Podcasting has boomed in recent years, but its advertising business is passé, at least in technological terms — which is exactly what marketers like about it, according to digital media experts.
“Podcasting is fascinating because it has thrived despite, and likely because of, lacking the sophistication of the rest of digital media,” says Brian Morrissey, founder of The Rebooting, a newsletter and podcast covering the digital media industry. “Podcasting has a programmatic component, but that has been less important than the human connection between the host and audience. That is why host-read ads far outperform targeted programmatic ads.”
The podcast boom began in the mid-2010s, and exploded during the pandemic, as Covid-weary audiences filled much of their free time listening to their favorite podcast personalities gab incessantly. In 2015, only a third of U.S. residents had consumed a podcast, according to Edison Research. By 2020, that number had jumped to 55 percent, a majority of all Americans, and it’s now at 70 percent. Forty percent of all consumers now listen to at least one podcast per week.
With that audience growth has come substantial growth in advertising revenues. The U.S. podcast market is now larger than $30 billion, with a predicted growth rate of 27 percent each year, according to Grand View Research.
And yet, podcasting advertising remains stubbornly in the past. The industry has been largely left out of the shift to programmatic advertising. Instead, the big money in podcast advertising comes from live reads by podcast hosts, a vestige of the terrestrial radio era.
The predominance of live reads is due to the close relationships forged between podcast hosts and their audiences, Del adds. Podcast listeners have spent hundreds of hours listening to their favorite podcast hosts speak about the news, culture or their personal lives. “It’s hard not to develop a relationship with that person,” says James Del, a former head of advertising at digital publishers Gawker and Recurrent Ventures, who is now a podcast producer for journalists and influencers. “It’s the most intimate form of consuming media.
These tight-knit host-audience connections are a fertile opportunity for brands. “Podcasting ads occupy a space between regular ad pitch and endorsement,” says Morrissey. “The most effective forms of marketing are personal recommendations.”
More programmatically delivered podcast ads may be in the near future, however, due to many podcasts shifting from audio to video. Historically, podcasts were audio only, delivered via RSS files. Segmenting audiences and serving them targeted ads in this format means re-uploading different audio files, with different ads, to target different demographic groups. “My understanding is the platforms hate it,” says Del. “Who wants to have these files changing every hour?”
Many of the most successful podcasts in the market have reinvented themselves in recent years as video talk shows broadcast on Spotify and YouTube, however. A third of weekly podcast listeners now consume podcasts on YouTube, the platform that has helped usher in the video podcast boom, according to Edison. More than a quarter (26 percent) of podcast listeners use Spotify, the audio platform that recently signed a deal with Netflix to distribute Spotify’s video podcast on Netflix’s streaming service.
Video platforms are well-equipped for dynamically inserted targeted ads aimed at different consumer segments. “What will be fascinating is how to bring the best part of programmatic to podcast advertising without losing what made it differentiated and effective in the first place,” Morrissey says of the future of podcast advertising.
For now, the live-read reigns supreme in the podcast market.
“It’s like old-school radio advertising,” Del adds. “And it still works”
