (e.g., geotargeting, listener job function).
- Block-buying capabilities—When podcasts first emerged, they were more likely to advertise one or a limited number of brands as general sponsors. Now, podcast producers and platforms can similarly “chop up” the number of advertising slots along with where in the show or how they’re presented. This makes it far easier to select and purchase the advertising opportunities that best perform for and reflect the brand.
And to reinforce this channel’s continued advertising maturity and revenue generation potential, Spotify—one of the leading delivery platforms—has already begun purchasing companies in the podcast advertising space. For example, in early 2022, the platform purchased Chartable and Podsights, companies that facilitate podcast marketing and ad attribution.
Podcast advertising growth by the numbers
As mentioned above, podcast advertising maturity has reached a stage that enables rapidly accelerating growth. But the numbers remain eye-catching.
From 2019 to projections for 2024, annual podcast ad spend has demonstrated roughly 3.5 times the growth:
- 2019—$700 million
- 2020—$870 million
- 2021—$1.34 billion
- 2022—$1.73 billion
- 2023—$2.2 billion
- 2024—$2.56 billion
Podcast advertising 101
Podcast ads generally fall into two categories, similar to how radio ads have been delivered for decades:
- Announcements and talent-read spots—This is the format most associated with podcasting’s early days, with the program’s host or other personnel directly presenting the ad to the listener (e.g., program or segment sponsorships). Nearly half of surveyed listeners prefer these types of ads, as reinforced by their effectiveness—accounting for 55% of all U.S. podcast advertising revenue.
- Programmatic or dynamically inserted ads—These ads resemble “commercial breaks.” According to the Interactive Advertising Bureau (IAB), the emergence of “canned”—or prerecorded—spots in podcasting is responsible for driving 84% of ad revenue. This is because canned spots enable advertisers to more easily leverage the audience targeting and simplified buying discussed above.
Interestingly, these two categories become increasingly blurred despite listeners’ perceptions. Per IAB, all podcast ads have begun shifting toward dynamic insertion, with over 80% of announcements and talent-read spots being delivered this way.
Preparing to advertise on podcasts
Brands looking to successfully leverage podcast advertising should factor in two primary considerations when preparing their campaigns. The first is focusing on podcasts and platforms that collect and use first-party audience data themselves. Due to the increased attention and restrictions on consumer data sharing (e.g., state-level data privacy laws, cookies), podcasts, advertising platforms and advertising brands all need to be careful with where that audience data comes from and how it’s used.
The second consideration is simply that brands are now seeing the success of podcast advertising. So, if your target audience overlaps with a given podcast’s, you’ll need to move quickly and lock in spots before rapidly increasing demand and decreasing inventory only leave less-impactful programs available.
Leverage podcast advertising in your media mix
Brands considering podcast advertising find themselves at the perfect juncture to see how effective this channel can be for them. With audience numbers growing and technological capabilities maturing, brands can more easily find the right programs and launch their campaigns—doing so before the landscape becomes too competitive.
IAB. US Podcast Advertising Revenue Study.
Statista. Podcast advertising spending in the United States from 2019 to 2024.
International Podcast Day. Podcasting Historical Timeline and Milestones.
Statista. Percentage of consumers who are aware of podcasting in the United States from 2006 to 2022.
The Verge. Spotify is acquiring two major podcast tech platforms.