Publishers and media companies across the United States and beyond have invested significant time and resources into launching and running podcasts in recent years.
For many, building a large audience has not been an issue – in America alone, there are 80m people who listen to podcasts on a weekly basis, according to Edison Research. But turning this reach into revenue has proved to be a challenge.
The latest forecasts from eMarketer, though, offer some encouragement. This year, the US podcast advertising market is on course to hit $1.3bn, up nearly 40% from $960m in 2020, according to figures calculated last month. And the forecasters estimate that total US podcast marketing revenues will top $2bn by 2023 (see table).
One of the major drivers behind the growth of the US podcast advertising market is advancing programmatic technology for the sector, according to eMarketer forecasting analyst Peter Vahle.
Asked why podcasts currently underperform compared with other mediums, Vahle told Press Gazette: “They didn’t have the same advertising tech behind them for a lot of these publishers. They weren’t able to advertise at the same scale.
“That’s largely because of the host-read ads which still have a huge presence in the podcasting world. And moving forward, those will be more of a premium offer. They’ll always be around. But now, with programmatic advertising becoming so much more popular and present within podcasting, that’s how they’re really able to start scaling up.”
Read New Statesman Media Group’s free white paper: How to define, discover and develop actionable leads in B2B marketing
The advancement of programmatic podcast advertising is particularly good news for small publishers who currently “aren’t able to negotiate and reach out and find advertisers the same way the big media and publishing companies could,” said Vahle.
“They can take advantage of programmatic, which means that the long-tail, smaller publishers will be able to monetise and advertise a lot more efficiently. That’s another thing that’s leading to this strong growth in the next couple of years.”
Vahle also believes podcast creators are benefiting from marketers taking the podcasts more seriously, especially after they proved resilient through the Covid-19 pandemic and lockdown rules that ended commuting in many parts of the world.
“Advertisers have seen it as a bit more of an experimental play,” he said. “So there’s been a little bit of hesitation. It became almost a universal thing pretty quickly where a huge percentage of the population was listening.
“But before that, advertisers weren’t sure if it was worth it because they couldn’t track and measure the success of their advertisements well. And that again goes back to the tech behind podcasts. And because it’s not as sophisticated, it was always seen as more of a risky investment.”
Case study: NYT podcast investments start to pay off
In the news publishing industry, few companies have invested in podcasts like the New York Times.
As well as building up its own well-staffed podcasts over many years, the NYT also last year spent around $25m acquiring Serial Productions.
Is it paying off? Reporting the NYT’s full-year results for 2020, chief executive Meredith Kopit Levien revealed podcast advertising revenues reached $36m, up $7m on 2019.
This figure, while encouraging, highlights the current underperformance of the US podcast advertising market.
The NYT’s flagship podcast, The Daily, already attracts 4m listeners each day – “almost twice as large as the paper was at its peak,” according to Kopit Levien.
Print advertising revenues for the New York Times (which is now well below its peak newspaper circulation) last year fell 39%, but remained more than four times the size of podcast ad sales (see chart below).
‘Programmatic will ultimately just lead to more growth, more dollars in everyone’s pockets’
So who will benefit most from the growth of the US podcast advertising market? Large companies like the New York Times and Spotify, which owns several companies in the podcasting world? Or small publishers that currently make little money from their shows?
“I think it will be both,” said eMarketer’s Vahle. “I think that what could happen is the premium slots – like the New York Times’ Daily or Joe Rogan or the shows that are extremely popular with huge audiences and there’s a ton of advertiser demand – the prices could go up even further for those host-read ads on those premium slots.
“But, looking across the board, I think that the smaller people will benefit a lot from this increase in programmatic advertising. Because we’ve seen Spotify, Pandora, iHeartMedia – three of the really big players – have acquired big podcast tech companies that are really going to power the whole ecosystem. Not just Spotify, Pandora and iHeart, but their technology will allow people who are advertising through them to advertise off their platform as well, so it really does affect the whole ecosystem…
“I think programmatic will ultimately just lead to more growth, more dollars in everyone’s pockets.”
Photo credit: Branislav Nenin/ Shutterstock