With an expected growth rate of 14.7 percent this year, US podcast ad revenues are inching toward the $1 billion mark despite the global pandemic, according to the International Advertising Bureau’s (IAB) fourth annual Podcast Advertising Revenue Report which examines 2019 podcast performance and 2020 projections. The figure represents a downgrade from IAB’s pre-pandemic estimate that podcast ad revenues would increase by 29.6 percent in 2020.
In 2019, podcast advertising revenues grew by 48 percent, reaching $708.1 million, up from $479.1 million in 2018. As IAB’s research shows, podcasts are increasingly becoming part of a brand’s annual planning as annual buys in 2019 reached 47 percent, up from 24 percent in 2018. Whereas scattered advertising dropped to 21 percent of overall buys in 2019.
Top podcast advertisers included direct-to-consumer (DTC) brands (22 percent) and financial services (16 percent). The largest DTC subcategories were health and wellness (22 percent) and home and appliance (19 percent).
Consumer packaged goods brands increased their investment in podcast ads, from two percent in 2018 to six percent in 2019. Additionally, beverage brands, restaurants and healthcare companies also doubled their investment.
For US podcast advertisers, the leading content genre was news and captured 22 percent of revenue, followed by comedy (17 percent) and society and culture (13 percent).
Direct response ads accounted for 54 percent of podcast ad revenues and mid-roll ads generated 74 percent of ad revenues, with 44 percent of spots being between 31 and 60 seconds.
Over half (66 percent) of podcast ads were read by a host vs. 27 percent which were pre-produced ads. This format makes podcasts more resistant to COVID-19 than other media because flexibility enables messaging to remain relevant as unexpected events occur and sentiments change.
The IAB attributes decreased revenue projections for 2020 to canceled or paused campaigns, a lower volume of requests for proposals (RFPs) and a decrease in cost per thousand impressions (CPMs).
Podcast advertising revenues are expected to rebound in the second half of the year, as IAB notes, historically, one-third of US podcast ad revenue is generated in Q4.
The results are based on a survey IAB sent to companies in mid-March and again in mid-April to account for any changes related to the pandemic.