Why agencies should take note of the boom in podcast advertising

Jeff Bezos is doing it. So is Warren Buffett. The leaders of America’s biggest companies are spending big bucks on podcast advertising.

Advertisers led by Bezos’s Amazon and Buffett’s GEICO (the insurance subsidiary of Berkshire Hathaway) splashed nearly $590 million on the format last year, a 21 percent jump from 2020, according to a new report by advertising analysis company MediaRadar Inc.

And spending is booming with good reason. Statista data shows 78 percent of the adult population in the United States listened to podcasts, compared to only 22 percent in 2006.

With tens of millions of listeners tuning into thousands of podcast shows on a regular basis, it’s only natural that this format is attracting the attention of marketers and ad buyers.

“Listeners with any niche hobby or learning interest can find something to enjoy and this is great news for advertisers because it translates to a higher engagement rate, more loyalty between the listener and the podcast host, and a less intrusive way to get a brand’s message across,” MediaRadar says.

Who were the top podcast advertisers in 2021?

Diving further into spending trends, MediaRadar’s analysis found technology, media, and finance companies were the biggest podcast advertisers and accounted for approximately 46 cents of every dollar spent on podcast ads.

Meanwhile, the following top ten companies accounted for 15.9 percent of the overall 2021 spending on podcast ads:

• Teladoc Health (BetterHelp)
• Berkshire Hathaway (GEICO)
• Capital One
• ZipRecruiter
• SimpliSafe
• Comcast
• Amazon
• Squarespace
• Coors
• Progressive

MediaRadar’s analysis found podcast advertising was “sticky” in that brands tended to become repeat customers of content creators, indicating they were earning a sufficient return on investment (ROI) from the format.

“Once brands become podcast advertisers, they tend to stay in the format - 79 percent of podcast advertisers from 2020 continued buying in the format in 2021,” the report says.

Where are advertisers placing ads in podcasts?

Podcast advertising is still a relatively new frontier in marketing. Typically, advertisers pay content creators for ad placements on one of the following sections of an episode:

• Pre-roll - The first thing listeners hear when they press play
• Mid-roll - An ad placed at or near the halfway point of an experience
• Post-roll - An ad placed at the end after the main show has concluded

While advertisers are continuing to test and learn which section is most effective - as well as the ideal length of an ad - the report shows advertisers had a stronger preference for having their brand mentioned in the middle of an episode during 2021.

“The bulk of ads (42 percent) are 30 seconds in length. And most are placed in the middle of the podcast or at the beginning when they’re less likely to be skipped,” the report says.

Why should agencies take note?

The growth in podcast advertising should give pause to how agency owners allocate their clients’ marketing budgets and whether streamed audio provides a new avenue to effectively target buyers.

MediaRadar's analysis found podcast advertising is growing on average 19 percent annually in the United States, six percentage points faster than the average digital audio ad expenditure growth rate. Based on that growth trajectory, podcast advertising will become a $1 billion marketing within four years.

Neal Schaffer, Founder of digital marketing consultancy PDCA Social, says “podcasting as a mass medium has arrived” and is providing marketers with an attractive opportunity to generate results in an environment where brands are typically focussed on the highly competitive social media, TV, radio, and print space.

“As a general rule, social media networks are leveling off in market share and saturation. For those of us that want to stick out and be found in a crowded digital space, the amount of podcasts that exist is about 0.1 percent of the total amount of blogs that exist,” he says.

According to Schaffer’s research, there were over 850,000 active podcasts and 48 million total episodes of content across 100 languages in 2021, with genres ranging from digital marketing, sports, fashion, and politics to shows dedicated to the Harry Potter universe and stopping asteroids.

“Not so long ago, podcasts were considered a nerdy form of media. As podcasts become more mainstream, however, they are experiencing explosive growth. This is giving us as marketers an incredible opportunity to help shape a new genre of media while also making money for our companies or clients,” Schaffer says.

Kurt Kaufer, Partner and Chief Marketing Officer at Ad Results Media, wrote on Forbes last year that podcast advertising is “one of the media industry's best open secrets” and a high-performance channel, especially for direct-to-consumer brands.

Citing market data from market research firm Neilsen, Kaufer says 78 percent of consumers aren’t turned off by podcast ads and 62 percent would consider buying a product after hearing promotion on a show.

He says podcast advertising delivers strong performance because of the following factors:

1. Scale - Brands are more confident of reaching target audiences at scale given niche podcasts tend to attract specific audiences or demographics that businesses wish to target.
2. Trust - Podcast audiences generally trust the hosts they listen to. According to Edison Research's Super Listeners 2020 study, 45 percent of podcast listeners have bought products and services mentioned on shows.
3. Recall - The same study indicates nearly 50 percent of listeners pay more attention to podcast ads than ads on other forms of media, and that consumers were more likely to remember brand mentions or messages from a podcast than other mediums.

How to get started in podcast advertising

Kaufer offers tips for agencies considering a foray into podcast advertising for themselves or their business clients:

#1 - Know your audience

Understand the demographics or specific clientele being targeted and identify podcasts that align best with their interests.

“You can partner with a specialty agency or review each individual show yourself to vet and verify for brand fit,” he says.

#2 - Define your objectives

Brand awareness or sales? It’s important to define your or your client’s objectives for podcast advertising campaigns.

“If the campaign objective is to drive brand or product consideration, I recommend working with the hosts to integrate personal stories about why they decided to try the brand and how it fits into their lives specifically,” Kaufer says.

“I've found that these personal anecdotes are exceptional at getting their listeners to consider the product for themselves.”

If the objective is purely focused on conversions, he recommends including a discount code or vanity URL prominently in the creative or placement and ensuring minimal friction during any online purchasing experience.

3# - Test and then optimize.

Kaufer encourages agencies to work with their clients to test different messaging, calls-to-action, ad formats, and placements and then optimize using the best-performing combinations by audience segment.

“Podcast advertising offers the ability to test and optimize a similar set of attributes as digital and social media. Track and measure the impact your ads are having on your clearly defined objectives and refine future efforts based upon data,” he says.

Conclusion

Podcasts are booming, and agencies should consider how they can leverage advertising opportunities in this format to generate results for themselves or their clients.

The value of podcasts is that they make it easy to reach relevant audiences. For example, a comic store with an ecommerce business would likely be a logical match for a podcast devoted to discussing comic books.

Importantly, research suggests podcasts ads can be very influential. Regular listeners of a podcast are more likely to buy or remember the products, brands, and services mentioned by the host of a show they enjoy than other mediums.