US podcast ad revenue to reach $2 billion in 2022 and top $4 billion by 2024, study says
In the last year or so, the podcast advertising industry has turned a corner. According to the Interactive Advertising Bureau (IAB) and PwC’s 2021 U.S. Podcast Advertising Revenue Study, the next two years will see a significant spike in podcast ad revenue growth.
In 2021, U.S. podcast advertising revenues rose to $1.4 billion, surpassing the $1 billion mark for the first time, a revenue increase of 72% year over year, according to the study. IAB also forecasts that the market will exceed $2 billion in 2022 and will be over $4 billion by 2024.
Eric John, vice president, IAB Media Center, said, “The report indicates significant growth ahead, with advertisers buying podcast impressions at scale while tracking delivery, effectiveness, recall, and results. Buyers will expect advanced brand safety solutions, audience targeting, and measurement, and we look forward to working across the ecosystem to create standards that serve creators, listeners, publishers, and brands.”
The audio format is growing extremely fast and is driven by three key factors, the study found. This includes the ongoing increase in podcast listeners and content as well as increased use of automated ad tech and growth of ad spending in the “Other” categories that historically had lower spend volumes (sports, religion, etc.).
There has been a surge in listeners and content, and advertisers are taking notice. ListenNotes estimates there are about 2.2 million podcasts in 2022, while other sources cite more than 3 million podcasts. The number varies since many podcasts either have few episodes or may not be active. EMarketer predicts U.S. adults will increase the listening time by 15.1%.
Another factor that is driving revenue growth is automated advertising technology. As the tech improves, advertisers can now leverage podcasts to reach their target audiences across various genres.
Pre-roll advertising, for instance, increased its share of revenue to 32% from 22% in 2020, per the IAB study. It also noted that podcast publishers should have a balance between a greater number of ads and shorter ad lengths while maximizing placement across pre-roll, mid-roll, and post-roll positions.
Image Credits: Interactive Advertising Bureau
In addition, dynamic ad insertion (DAI) expanded to 84% of ad revenue, almost doubling in two years. Both host-read and announcer-read ads are mainly served via DAI (84% and 85%, respectively). Many platforms offer dynamic ad insertion tech, such as geo-targeting and timed campaigns, among other easy tools to change out content and run various ads.
There are even players like Spotify that are adding features like call-to-action cards and more interactive podcast advertising experiences.
Using Spotify as an example, the company modernized podcast advertising in 2020 after launching Streaming Ad Insertion and a year later announced Spotify Audience Network, the first audio advertising marketplace. Its advertising revenues hit a record in 2021, passing from $745 million in 2020 to $1,208 million. Spotify’s CEO Daniel Ek confirmed the jump was mainly thanks to podcasts. The number of podcasts published on the platform continues to grow as well and reached 3.6 million in 2021.
A few months ago, in February, Spotify acquired podcast advertising tech firms Chartable and Podsights in hopes to improve measurement and attribution. In total, more than $1 billion has been spent in various podcast acquisitions.
IAB wrote in its study, “As the industry increasingly uses automation solutions, the need to continue to deliver strong resonance with consumers and thus value for advertisers is paramount. Now that the majority of host-read and announcer-read ads are dynamically inserted, advertisers get the best of both worlds with podcast advertising: authenticity of messaging with the scalability/flexibility of automated buying.”
Image Credits: Interactive Advertising Bureau
Lastly, new brands are investing in podcast ads, especially the “Other” industry bucket in which the podcast ad revenue percentage share has more than tripled in two years. The “Other” ad category refers to energy, government, nonprofit, advocacy, tech, law, pets, sports, religion and spirituality, education, home improvement, gambling and sports betting.
The sixth annual IAB U.S. Podcast Advertising Revenue Study is based on an online survey sent to industry experts fielded in March and incorporates market-sizing estimates for the United States, inclusive of non-survey participating companies.