Here's How Fast the Podcast Industry is Growing
Welcome to The Yard, a blog by Backyard Media that explains the podcast industry and podcast advertising.
Just how fast is the podcast industry growing? One study from 2017 attempted to answer this question in more detail than ever before. A collaboration between the Interactive Advertising Bureau (IAB) and PwC, this study was meant to directly survey the industry's biggest players, the 20 largest advertising companies as well as podcast publishers, in order to have a more accurate view of podcast advertising revenue and estimates of revenue growth. Here are some of the study's most important findings for companies looking to get into podcast advertising.
1. Growth in podcast revenue is picking up speed
Podcast advertising revenue is growing, and its rate of growth has increased for the past few years. IAB's respondents reported $119M in revenue for 2016, and it expects 2017 to bring in $220M, an 85% year over year increase. Compare that to a 72% increase between 2016 and 2015,which saw $69M in revenue. The quarterly increases in revenue are also very steady - IAB shows that between the start of 2015 and the end of 2016, the Compound Quarterly Growth Rate was 19%.
Why is this growth so high? We talked in our last blog about the changes that the podcast industry is going through: the growing number of podcasts, the rise in listenership among the American adult population, and the professionalization of podcasts and podcast studios.
The final numbers for 2017's advertising revenue aren't out just yet - we expect them some time this spring - but because the survey is drawn from first-party data, we're confident that actual advertising totals will be within this range.
2. New technology will allow fresh ad content on older podcast episodes.
The IAB study was also one of the first we've seen that measured the rise in dynamic ad insertion technology (see our explainer on dynamic ad insertion technology here). It found that between 2015 and 2016, dynamically inserted ads went from 37% of all ad inventory to 56%.
What is dynamic ad insertion? Compared to traditional ads that are "baked in" to the audio file of the show, this technology allows publishers to remove and update ad slots in older episodes of their podcasts. As a result, ad inventory can remain up to date with fresh ads, and sponsors have the opportunity to insert ads into older episodes. For series that listeners need to consume from start to finish, like narrative nonfiction podcasts, this technology can be very powerful. We'll explain dynamic ad insertion in depth in a later blog post - this technology is still on the rise and it will no doubt lead to big changes in the industry when it's widely adopted.
3. Sponsors continue to see the value in the host-listener relationship.
Podcasts remain an outlier when it comes to digital media. IAB states that "host read ads continue to be the preferred mechanism” for ad delivery. Despite all of the changes in the industry, 60% of ads in 2016 were host read, while 40% were pre-produced. Compare that to 2015's numbers, where 63% of ads were host-read and 37% were pre-produced. For an explanation of the differences between the two types of ads, read our primer here.
This slow growth for pre-produced ads indicates that sponsors still see real value in having hosts recommend their products to listeners. We've spoken at length about this relationship and how podcast advertisers can leverage it - see this post as well as this one.
4. Sponsors are diversifying their podcast ad campaigns.
Sponsors are learning the effectiveness of other types of ad campaigns, and the IAB data for 2016 shows this.
Direct response remains dominant at 73% of all ads, with a significant minority (25%) being pure brand awareness. Interestingly, branded podcast content made its mark in 2016. We expect further diversification in the types of campaigns that sponsors choose. Even as the effectiveness of direct response ads remains high for sponsors, listeners who have above-average podcast listening want to hear sponsors differentiate themselves. This could be in collaborations with hosts or more branded podcasts - much like GE and Ebay have done in the past.
You can read our breakdown of the different types of podcast ad campaigns here.
And that's all we've got for you today! As updated information about the industry's growth comes in this spring, we'll be sure to check back in to make sense of all the data.
Make 2018 the year your company takes advantage of the power of podcast advertising. Contact us to learn more about Backyard Media's podcast partners and learn how easy it is to get started.
Backyard Media is a marketplace for podcast advertising. We connect content creators of all shapes and sizes with awesome sponsors, providing them with the resources they need to do what they do best. Everyone wins.
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