Podcasts: The $74bn opportunity advertisers are missing out on
Opinion
Given podcast listeners are typically attentive and engaged, this medium allows advertisers to connect with receptive audiences. Yet podcast advertising only represents 0.2% of total ad budgets. Now is the time for podcasts to truly shine.
Consumers’ enthusiasm for podcasts shows no sign of abating. According to the Podcast Index, there are now over 4.4m registered podcasts globally. One-fifth (20%) of UK adults listen to at least one podcast per week and a quarter (24%) of podcast users listen to six or more podcasts every week.
These are high-value audiences, too, with 28% of lucrative Gen Z audiences listening to podcasts nearly every day, while 21% listen to podcasts for more than 10 hours a week, equating to around 6% of their time.
Given podcast listeners are typically attentive and engaged, this medium offers advertisers a significant opportunity to connect with receptive audiences. Yet podcast advertising currently only represents 0.2% of total advertising budgets.
From my calculations, if advertising budgets were adjusted to reflect time spent, podcast advertising would represent a $74bn opportunity.
So why aren’t advertisers biting?
Challenges of advertising on podcasts
It might seem like podcasts have been around for a while but, compared with channels like linear TV and mobile, podcasts are still very much in their infancy. And nascency always comes with a set of challenges.
With the podcast market growing so quickly, there’s a lack of data available on the demographics or listener numbers for particular shows, making it challenging for advertisers to identify the most relevant podcasts to advertise on.
What’s more, popular podcasts often have global audiences and if a brand has a region-specific product or service, this can result in wasted ad impressions if the publishers lack the ability to target ads geographically.
In addition to targeting queries, attribution is also an issue. There is no Google Analytics or mobile measurement partner equivalent for podcasts (yet) and, as listeners can’t click on ads and user data is restricted to the individual app, attribution solutions don’t really work on this medium.
That’s not to say that the success of podcast advertising can’t be measured. There are solutions such as causal AI that can provide accurate measurement for campaigns, but evaluating a network of podcast ads across multiple shows is not yet possible.
To date, the targeting and measurement issues has held advertisers back from cashing in on this lucrative channel. But is all that about to change?
While most podcast platforms offer dynamic ad insertion already, there is a lack of available inventory. However, thanks to advanced new tools, programmatic trading is becoming more prevalent on podcasts. Soon, this could standardise the medium — at least until large platforms revert to walled gardens.
What’s more, major podcast platforms look set to introduce geo- and dynamic-targeting soon — something that will, for example, enable a UK brand to target only UK-based listeners on a global podcast. Being able to hone in on specific audiences and offer more personalised ads will be a huge draw for advertisers.
Enter Big Tech
The triopoly of the podcast world is Spotify, Apple and YouTube. The walled gardens, Spotify and YouTube, both have solid advertising options, while Apple has yet to fully capitalise on its podcast advertising opportunities. But I do expect this to happen soon.
Apple’s advertising hesitancy likely comes from its mistake of moving too quickly in its acquisition of the now discontinued iAd. Although the essence of iAd has been resurrected in what we now know as Apple Search Ads, the format of these ads (non-intrusive) does not align with the dynamically inserted ads currently required for podcasts.
Make no mistake that Apple will be working on this, though.
Out of the trio, YouTube is the player really shaking up the market. Its podcasts combine video and audio to create a new style that is proving extremely popular. According to YouTube, viewers watched more than 400m hours of podcasts per month on their TVs last year.
As a result, Spotify and Apple are also experimenting with video podcasts and this opens the door for even greater advertising opportunities. By this time next year, it’s very possible that the audio-only format of podcasts will have faded away to make way for the bigger and brighter video versions that can be more easily targeted and measured by advertisers.
Fully AI shows?
I can’t write this without also mentioning the role AI is likely to play in the future of podcasts.
AI voice engines such as ElevenLabs, Epidemic Sound and Filmora are already being used to turn written content into podcasts.
While generative AI may not have crossed the uncanny valley phenomenon for images or photos just yet, it’s definitely already there for audio. Podcast hosts as well as content creators are now able to generate podcast content using tools like ChatGPT, Claude and others.
It’s possible that some podcast shows are — or soon will be — fully automated creations, consistently producing episodes to gain traction. Rightly or wrongly, with the right AI marketing tactics, these shows could generate millions of listeners. And where the audiences go, the advertisers will — eventually — follow.
This is podcasts’ time to shine. There is immense potential in this medium and, driven by Big Tech and AI advancements, this billion-dollar advertising opportunity will soon be realised to the advantage of brands and podcasts everywhere.
Maor Sadra is CEO and co-founder of Incrmntal