Ciaran Davis has been a director of the CRA Board since 2018
MELBOURNE, Australia — Over the past year, advertisers have increasingly eyed podcasting as the next growth area, as agencies continue to invest heavily amid shifting listener consumption habits. As audience demand and investment continue to rise, ad dollars follow. According to Edison Research’s The Infinite Dial, podcasts had reached 177 million listeners in 2022 — with advertising revenues poised to exceed US$2 billion by 2023.
Podcasts have played a fundamental role in helping us stay up-to-date with the latest news and entertainment while adjusting to our new hybrid reality. With a wide variety of genres available and on-demand access, podcasts have stayed true to the multi-tasking reality of their listeners, enabling podcasts to grow at exponential rates amid unsettling uncertainties.
A resilient medium
While podcasting was powering forward even before the pandemic hit, the last year really kicked the medium’s growth into overdrive. Unlike traditional entertainment mediums, podcasts adapted well to the shift to remote production, which attracted increased attention from media companies and creators, leading to an influx of new content.
Predicted growth over the next five years occurred practically overnight. Podcasts were the MVP the population needed in a time of uncertainty, adapting to our changing lifestyle in real-time. While ad dollars halted temporarily, they quickly began to flow again as we adjusted to our new normal, showcasing the resiliency of the medium.
The art of podcast advertising
Unlike traditional radio, podcasts are a “lean in” medium, with ads carefully constructed as host-read segments woven directly into the show to encourage more active listening.
It’s important to factor that into any advertising strategy and select programs that resonate with the interests of a target audience. With the intimate audience relationships and personalities of podcast hosts, listeners expect and look forward to advertisements within their favorite shows. Podcast advertisements should capitalize on this by leveraging the intimate nature of the medium, allowing shows to have fun with the creative, and bearing in mind the tone of the ad style listeners expect.
Advertisers still don’t understand the basic principles to ensure a successful campaign in the medium.
Lastly, there’s the dilemma of whether a programmatic or direct spend ad is best. There’s a simple rule of thumb to consider when making the selection: A programmatic ad is best for brands with the primary goal of increased visibility within their target audience, while a direct-sold ad is best for brands with the primary goal of obtaining a specific return on investment. That’s not to say that you can’t achieve ROI with programmatic or can’t achieve visibility with direct, but programmatic will prove to be the key to unlocking podcast advertising at scale.
The future of podcasting
Podcasts continually adapt to the changing landscape, providing consistent listener growth. However, there are a few challenges podcasting must overcome if it wants to keep up with its rapid pace of growth:
- Increased need for education around how podcasts work. Many advertisers still don’t understand the basic principles to ensure a successful campaign in the medium, largely because of the confusion between programmatic and direct sold-ads.
- Difficulty discovering podcasts. With the medium still relatively new, discovering podcasts at scale to advertise on continues to be a challenge.
- Measurement of podcast data. There is no singular trusted source of data for podcast measurement. Advertisers must get creative and compare data from publishers with that from audience measurement firms, who employ varying measurement methodologies to inform podcast advertising decisions.
Better education and familiarity with the medium will surely play a significant role in overcoming these challenges. We are also seeing improvements in measurement efficiencies. As the industry moves forward and advertisers become educated on best practices, we’ll see a shift to shorter ad formats on this medium, incorporating steps to better reflect listener preferences. We’ll also see the creation of sound signatures (or brand recognition sounds) that play within ads to resonate more effectively with listeners.
The new age of podcasting is here — are you ready for it?
The author is the managing director of Omny Studio, part of Triton Digital.