Why Podcast Advertising Revenue Will Hit $500 Million in 2020
Marketing budgets are increasingly including podcasts in their advertising strategies, and in 2017 this trend is only gaining steam. But why is this happening? And what do the trendlines look like for the next few years?
Projections from data company Bridge Ratings' Podcasting Audit Study show us that podcast advertising has grown immensely since just 2014, and that it continues to beat expectations. Let's take a look at what the company's projections for podcast advertising through the next few years look like, and what's driving the numbers.
Spending on podcast advertising will be nearly $250 million by the end of 2017, and projected to be over $500 million in 2020.
First, the top-line numbers. Bridge Ratings has revised upwards its projections for total podcast ad spending this year, and now expect $243 million in total spending in 2017. Furthermore, in 2018, the company expects $316 million in total spending on podcast ads - an increase of 30% in just one year.
And by 2020, Bridge Ratings expects the industry to total more than half a billion dollars - $534 million in spending.
What's interesting here is that the company's projections in January 2017 compared to those made in March 2016 were noticeably revised upwards - a 17% difference for FY2017 and 23% higher for FY2018.
Another study of podcast advertising trends - the Internet Advertising Bureau's study in spring of 2017 - projected this year would see $220 million in ad spending. That more recent study comes from first-party advertising data, so it gives us a nice baseline of data for 2017 ad spending. We can see that Bridge Ratings' 2017 estimations (both from 2016 and 2017) fall on either side of that $220 million number.
The bigger question behind this chart is why podcast advertising researchers think industry revenue will continue to increase at such a pace, and as time goes on, their projections are revising upwards?
Advertising dollars are moving to podcasting because barriers to listening are coming down.
One trend that is driving this switch to podcast advertising is that podcast listening technology is becoming more accessible.
In the 2000s, podcast technology was pretty archaic, usually involving manual downloading of podcasts through iTunes, or for more tech-savvy users, direct subscription to an RSS feed.
In 2017, however, listeners generally access podcasts through directories on their smartphones - Apple Podcasts, Google Play, and Stitcher, to name a few. Yet these directories still require that listeners manually search for podcasts by title. Most services also maintain content categories of "top" podcasts about business, technology, comedy, and the like. Finding podcast content a listener likes can still be hit-or-miss, which explains why podcast discovery still heavily relies upon word-of-mouth recommendations by podcast hosts, friends, or family members
2017 has seen a shift to a more frictionless way of finding and listening to podcasts. Systems like Amazon's Echo can start playing a podcast through voice activation, no interfacing with a smartphone app required - which is great, as people generally listen to podcasts while doing other activities.
Second, new technologies are popping up that can "recommend" podcasts to listeners by placing them in a queued playlist. These recommendations often are based on the listener's current podcast or on their listening history. Much like Spotify and Pandora use algorithms to recommend music, the days of manually finding new content might soon be behind us. As these two trends continue and podcast listening becomes more accessible, the overall share of Americans who listen to podcasts - 67 million in 2017 - will increase, and marketers should adjust their digital advertising budgets accordingly.
As listening becomes easier, more Americans are willing to tune in to podcasts.
Bridge Ratings, as part of this annual survey, asks over 2,000 Americans about their podcast listening habits. For the first time since they started measuring podcast consumption, the number of people in the sample who had "no interest in podcasting" has dipped below 50% of the group, to 48%. At the same time, 35% say they have listened to a podcast in the previous month, and 20% say they think they will listen to a podcast in the next month (a 100% increase over last year).
What is striking to us when we look at this data are the reasons that respondents gave for not having an interest in podcasts: 48% of this subgroup said they didn't know how to find and listen to podcasts, and 27% felt they could find the same audio content elsewhere.
The shifts in technology that we just mentioned are key to addressing these concerns - as podcasts become as easy to find as internet streaming music or news reports via voice-activated assistants, more Americans will tune in to the medium and see its value. We can also see that once audiences start consuming podcasts, they have very strong reasons for liking the medium. Bridge Ratings' finding showed that the top reasons that respondents preferred podcasts were:
- A great source of information
- Time-shifted audio content (i.e. listen whenever they want to)
- Cultural awareness
- Portability (i.e. listen wherever they want to)
- Introduction to new ideas
These reasons match up very closely with data we've seen from Edison Research about why listeners value podcasts so highly.
Millennials are a larger share of podcast audiences and are a coveted marketing segment.
Podcast audiences remain largely within the 12-54 age cohort. Within this range, Millennials are an outsized share of listening audiences. Why is this? As many marketing departments have found out in the last decade, Millennials are digital natives, and are particularly tech-savvy when it comes to smartphones - the main point of entry for most podcast listeners.
Millennials also want to control how and when they get their content. And they like the breadth of content available on podcasts - comedy, politics, news - and the variety of different formats that podcasts can take.
Millennials have already become a coveted group for marketers as they age and have more spending power. Podcasts are a natural fit for Millennials' technology and content preferences, and advertisers should move their budgets to the medium accordingly.
So, why will podcast advertising hit $500 million by 2020?
To recap, the confluence of easier (and smarter) listening technology, growth in listening audiences, and Millennials becoming such a large share of podcast listeners, point to the reality that advertising dollars will continue to shift to the medium over the next few years.
Want to learn more about diversifying your marketing by advertising with Backyard Media's podcast partners? Get in touch with us here.
Take a look at some of our related content below:
- What is a Podcast Ad?
- What does a Podcast Ad Campaign Look Like?
- How Podcast Ads Impact Brand Lift
- Why Listeners Respond to Podcast Ads
- Here's Every Podcast Format in 2017
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