Podcast advertising is maturing, both in terms of measurement capabilities and audience sizes — and more later stage brands are taking notice. Podcasts, once a go-to marketing channel for direct-to-consumer brands, have become a mainstay for more seasoned advertisers, agency executives say.
“As part of our conversations, brand interest in podcasts has more than doubled in the last six months,” said Tom Kelley, CEO and partner at marketing agency Revival House, which has worked with clients like DraftKings, Sony and Nike. “It certainly feels like a trend on the rise.” (He did not provide specific figures around client podcast advertising inquiries).
This year, podcast advertising is expected to account for $2.25 billion of ad spend and grow to $3.53 billion by 2026, according to Insider Intelligence. Even with economic uncertainty putting marketing budgets under intense scrutiny, podcast ad buyers said in February they had yet to see a slowdown.
At the helm of that ad spend are increasingly more mainstream brands like Molson Coors’ Simply Spiked juice line, The Weather Channel and Sleep Number, all of which are looking to leverage podcasts’ improved measurement capabilities, better targeting and growing audiences.
Over the last year, Sleep Number’s podcast advertising spend has grown to account for 20% of its audio advertising budget, said Lisa Bailey, the brand’s vp of media and content strategy. (She did not disclose specific ad spend figures.) Per Bailey, that spend on podcasts has been steadily increasing over the last five years, especially as audiences grow around more niche topics.
“It’s one of our highest driving return on investments for us and it’s just growing,” Bailey said, adding that podcasts drive sales for the company. (She did not disclose specific sale figures.) Per Bailey, the company uses media mix modeling to determine podcast advertising ROI. “Because of the impact that has and what we can monitor, we can really see that this particular media form is super engaging and we get huge engagement against it,” she said.
Last summer, Simply Spiked got into podcast advertising with the launch of its Simply Spiked lemonade, but the plan was very small in scope, according to Josh McDonald, senior marketing manager of FMBs (Flavored Malt Beverages) at Molson Coors Beverage Company. (He did not offer specific ad spend details.) Before that, in 2020, Molson Coors became a charter sponsor of Charlamagne tha God’s Black Effect Podcast Network. And, ahead of launching its latest spiked peach drink this month, the company said it will lean even further into podcast advertising.
“We know podcasting is growing in leaps and bounds year-on-year,” said McDonald. “It’s integrated into our strategy. It’s not a test and learn. We’re leaning into it. It’s a strong piece of our media strategy.”
Meanwhile, The Weather Channel ran a podcast ad campaign on Pandora last summer, which drove a 6% lift in overall brand favorability, according to Samantha Cohen, head of marketing technology and media for The Weather Company, an IBM Business. Per Cohen, research showed that nearly half of The Weather Channel’s target audience tuned into four or more podcasts on a weekly basis, making it a channel worth testing to get in front of that audience.
There are a few reasons brands seem more keen on podcast advertising now than they have in the past, agency executives say. They include better measurement tools, increased listeners and more shows (thus more genres and audiences) to pick from. For instance, back in 2020, Spotify rolled out Streaming Ad Insertion (SAI) technology to help advertisers with digital planning, reporting and measurement. There’s also programmatic podcast advertising, which has sparked some advertiser interest even though it’s still in its infancy.
And unlike other marketing channels, podcasts are immersive because they capture a listener’s full attention even as life returns to normal post-pandemic. (Although it is worth noting that the audio boom has cooled some since its spike during pandemic lockdown.)
“While the end of 2022 saw growth in investment from traditional audio/radio slow a little bit [following the pandemic boom], interest from non-traditional audio clients focused on brand advertising continued to increase,” Jimmy Saunders, executive director of audio and events at New York Times Advertising, said in an email to Digiday.
While improvements in podcast advertising, like better measurement and targeting capabilities, have made it easier to buy ads through programmatic channels, there are also new channels, like YouTube adding podcasts to its music app. And new video podcast capabilities are being added on platforms such as YouTube and Spotify.
“A big thing you’re seeing happening on podcasts that was similar to digital 30 years ago is, right now, a lot of brands are looking at audiences at scale,” said Brian Berner, Spotify’s Head of Sales for the Americas. “Podcasts are still growing and audiences are still growing.”
On average, U.S. adults will spend about one hour and 43 minutes per day listening to digital audio, like podcasts, this year, per Insider Intelligence. That figure is expected to increase slightly next year to an hour and 45 minutes per day.
With that said, the podcast advertising industry is poised for growth among brand advertisers, especially as diversification of media spend continues to be a topic of conversation throughout the industry.
“What was once a go-to element in the marketing mix for strictly DTC brands has begun to mature significantly,” Patrick Schmidt, managing director of Wheelhouse Labs, said in an email to Digiday. “Brands accustomed to taking risks to reach their audiences through evolving platforms are winning big with partnerships in podcasts.”
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Kimeko McCoy