The dent COVID-19 put in podcast advertising hasn’t stopped the market from growing.
Revenues in the podcast advertising market are projected to grow 14.7% year over year to nearly $1 billion in 2020, according to the IAB and PricewaterhouseCooper’s full year podcast ad revenue study, released Monday. IAB surveyed 19 podcast publishers and ad networks prior to the pandemic and followed up in mid-April with another survey about COVID-19’s impact on the industry.
That 14.7% projection is a downgrade from the IAB’s pre-pandemic expectations of 29.6% growth in 2020, 55% growth in 2021 and 36% growth in 2022. Those figures were based on podcast advertising’s growth to $708 million in 2019 (48% year over year).
But 2020’s decelerated growth is still a positive given how the pandemic has decimated other mediums, said Zoe Soon, VP of consumer experience center at the IAB.
“Despite COVID, which has slammed everyone, we’re still seeing growth in podcast advertising,” she said. “It’s definitely a resilient media.”
In Q1 and Q2, 31% of advertisers paused or canceled podcast ad campaigns that were booked but had not gone live yet in response to the pandemic. Twenty-five percent paused campaigns that were already live, and 19% of publishers reported a reduced number of incoming RFPs. Fourteen percent of publishers attributed revenue decreases to CPM declines.
Podcast revenues were hit the hardest in June, down 19% year over year, compared to a 16% dip in April and a 15% drop in May. But the market has started to rebound since, and the IAB projects 8% and 4% revenue declines in Q3 and Q4, respectively.
“There’s a little bit of a delay in terms of the impact on spend,” Soon said. “People are committed to a sales cycle, and certain campaigns are in play already.”
Podcast advertising held up relative to other mediums partially due to disproportionate spend from direct-to-consumer brands, which made up 22% of podcast ad buys in 2019. “Those are the categories that fared better in the pandemic anyway,” Soon said.
Flexibility is key
Of the brands that paused their podcast ad campaigns, 8% did so to update their messaging, with 75% of that group shifting more toward mission and cause-based marketing.
Podcast ad creative is easy to swap out, Soon said, because it can be done remotely without actors or a film crew.
They are also flexible to buy. While the share of dynamically inserted ads remained flat at 48% in 2019, it’s still easy to adapt messaging on host-reads, which made up 66% of buys in 2019.
“Host reads provide flexibility in that you have a human and you can control the messaging,” Soon said.
While those surveyed said they expected dynamic ad insertion to grow this year, brands may have shied away from automation during the initial COVID-19 outbreak and as the Black Lives Matter protests began to grow across the country, Soon said.
“Dynamic ad insertion is kind of set it and forget it,” she said. “If something happens, changing the messaging would be a little more like putting out fires as opposed to having that control.”
Podcasts go upfront
As brands become accustomed to podcasting, they’re incorporating buys into their upfront plans.
Upfront buys made up 47% of podcast ad revenues in 2019, nearly doubling from 24% share in 2018. Meanwhile, scatter buys decreased from 34% in 2018 to 21% last year. And 31% of brands are buying on a quarterly basis, down from 38% last year.
“Brands have tested the waters,” Soon said, “and now they’re buying for the longer term.”
Upfront buys are also growing as podcast platforms grow. Most recently, Omnicom committed to spending $20 million on Spotify podcasts this year, thanks in part to better targeting and measurement provided by the platform.
“Exclusive content allows them to get control from Apple because people have to listen on their platform,” Soon said. “Apple doesn’t share much data on who is listening.”
But brands are also committing to individual shows and producers upfront. Ten percent of brands bought podcasts on share of voice within a given series this year, up from 2% last year.
Upfront buys are also becoming more common as big brand advertisers invest. While direct response campaigns still make up more than half (54%) of podcast ad revenues, brands in financial services and CPG grew their share of podcast ad spend to 16% and 6% respectively in 2019.
“The heart of podcasting has to date been direct-to-consumer,” Soon said. “But more established brands are starting to look at podcasting.”
