IAB: US podcast ad revenue will grow 15% to nearly $1B

Brief:

U.S. podcast advertising revenue will rise 15% to about $1 billion this year, less than the 30% growth previously predicted by the Interactive Advertising Bureau and consulting firm PwC. Ad revenue for podcasts had surged 48% to $708.1 million last year, per an announcement shared with Mobile Marketer.
Direct-to-consumer (DTC) brands are the biggest podcast advertisers, making up 22% of the market, followed by financial services at 16%. Among DTC brands, health and wellness and home and appliances are the biggest sub-categories. News is the most popular podcast content for advertisers at 22% of total spending, followed by comedy (17%), society and culture (13%), business (11%) and true crime (9%), per the IAB report.
The percentage of advertisers that have added podcasts to their annual media plans nearly doubled to 47%, indicating that more brands are likely to participate in upfront purchases rather than the scatter market. The IAB will host its Podcast Upfront as a virtual event because the coronavirus pandemic on Sept. 9-11, per its website.

Insight:

Marketers will increase their ad spending on podcasts this year, though by not as much as the IAB and PwC had predicted before the coronavirus pandemic and its economic fallout dampened demand. The predicted 15% growth is still healthy, considering that media spending excluding political ads may fall by 13% this year, per a forecast by WPP-owned media agency GroupM. The continued growth in ad spending reflects the growing audience for podcast content, which grew 16% to 104 million U.S. listeners earlier this year, per a study by Edison Research and Triton Digital.

The IAB's revised forecast for continued ad revenue growth for podcasts comes as more marketers dedicate media budgets to the format and streaming platforms expand their ad inventories. Omnicom Media Group last week announced a groundbreaking deal with streaming company Spotify to spend $20 million by the end of the year on podcast ad placements. The agreement is a strong sign that advertisers see the possibilities to reach the growing audience for podcasts.

Meanwhile, the podcast industry continues to see increased investment in distribution and programming. Sirius XM this week agreed to buy the Stitcher podcasting unit of E.W. Scripps, adding to its roster of streaming media platforms such as Pandora. Previously, iHeartMedia, the largest owner of radio stations in the U.S., launched a custom advertising network aimed at marketers seeking to reach podcasting's growing audience.

Spotify is banking heavily on podcasting to compete with rival music streaming services like Apple Music, which comes preinstalled on Apple's products. Spotify last month formed a multiyear partnership with Warner Bros. and DC to carry scripted podcast series based on the comics imprint's superheroes. That agreement followed an exclusive deal to stream popular podcast "The Joe Rogan Experience" and Spotify's purchase of Bill Simmons' The Ringer network.