US podcast ad revenue to jump 45% to $1.13B next year, eMarketer says

Brief:

Spending on podcast advertising next year is forecast to grow 45% to $1.13 billion in the U.S., surpassing the $1 billion mark for the first time, researcher eMarketer said in a new report shared with Mobile Marketer. The growth will give podcasts 21% of the U.S. digital radio ad market.
Next year's growth will surpass this year's 10% increase to $782 million as the advertising market recovers from the coronavirus pandemic. EMarketer expects podcasting ad spending will continue to expand for several years, including an 18% gain to $1.33 billion in 2022.
Programmatic media buying will grow from 4% of the podcast ad market this year to 6% in 2021 and 8% the following year. The broader availability of dynamically inserted audio ads into podcasts will support programmatic growth, eMarketer forecast.

Insight:

The expected growth in ad spending on podcasts reflects a growing consumer appetite for the on-demand audio format that listeners can access with mobile devices, smart speakers and computers. Marketers will boost their spending on podcasts to reach that growing audience, which eMarketer predicted will expand 15% to 105.6 million listeners this year and by 9.5% to 115.6 million in 2021.

However, eMarketer foresees a need for better measurement of podcast listening to help support that growth. The Interactive Advertising Bureau (IAB) recently released guidelines for podcast ad metrics that can help to increase ad spending as advertisers, ad agencies and audio platforms adopt a common standard.

"The continued growth in podcast advertising is no surprise, as investments have made podcasts accessible to a wider audience," Shelleen Shum, eMarketer forecasting director at Insider Intelligence, said in a statement. "The news genre, a focus of many podcast advertisers, has performed well during the pandemic. While some ad campaigns were paused in H1 due to the uncertainty from COVID-19 lockdowns, we expect a rebound in Q3 and Q4."

Growing ad spending on podcasts will help audio platforms and producers to profit from the billions of dollars they're investing in the development of on-demand audio content. That investment has included multiple licensing deals and acquisitions announced in the past couple of years.

Spotify, the audio streaming platform whose global audience grew 29% to 299 million people in Q2 from a year earlier, has led the way with recent podcast development. In addition to licensing deals with popular podcasts like "The Joe Rogan Experience," Spotify expanded its programming by snapping up Bill Simmons' The Ringer network, podcast producer Gimlet Media, podcast production platform Anchor and narrative-focused podcast studio Parcast. Spotify also started streaming a podcast hosted by former first lady Michelle Obama and a weekly show co-hosted by TikTok star Addison Rae. As part of its effort to monetize its growing library of podcast content, Spotify recently reached a $20 million advertising deal with Omnicom Media Group that gives the agency and its clients special access to the platform's innovations around podcasts.

Spotify isn't alone in the podcast land grab. The New York Times last month agreed to buy Serial Productions, creator of the popular true-crime podcast "Serial," to broaden its range of audio programming that includes its news podcast "The Daily." Sirius XM, which owns audio streaming company Pandora, last month agreed to buy the Stitcher podcasting division of E.W. Scripps for $325 million, a deal that followed its acquisition of podcast technology startup Simplecast to expand support for producers of streamed audio content.

Apple, which pioneered the podcasting format more than a decade ago, reportedly planned to expand its original podcasts to support its Apple TV+ streaming service. IHeartMedia, the largest owner of radio stations in the U.S., in February launched a custom advertising network aimed at marketers seeking to reach the growing audience for podcasts.