Podcast advertising revenue is expected to more than double between 2022 and 2025 and grow to $4 billion (£3.2B), according to projections from the Interactive Advertising Bureau.
The projections were part of the IAB’s annual US Podcast Advertising Study, which was released as part of yesterday’s annual Podcast Upfronts advertising summit. It follows the release of the IAB’s annual Digital Advertising Spend report at the end of April, which revealed that podcast investment was up 32% year on year in 2022, beating the overall UK digital ad industry’s growth of 11%.
Overall, podcast ad revenue in the US grew by 26% year-over-year - amounting to $1.8 billion (£1.4B) - and continues to be one of the fastest growing digital channels despite challenges in the macroeconomic environment. Podcast advertising’s share of revenue in Q4, however, fell to its lowest level in the last six years as a result of these challenges, amounting to 29% - which is a 5% decrease year on year.
“Following a year of unprecedented growth for the overall digital advertising industry in 2021, 2022 was a year of headwinds related to a slowing economy resulting in pullbacks on advertising and marketing spend,” the report said. “On the heels of this product evolution and advertising growth, IAB anticipates further advertiser demand, growth in programmatic buying, advancements in brand safety, and the application of attention measurement to the podcasting ecosystem.”
Digital advertising in North America also faced overall challenges this quarter due to the current economic climate. Independent podcast company Acast reported in its financial report for Q1 2023 that its net sales in North America dropped by 1% due to weakness in the advertising market, compared to Europe where it increased its net sales by 14%.
Similarly, The New York Times also reported in its financial report for Q1 2023 that its digital advertising revenue decreased by 8.6% which was primarily because of lower revenues from podcasts and creative services, also impacted by the macroeconomic environment.
However, the IAB predicts positive growth for podcast revenue with the increase of programmatic buying to meet advertiser demand for contextual audience targeting, such as Acast’s keyword targeting tools which use advanced speech-to-text transcription technology, AI and natural language processing to identify key words and phrases in podcasts at episode-level.
Additionally, the IAB also highlighted advancements in brand safety and suitability targeting solutions to help advertisers feel more confident in investing in podcasts. Since the start of 2023, AI podcast measurement firm Barometer has partnered with a number of podcast and audio companies to enhance brand safety and contextual targeting including Wondery, Audiohook, and Katz Digital.
The report from IAB also revealed that the podcast categories that advertisers are investing in are expanding, with news no longer the top revenue genre for the first time since 2018, instead dropping to fourth place. It was replaced by sports at number one, followed by society & culture, then comedy. The IAB pointed out that this could be because 2021 was an election year which spiked numbers and that there were signs of “waning consumer interest” in the news last year.
In terms of industries, retail saw an increase in share of revenue year-on-year going from 6% in 2021 to 9% in 2022 as consumer spending in stores returned to normal after the pandemic, while the rest of the categories remained relatively static. “Other” industry categories remained the highest at 28% - which refers to a combination of comparatively low-revenue categories like energy, non-profit, government, and others.