IAB Podcast Advertising Revenue Study Reaction (2021)

This transcript is edited.

[00:00:14] Heather Osgood: Hello, and welcome to the podcast to advertising playbook. I'm your host, Heather Osgood. And today, on the program, I will be talking about the IAB US Podcast Advertising Revenue Study. Each year, the IAB, the Interactive Advertising Bureau, do a study on the podcast ad space. And they released the study from the prior year, typically at their Upfront event, which they held at the beginning of May.

[00:00:44] Heather Osgood: And we now have the report. I love this report because it gives us a great benchmark on where we're as an industry in podcast advertising. So there are some exciting [00:01:00] findings in the study. I recommend that if you haven't downloaded it, you go ahead and go over and download that report.

[00:01:08] Heather Osgood: It's a straightforward thing to find. If you search for the IAB Podcast Advertising Revenue Study, you'll come up with it, and you can download the PDF, which is a great comprehensive report. So I do recommend that you download the full. But in the podcast episode today, I wanted to give you some of the report's highlights and give you my feedback and opinion on what some of these things mean.

[00:01:33] Heather Osgood: The report says that US podcast advertising revenues surpassed the $1 billion mark in 2021 for the first time. Now we have been projecting this number for some time. I will say, having been in the podcast space for six years, I feel like it's been like, it's coming, it's coming. I think it was projected to arrive in 2020, [00:02:00], but instead, we got the pandemic, which was so much fun, but we did see that we surpassed the $1 billion mark; we got $1.4 billion in revenue.

[00:02:13] Heather Osgood: This was exciting and continues to grow. One of the most interesting parts of the report states that the podcast advertising industry continues to be one of the fastest-growing digital media channels. So we have to let that sink in because the report says that with 72% growth, podcast advertising grew twice as fast as the total internet advertising market, which was only up 35% year over year.

[00:02:47] Heather Osgood: And that was according to their internet advertising revenue report. So the IAB is great because they do lots of different revenue reports. They're able to compare them. But I think that's pretty [00:03:00] phenomenal, right? That we can say that digital marketing we know is on the rise. Digital media is rising, but it only grew at 35%, while podcast advertising grew at 72%.

[00:03:13] Heather Osgood: So, certainly something to be proud of. Now, when looking at why this explosive growth, like what happened to lead us to where we're at right now, the report stated a few things, and I definitely would say that I agree with them. The first is that we're seeing expanding user base with having more consumers growing a library of really engaging, diverse content. So we've got an increasing number of podcasts out there, right? There are lots and lots of podcasts. But we also see that the consumer base is widening, so more and more people listen to podcasts regularly. 

[00:03:55] Heather Osgood: It is exciting; there was another report that came out relatively [00:04:00] recently. An Edison research report stated that most people listen to the top 1000 podcasts out there, which is fascinating. But more people are coming into the space, more listeners, as well as more content creators, which is a good thing.

[00:04:18] Heather Osgood: We also see that advertising has increased in terms of kind of ad tech piece, particularly in dynamic ad insertion. Now, if you have been listening to this podcast, you have heard me talk about dynamic ad insertion because I do believe that it is the backbone of what will help us as an industry grow.

[00:04:45] Heather Osgood: And if we're talking about dynamic ad insertion, it's important to remember that dynamic ad insertion is using technology to electronically insert ads into your entire catalog of episodes. Of course, you don't have to put it in every [00:05:00] single episode, but you have that capability, and those ads, of course, can be host read, and they can also be announcer read.

[00:05:06] Heather Osgood: So fascinating to see that. And I'll talk about some of the numbers here when we get further into the report. The other thing that they found was that there is increasing ad spending by existing and new advertisers in this space. So there are new categories, new industries that are entering the podcast ad space and trying it out, which to me is probably one of the most essential pieces of this report because if we don't have new companies coming in, if we don't have new brands looking at the space and saying, Hey, we should be advertising.

[00:05:42] Heather Osgood: Then, what are we doing? We've got to get those new companies interested in the space. And as someone who sells podcast advertising, I can tell you it's not always easy because if you're not an avid podcast listener, sometimes it's difficult to wrap your brain around what we're [00:06:00] doing with podcast advertising.

[00:06:01] Heather Osgood: It isn't always super straightforward. There are so many different options which makes it difficult, I think, for advertisers sometimes to decide where they should enter the space. So it's great to see that we do have so many new brands and, of course, existing brands continuing to go ahead and invest in a space.

[00:06:22] Heather Osgood: Now, the other exciting thing, and, of course, this is a projection, and this revenue report will give projections, but the report states that revenues are forecasted to almost triple to 4.2 billion in the next three years. I find that a vital statistic because revenues, when you look at them, they have crept up.

[00:06:50] Heather Osgood: And now we are looking for this very explosive growth in this space. And that certainly is extremely [00:07:00] important for us to look at that we're going to get to a much higher number and that we're going to continue to see this. So now, let's look at the different types of industries that were investing in the space.

[00:07:13] Heather Osgood: Like, where is this revenue coming from? So we saw that some of the top of the charts were financial services, direct-to-consumer retail brands, art, entertainment, and media. Things that we had seen in past years. That weren't all that fascinating. The really interesting one-piece is the other bucket they place on the report, which, I mean, let's face it.

[00:07:38] Heather Osgood: Who likes the other bucket? I know I wouldn't say I like the other bucket because of what's in that bucket. It's hard to say. Right. But the other bucket grew at a considerable rate. It more than tripled its share in two years. So it went from 8% to 28%. The top [00:08:00] category in the report was the "other" category.

