The IAB published a follow-up study to its earlier podcast study, which discovered that U.S. podcast ad revenues grew at a rate more than double that of the total digital advertising market.
Part two of the study, titled U.S. Podcast Advertising Revenue Study 2023: Drivers, Strategies, and Tactics for Growth, reveals the drivers, strategies, and tactics driving podcast ad revenues, as well as the market’s future direction.
“The growing interest we’re seeing in podcasting among larger, brand-aware advertisers demonstrates the evolution of the medium to deliver a range of buyer KPIs,” said Matt Shapo, Director of Digital Audio and Video, IAB Media Center. “Podcasting continues to be a remarkably nimble channel, allowing advertisers to reach an expanding user base, adopt new features and solutions, and develop new content with creators.”
Key Findings:
According to the report, podcasting can deliver on buyers’ KPIs across the funnel: the majority of podcast advertising is used for brand-building, accounting for 61% of total ad revenues — an increase of 13% in the last two years.
There’s a lot to like for brand marketers. For example, since last year, the use of brand safety and suitability solutions in podcasting has nearly doubled, with 69% of publishers using brand safety solutions and 62% using brand suitability solutions, including contextual transcript analysis. According to the report, buyers are also expanding their range of measurement solutions commonly used with other digital channels for their podcast campaigns.
Another significant finding from the IAB study is that dynamic ad insertion (DAI) now accounts for more than 90% of ad revenue, nearly doubling over the past three years.
“For marketers who need to respond fast to trends and update messaging on the fly — but need a brand-safe and brand-suitable solution — podcasting is a proven winner,” said David Cohen, CEO of the Interactive Advertising Bureau. “There’s still real growth ahead.”
Opportunities for Growth
Podcasting must continue to develop capabilities in order to compete for buyers’ dollars with other digital media channels.
The study, for example, shows that the industry must continue to invest in creating interconnected networks that provide advertisers with both scale and precision. While programmatic advertising has grown significantly — 5x from 2021 to 2023 — its share of podcast revenue remains at 11%. In comparison, the programmatic share of other digital media channels is 87%.
Another growth opportunity is for publishers to rethink and redesign podcast ad inventory to help advertisers reach audiences for shows, episodes and properties. Currently, podcast ad inventory is primarily for shows. Sophisticated audience-based buying, which is common in other digital media channels, only accounts for 25% of podcast revenue.
Video is perhaps the most unexpected opportunity for what was previously an audio-only channel. Users are increasingly consuming podcasts in both audio and video formats, and they are using video platforms like YouTube to discover and consume podcasts. With video-enabled podcasts accounting for less than 10% of total revenue, there is a significant opportunity to engage listeners across platforms and expand podcast monetization. The industry must develop new ad models that correspond to higher percentages of podcast consumption within video environments.
“While podcast creators have a lot of work ahead of them, the investment from brand marketers is more than enough to make it worthwhile,” Shapo concluded. Buyers believe in podcasts and are willing to invest more.”