Who Buys the Most Podcast Ads in 2018?
Welcome to The Yard, a blog by Backyard Media that explains the podcast industry and podcast advertising.
Building on our blog post about the Interactive Advertising Bureau's 2018 survey of podcast advertising revenue, we're going to look at one section of the study that has gotten less attention: which industries sponsor podcasts the most. We'll also take a look at which types of podcasts are getting the most advertising dollars, so that prospective podcast advertisers know the trends in podcast advertising and what options there are for their next advertising campaign.
When it comes to podcast sponsorships, Financial Services and Online Retail dominate
Here's the chart from the IAB survey which shows the industries that most podcast sponsors are coming from:
Note: This chart represents ad dollars spent in 2017, not the frequency of ad buys or total numbers of sponsors from each industry.
IAB has pointed out the big-picture data point: nearly 60% of all podcast advertising revenue comes from four industries: Financial Services, Retail, Arts & Entertainment, and Business-to-Business.
That financial services is the highest value sponsor industry makes sense. Anecdotally, podcast listeners regularly hear ads from investment services like Betterment and financial companies like Square. These ads often appear on podcasts dedicated to managing money, like the best investing podcasts we highlighted in this blog. As well, bigger banks like Wells Fargo have included podcasts in their marketing budgets for the last five or so years. Some of these companies are even exploring branded content podcasts - where a sponsor funds a new podcast and serves as its exclusive sponsor. Hiscox Insurance recently partnered with the studio Panoply to create the podcast Points of Courage.
Direct-to-Consumer Retail covers many of the online products and services we've heard advertised on podcasts since the early 2010s. These are services like Harry's, Dollar Shave Club, and MeUndies. We suspect that while the financial services category gets its #1 spot from the size of its ad buys, these companies match them (very nearly, at 16.2%) with the quantity and regularity of their ad buys. These "dot-com" services were some of the first companies to realize the power of a host-read ad and the value of podcast audiences.
Finally, we see that other consumer brands are moving into podcast advertising - Automotive at 6.4%, Telecoms at 4%, Beverage and Restaurants at 3.3%, and Consumer Goods at 3.1%. If the IAB had asked this question for FY2016 or FY2015, likely we would've seen their share of revenue rise from near 0% to where it is now. Marketers at brands like Ford have come to realize that podcasts are just for online-only companies. Podcast listeners value the type of ads they hear on podcasts and consider ads as part of a podcast's content, not separate from it. That means that established consumer brands more used to marketing on TV and radio can see the same ROI from podcast ads as the online service companies do.
So, what should sponsors take away from this? The data gives us a good lay of the podcast advertising landscape. It confirms many of the trends we've seen with podcast ad sales, especially the influx of new industries like financials and non-online retail services. The diversification of industries in this space shows that podcast advertising is not useful for a select few industries, but instead a universally valuable medium for advertisers. And as we highlighted in our last post on the IAB report, the data from 2017 sends a clear message that sponsors that are considering adding podcasts to their marketing budgets should get in on the ground floor this year.
News, business, and technology podcasts are raking in the advertising revenue
The IAB included a chart that was the reverse question: which podcasts (as defined by their Apple Podcasts categories) are getting the most advertising revenue?
We again see a similar share of revenue among the top four in the list. About 55% of all podcast advertising revenue goes to Arts & Entertainment, Technology, News/Politics/Current Events, and Business.
There are two interesting takeaways from these top four categories. First, News/Politics/Current Events is taking in such a high share of podcast ad revenue - 13.3% - after rapid growth and change within the space the past two years. Podcasts, like more traditional news outlets, saw a "Trump effect" which boosted their audience traffic in 2016. Listeners interested in politics began to consume more podcasts focused on discussing and explaining the news of the week, often formatted as expert panel discussions. The advent of the "daily news" podcast is another recent change. These shows consist of shorter 20-minute episodes delivered to listeners every day. They cover the previous day's news, with the goal of keeping busy listeners up to date on the most important stories. There's evidence that the popularity of the daily news podcast genre caused the average number of podcasts listeners consume per week to rise within the past 12 months. We're likely seeing it in this IAB data too - sponsors are jumping at the chance to advertise to the highly educated, audiences of these political shows.
Second, the strength of the Technology and Business categories shows that podcasts serving specific industry niches can attract large, valuable audiences. Marketing, entrepreneurship, software development, and venture capital are all popular topics within these categories. Backyard Media represents many podcasts that focus on these topics; they boast large, dedicated listening audiences. We've seen firsthand that a niche podcast with a highly-engaged, highly professional audience presents significant value for podcast sponsors looking to reach them.
One other note about this chart. The top category of "Arts and Entertainment" is likely in that spot as it represents a vast array of podcasts about society, culture, and the arts. The category features many big culture podcasts from media outlets like Slate, NPR and WNYC Studios. Many newer podcasts also default to this category, adding to its size.
So, what should sponsors take away from this? The story of this chart is that sponsors shouldn't look for the biggest podcast out there and throw advertising dollars at it. Instead, prospective and existing podcast sponsors need to consider the product they're selling and the audience they want to reach. For tech-focused sponsors, a niche podcast about programming languages for web development with a dedicated audience of industry professionals presents a much better value than a culture podcast that reaches 2 million listeners. Industry players like Backyard Media can provide guidance about which podcasts will be the best channel to deliver a specific sponsor's ads.
Ready to join the hundreds of companies advertising on podcasts? Backyard Media offers a wide range of podcast partners that sponsors can advertise with. Contact us here to get started and see your ads reach valuable new audiences within two weeks!
Want to read more about the proven value of podcast advertising? Check out these blog posts:
- Podcast Advertising Will Be Worth More Than $600M by 2020
- Where Should I Put My Money? The 5 Best Investing Podcasts in 2018
- Here's How Fast the Podcast Industry is Growing
- What Do We Know about Podcast Listeners in 2018?
- Why Listeners Respond to Podcast Ads
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.