An annual study of the US podcast industry cut its growth forecasts in half as companies withdrew or stopped ad campaigns in the wake of the coronavirus outbreak.
The explosive audio medium is forecast to generate nearly $ 1 billion in advertising revenue in 2020, with an expected growth rate of 14.7%, according to the fourth annual Interactive Advertising Bureau podcast ad revenue report prepared by PwC. Before the pandemic, the industry was expected to grow as much as 29.6% this year. Revenue is expected to recover in the third and fourth quarters.
The forecasts will hit the burgeoning industry hard, which has multiplied in size in recent years as fans of news and real crimes tune in from their cars, public transit rides, and homes. Podcasting has made stars of print journalists obsessive about the cold case. It has also been a focus of acquisition activity in recent years and, more recently, of union organizing.
“Podcasts have consolidated their place in the marketing mix, with more vendors planning ahead to secure both inventory and price earlier in the season,” said Zoe Soon, IAB vice president in a statement.
The report cited canceled or paused marketing campaigns as the top reasons cited by podcasters for the slowdown in revenue in the first two quarters of 2020.
Ad revenue growth in 2021 and 2022 is forecast at 55% and 36%, respectively, according to the report.
In 2019, podcasting advertising revenue reached $ 708.1 million, representing 48% growth compared to the previous year. Recipients include Southern California podcast companies, such as Beverly Hills-based PodcastOne, which has seen double-digit revenue growth in recent years. Los Angeles-based podcast network, the Ringer was recently acquired by Spotify. In 2019, the Swedish music company also acquired podcasting companies Gimlet and Anchor FM Inc.
The report shows how podcasts are gaining ground as part of companies’ annual marketing plans rather than being part of the so-called “scattered” buying strategy, when brands and agencies buy inventory closer to the issue date. . According to the report, companies making podcasts as part of their annual ad purchase have nearly doubled, up 47%.
“Podcast hosts are becoming trusted influencers with loyal communities,” Soon said. About 66% of podcast advertising is host reading, Soon said.
News was the leading podcast genre for American advertisers in 2019, capturing 22% of revenue; it was followed by comedy at 17%. True Crime, a popular genre for producers like Wondery (who has done podcasts in association with the Los Angeles Times), captured 9% of revenue. Among the advertiser categories, health and wellness were the largest direct-to-consumer segment.
News organizations like the New York Times and Los Angeles Times have prioritized podcasting as a medium for their content.
“In the early days of COVID-19, the media formats that remained resilient were those that provided agility for vendors to change messages,” said Sue Hogan, IAB senior vice president. Podcasts offer that agility, but news advertising revenue was hit hard in other outlets in the first days of the outbreak, he added.
If the pandemic collapses and companies invest in advertising again, the podcast industry still has a chance to regain ground this year, as historically around a third of U.S. podcast revenue is generated in the fourth quarter, according to the report.