[00:08:02] Heather Osgood: And what the report stated, which I think makes total sense, is that when we have a lot of these smaller industries entering the space, they can't all be categorized, but that gets us back to this idea that we do have so many new industries and new categories advertising in the space. So again, exciting to see that.

[00:08:23] Heather Osgood: All right, now we get to the part where we talk about dynamic ad insertion, and I always love to see this, but it said that 84% of all of the ads were dynamically served, whereas 16% were embedded ad reads. When you go back and look historically, that is significant growth to see that 86% are being done dynamically.

[00:08:50] Heather Osgood: Now I will say that they did find that announcer read ads certainly have an increase. We have seen traditionally host read ads have been [00:09:00] more significant than announcer read ads. Still, of course, as we look to automation and of course, as we look to using the dynamic ad insertion functionality, we do have to remember that if we aren't using a computer entire ad space, we're not going to be able to fill a hundred percent of the impressions out there. That is not to say that there isn't, of course still great value in host read ads. And my prediction would be that as we continue to see an increase in announcer read ads, those host read ads are going to become even more valuable because advertisers are going to be willing to pay additional for those specific reads and because they are going to be more valuable. So I think that they will eventually command a higher price, and in some instances, they do, but not always; it depends on how you're purchasing the ads. So I think that is fascinating and, of course, excited to see [00:10:00] that we are going to be continuing to grow the dynamic ad insertion side of the business.

[00:10:06] Heather Osgood: Now, in terms of the categories of different podcast types, where we see advertising congregating, we're finding very typical findings that we have seen in past years. News, comedy, society and culture, sports, true crime, and business are some of the shows topped the charts.

[00:10:26] Heather Osgood: And of course, that isn't really a surprise. I don't think to anyone that those are the categories that are performing well. If you're interested in starting a podcast, maybe you consider one of those categories. At least if you're interested in getting ad revenue on your show, but those are the categories that really are topping the charts in terms of where advertisers are spending their dollars.

[00:10:51] Heather Osgood: Now wrapping us up on our episode today, I did want to talk about the results tracking part of the [00:11:00] report. So of course, when we talk about podcast advertising, one of the most important things that advertisers are always looking at is how are we going to track the results? And if you've listened to podcast that, of course, we are using these unique URLs. We are using these coupon and promo codes to track results. And we have found that has been the case for many, many years. And so that's normal, but I thought what was really interesting is that in terms of the way that we're tracking results, there are those two that I mentioned the unique URL and the coupon promo codes, but there's also the attribution tracking and the pixel tracking, which certainly has gained popularity over the last few years. It stated that advertisers used these different, these three different methods to track results and they, they use them all equally. So the report states that 89% of advertisers used a unique [00:12:00] URL. 89% of advertisers used a coupon code, 89% of advertisers used pixel-based attribution tracking.

[00:12:09] Heather Osgood: So, really, I thought that was pretty fascinating to see. I didn't realize that attribution tracking had come along as far as it had. I knew that it was prominent in this space. And I knew that just anecdotally, we were seeing the requests for that come in more and more, but seeing that kind of hard evidence that really that attribution and pixel tracking is here is important.

[00:12:33] Heather Osgood: Now it's also super important as an industry that we take a look at how we're going to be addressing this potential issue. Because with Spotify purchasing Podsights and Chartable now is that really third party data? Or should we be looking at other pixel-based attribution companies to fill that role? I know that there are certainly a couple of companies that are jockeying for this space.

[00:12:58] Heather Osgood: And I would love to see [00:13:00] more companies really put thought and energy around that because I think there definitely is an opportunity. The other thing that I did want to touch on was the difference between the direct response advertisers and the brand advertisers. So I was really kind of surprised that didn't shift a whole lot.

[00:13:20] Heather Osgood: They're both right around, I think, it was like the 45%, 46%. I think that that's really interesting to see. Of course, we know that brands are going to enter the space more, but we still do ultimately get down to the fact that a lot of the tactics that digital marketers use are still not available in podcasting.

[00:13:43] Heather Osgood: So we're still not providing a lot of the analytics that they're accustomed to using. We're not really providing the ease of placing those announcer read ads. And so, as long as we still I think, have that to [00:14:00] overcome. I think brand advertisers may not enter the space and as great in numbers as we would like to see, but, I certainly hope and would love to predict that we'll have more brand advertisers into the space.

[00:14:12] Heather Osgood: That of course is not to say that our direct response advertising. Aren't super valuable and that we don't want to keep them because of course we do. And I think that they really are a good guidepost for us to see that this space really does allow for, you know, results within podcast advertising because direct response advertisers wouldn't be in this space.

[00:14:34] Heather Osgood: They wouldn't be advertising as much as they do if it didn't work. They really only invest their money where they know they're going to see, obviously, that direct return. So that concludes my review of the IAB Podcast Advertising Revenue Study for this year. Now, of course, these are stats that we have collected from 2021.

[00:14:57] Heather Osgood: And we will have to wait until [00:15:00] next may to find out how 2022 is shaping up, but certainly from my vantage point, at True Native Media. We are seeing increases in spending. My guess is the entire industry is continuing to see those. And I think that the industry as a whole is really on solid footing and poised to continue to grow.

[00:15:19] Heather Osgood: So I hope this episode has been helpful for you and just giving you a little peek into where we're at as an industry with podcast advertising. If you have not gotten into the podcast ad space and you are interested in jumping in, please head on over to our website, truenativemedia.com and download our marketer's guide to podcast advertising, where we can walk you through how to enter the space.

[00:15:43] Heather Osgood: Thanks so much for listening and we'll catch you next time.