Brief:

• The global podcast market is forecast to make up 4.5% of all audio advertising spend by 2022, hitting $1.6 billion, according to researcher WARC. That figure is almost double this year's estimated ad spend of $885 million, or 2.5% of the audio market.
• Podcasts reach 62 million U.S. listeners a week, a 22% audience penetration. More than half (53%) of those listeners tune in to YouTube for their podcast content, compared with 29% for Apple and 28% for Spotify.
• Brands experimenting with podcast sponsorship will drive much of the spending over the next few years. Additional growth will depend on technical advancements, including more accurate, real-time audience measurement and programmatic ad buying, per WARC.

Insight:

WARC's forecast indicates that advertisers plan to put more media dollars into podcasts as listeners request spoken-word content from mobile apps and smart speakers. "Podcast advertising holds great potential as it enables brands to reach a highly-engaged, young and affluent audience via a medium they have an affinity with," James McDonald, WARC's managing editor, said in a statement.

Podcast listeners also express a willingness to listen to messages from sponsors. Almost four in five (78%) podcast listeners said they don't mind ads or sponsorship messages, which they recognize as necessary to support the free content, per WARC. Fifty-eight percent of podcast ads are reportedly integrated into the content, creating a more seamless experience for the listener than in other formats like radio, where longer ad breaks are entirely separate from the core content.

Podcasting is a key part of Spotify's goal of becoming the world's biggest audio platform, WARC said. The streaming platform, which had 207 million active users as of its latest quarterly report, is investing in original podcast content with its in-house Spotify Studios unit. Its recent acquisitions of Gimlet Media, Anchor and Parcast give the company greater expertise to support its ad business and margins. Originally produced content helps Spotify to cut royalty costs for podcasts licensed from outside sources. The company's gross margin of 26% last year indicated that three-quarters of its income was paid out in content acquisition fees, per WARC.

Spotify has helped to boost monthly listening of podcasts, especially among people ages 12 to 34, a survey by Edison Research and Triton Digital found. The percentage of Spotify listeners in that age bracket who said they've listened to a podcast within the past month grew to 53% this year from 32% in 2018, the data show.

Brands are experimenting with getting in on the growing platform with sponsorships. In February, BMW collaborated with The New York Times' branded content studio to create a six-episode podcast for foodies. Sporting goods retailer Intersport also partnered with Nike on an educational, training-focused podcast about long-distance running. Brands also are creating their own shows that are relatively low-cost and give them full creative control over how to engage with audiences through audio. Jack Daniel's Tennessee Whiskey, Giant Food and Sephora are among the brands that have created their own podcasts to reach target audiences with exclusive content.