Next time your friend jokes about starting a podcast, make sure your friend follows through.
According to a new report from the IAB in partnership with PricewaterhouseCoopers US, podcast ad revenue has grown by 85 percent since last year and is on track to reach more than $220 million in 2017. Previously, ad revenues for podcasts jumped 73 percent from 2015 to 2016.
“The podcast landscape continues to grow and move mainstream,” said Chris Kuist, the svp of research and impact for the IAB. “This is the first time we’ve been able to crystallize the sense that podcasting is an important and powerful marketing platform.”
The study’s authors worked with 20 of the industry’s largest players, like Gimlet and Acast. Looking at historical data, they developed a full picture of what types of podcast advertising are available and how the area has been growing.
For example, ads that are read by podcast hosts perform better than pre-produced ads from marketers; additionally, the study found that dynamically placed ads, which typically stay in episodes until a certain number of impressions are reached, performed well. But direct response campaigns, often involving an offer code listeners can enter for a discount, are the most prevalent.
“We’re seeing the beginning of an industry still,” said David Silverman, partner at PwC US. “Companies are trying to figure out how to use ads on podcasts effectively. So far, a connection with the host is the best deal for branded marketing.”
Previously, the IAB released its Internet Advertising Revenue Report which stated that digital audio ad formats generated $1.1 billion in 2016, which didn’t include any revenue from podcasts.
“Ears are becoming just as important as eyeballs when it comes to ad impressions,” said Silverman.
Many advertisers on podcasts tend to be startups, hoping to reach an urban, commuter audience. Companies like Squarespace, Casper and Blue Apron are frequent podcast advertisers.
“It makes sense to dip your toe in if you’re a brand of any size,” said Silverman. “The market’s big enough, and it’s worth spending the money in this space.”
“As the medium matures, we’ll have access to better audience demographic measurements so brands can easily see how to assess their money being spent,” said Kuist. “The importance is on clear, consistent measurement paired with excellent content.”
This first-of-its-kind study will help marketers see the potential of podcasting, even with more clear measurements for listenership and audience demographics still on the way.
“We’re still building the measurement mindset into these content partnerships to help move the process forward, when it comes to developing measurement tools,” said Kuist. “But if marketers can start smart, then we can build tools to articulate those learnings.”