Last year saw a significant increase in podcasting ad spend, according to the latest Podsights Benchmark Report, with a 152% year-on-year increase amounting to $757 million (£626 million) in total.
However, while ad spend is up, the average conversion rate overall is slightly down compared to Q4 2021, having dropped from 1.42% to 1.32%, although it has slowly started to grow since Q1 2022, and remained fairly consistent in the last two quarters of last year.
Acast CEO Ross Adams previously warned people of how “increasing concert and uncertainty” of the current macroeconomic environment can affect the advertising market in the company’s Q3 financial results which reported £8.27 million in operating loss.
The data is derived from Podsights ad campaigns running from Q1 2022 through to Q4 2022 across 1,000 brands and 4,300 campaigns - representing 15% and 25% year-on-year increases, respectively. It takes into account the campaign size, frequency, and conversion rates to analyse the data, while the average conversion rate is calculated based on the number of impressions and estimated frequency of visitors.
In terms of guidance for podcast ad buying, the report revealed that similar to the previous quarter report, pre-roll ads - which are played at the very beginning of an episode - proved to be most successful once again, outperforming mid-roll ads by 9%. The average conversion rate for a pre-roll ad is up by 12% (to 1.29%) which means a significant increase since Q3 2022 where it was down by 1%.
The report also recommended that advertisers drop the frequency of their ads to between two and five for optimal results, as well as advertising with multiple publishers since the average frequency of how many times a household was exposed to an ad in Q4 2022 was 4.94, which is only a slight increase since the last quarter.
Categories with the highest conversion rates were Parenting and Gambling with the former replacing Professional Services since Q1 2022 with a 4.46% conversion rate. Pharmacy also experienced a high purchase conversion rate this quarter at 8.28%, much higher than the average purchase conversion rate across all industries, which was at 5.15%. According to Spotify’s 2022 Podcasts Trends Report, Medical & Pharma - alongside Travel & Leisure as well as B2B brands - were amongst the highest in advertising growth overall last year.