US podcast ad spend surged 53% in 2018, IAB and PwC find

Brief:

U.S. spending on podcast ads surged 53% in 2018 to $479.1 million from $313.9 million a year prior, according to a new report from the Interactive Advertising Bureau and PricewaterhouseCoopers. Podcast advertising is expected to rise to $678.7 million this year and reach more than $1 billion by 2021, the report forecasts.
Dynamically inserted ads, which are added to podcasts when they're downloaded by a user instead of when they're first released, expanded their share of spending to 48.8% of podcast ads sold in 2018 from 41.7% a year earlier. Advertisers can use the ad format to target specific consumer segments based on data linked to IP addresses or other characteristics. Some podcasting apps read unique advertising identifiers of users' mobile devices.
Among industry categories, the biggest podcast advertisers were direct-to-consumer retailers (22% of total ad spend), financial services (21%), business-to-business (14%), arts and entertainment (10%) and telecommunications (7%).

Insight:

The podcasting market shows signs of healthy growth, even if it's dwarfed by ad spending in other media channels; advertisers are forecast to spend about $70.8 billion on TV advertising in the U.S. this year and about $129.34 billion on digital platforms, per eMarketer. However, podcasting is growing both in the U.S. and around the globe, and the worldwide podcast market is set to comprise 4.5% of all audio ad spend by 2022, when it hits $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 as a marketing medium have surged in popularity as more brands try to integrate them into their regular mix to appeal to on-the-go consumers with content that isn't perceived as overt advertising. NBC last month partnered with iHeartMedia for the first time to produce a podcast tie-in with the TV network's songwriting competition show, "Songland." In February, BMW collaborated with The New York Times' branded content studio on a six-episode series for foodies. Sporting goods retailer Intersport partnered with Nike on an educational, training-focused podcast about long-distance running.

Some brands are taking things to the next level by creating their own shows that are relatively low-cost to produce 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.

While the podcast industry has grown rapidly, it is maturing and consolidating within major media companies like iHeartRadio that seek greater awareness among mobile-savvy consumers. Podcasting is a key part of Spotify's goal of becoming the world's biggest audio platform. The streaming platform, which reported 217 million active users in its Q1 report, is investing in original podcast content through an 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 overall margins. Originally produced content could help Spotify to cut royalty costs for podcasts licensed from outside sources while drumming up interest among consumers looking for exclusive content.