Dive Brief:
- Podcast advertising revenues grew 5% in 2023 to $1.9 billion, according to findings from the Interactive Advertising Bureau (IAB). The figure represents a slower pace from the double-digit growth the sector has seen over the past several years.
- The IAB attributed the slowdown to a challenging advertising climate that particularly affected mid-tier companies, spurring losses that tempered overall growth. Podcasting is expected to return to double-digit growth this year, forecast to grow 12% to over $2 billion in revenue.
- Growth this year will be fueled by publishers through various initiatives including measurement, programmatic purchasing, live events, more aggressive show promotion and the ongoing development of video podcasts. The sector is on track to reach $2.6 billion by 2026.
Dive Insight:
As saturated as the sector may be, podcasts still offer advertisers a wealth of opportunities. In addition to the innovations of live events and video podcasting, the connections that the podcasters themselves make with their audiences are extremely valuable for the advertisers that sponsor the shows.
“The vitality of podcasting will also continue to be built on the unique rapport between podcasters and their diverse audiences, exhibiting extraordinary attentiveness to the content and the accompanying ads,” according to the report. “This is evidenced by the revenue contributions from a broadening array of advertising sectors and content categories.”
Among those ad sectors that increased their investment in podcasting were CPG and retail, up 4% and 5%, respectively, since 2021. Arts and entertainment, beverages, travel and tourism and automotive all recorded single-digit percentage growth from 2022 to 2023, according to the study. In addition to the direct connection to consumers podcasting provided, the ability to geo-locate through the various platforms was a distinct advantage, according to the IAB.
Still, more than a quarter of podcasting revenues were in the “other” category, which includes government, nonprofit, pets, home and more. These individual categories are often small but are so highly targeted that they are very appealing to advertisers who need to reach a niche audience affordably, according to the IAB.
Meanwhile, consumers continue to look more to their podcasts as an escape from the world, rather than as a place to be informed about it. Comedy is the most popular content genre – likely aided by shows from notable comedic personalities – and therefore saw its revenue share grow by four points over the past two years. The genre gained nearly 300 new advertisers in Q4 2023 alone. Sports was the second most popular content genre for the second straight year.
“Between comedy and sports, consumers are using podcasts to be entertained and delighted, which provides a sanctuary from other serious headlines playing out across the nation and the world,” said David Cohen, CEO of the IAB, in a release. “It’s where the greatest engagement and subsequent ad dollars are.”
A number of brands recently have looked to podcasts as a way to form stronger consumer connections. For instance, skincare brand CeraVe scored one of the best campaigns at this year’s Super Bowl by using earned media on channels like podcasts to amplify its paid media. Other brands, like Absolut, Jif and Pepsi Wild Cherry have similarly made the outlet part of their campaign strategies.
This is the 8th annual version of the IAB’s study, which is titled "U.S. Podcast Advertising Revenue Study: 2023 Revenue & 2024-2026 Growth Projections." The report was prepared for the IAB by PricewaterhouseCoopers LLP.
