UK podcast investment was up 32% year-on-year in 2022, according to the latest annual IAB Digital Ad Spend report, beating the overall UK digital ad industry’s growth of 11%.
While podcasts remained one of the most resilient ad categories last year, the sector’s ad spend growth was 29% lower than it was the year before. Economic challenges faced in 2022, brought on by factors such as the cost-of-living crisis and the unstable political climate in the country, resulted in a cooling period within the advertising market, but the report still proves that there is resilience in the UK digital ad industry.
Overall, in comparison to when the IAB first started measuring podcast advertising in 2020, the numbers still show a significant increase in podcast investment as advertising spend grew from £33.54m to £76.3m in just three years.
“The latest Digital Adspend results highlight two things: resilience and opportunity,” said IAB UK CEO Jon Mew. “Not only was 2022 challenging for our industry, as it was for the entire UK economy, it also followed a year of stratospheric, pandemic-induced growth in 2021.
“In this context, it’s testament to the resilience of digital advertising that the market has maintained double digit growth in 2022 – and astounding that it has grown by 56% since the pandemic began.”
A number of podcast companies have reported in their 2022 financial reports that their revenue income was also affected by global economic conditions. For example, podcast distribution platform Audioboom reported that its average e-CPM (revenue per 1,000 downloads) decreased from $64.64 (£51.87) in the first half of 2022 to $52.88 (£42.44) in the second half of that year, due to slow-down in the market, and independent podcast company Acast reported an operating loss of SEK 352.6m (£27.4m) in Q3 2022 for the same reason.
However, IAB UK chief marketing officer James Chandler told PodPod that the numbers do not suggest that the advertisers are “in any way scared or have been put off” and that the growth in digital ad spending is still healthy overall, particularly with podcasts.
“It’s a fast-growing medium, it doesn’t scream to us that advertisers are holding back investment or that there’s concerns at all,” said Chandler. “On a very logical level, it must be delivering for them as they continue to invest in it and as the opportunities to do different things become more varied and more complex.”
According to Chandler, podcasting will continue to have more opportunities for growth, as the industry is unaffected by changes that affect the overall online ecosystem, such as the removal of third-party cookies, which is set to be completed in 2024. Instead, podcasting already heavily relies on contextual targeting when it comes to advertising, which gives it an advantage over other industries that will now have to navigate finding a different solution to reach audiences without the use of third-party cookies.
As podcast advertising continues to grow, Chandler also says that people can expect a growth in creativity and format opportunities as more brands and advertisers start to realise that they can use podcasting to effectively reach niche and specialist audiences, as well as incorporate podcasting as a branding tool.
“People have realised that [podcasts] are not just this bottom-of-the-funnel performance thing and that you can build long-term partnerships with some of these creators and some of these podcasts,” said Chandler. “So it's become much more of a brand-building tool than just being a performance driver.”