What A Podcasting Industry Slowdown Means For Advertisers?
Despite layoffs, budget cuts, and fewer acquisitions by key players in the industry, podcasts continue to represent a viable venue for marketers. Podcasting is starting to experience the crunch that other tech firms that grew quickly during the earlier stages of the epidemic suffered after years of exponential growth and deal making worth millions of dollars.
Large platforms who made significant investments in the area are reportedly limiting their growth, freezing their budgets, and even starting layoffs.
Last month, Spotify revealed intentions to lay off around 6% of its workforce, while chief content and advertising business officer Dawn Ostroff left the organization. These two developments signal to market observers that Spotify’s $1 billion+ bet on podcasts was not paying off adequately.
However, both the amount of time spent listening to podcasts and the revenue from podcast advertising in the United States are increasing. According to the Interactive Advertising Bureau, these figures passed the $1 billion mark in 2021 and are expected to reach $4 billion in 2024.
(IAB). Only a portion of the tale of a channel that hasn’t yet reached its full potential is revealed by the pain felt at businesses that may have overextended into podcasts.
Elli Dimitroulakos, head of ad innovation at podcast platform Acast, said, “Podcasting has reached a stage of development and maturity, but it’s continuously expanding and growing.” Because it outperforms every medium, including influencer, it isn’t going away; instead, it is forging its own route and attempting to stand on its own.
Podcast promotion changes For the past few years, as podcasts have developed, innovations and investments have coexisted. While content investments made more noise, such as Spotify’s $200 million contract with Joe Rogan, advancements in ad tech had a greater impact.
Dynamic ad insertion and programmatic ads have scaled and automated podcast advertising for advertisers that previously targeted certain podcasts for host reads and sponsorship opportunities.
A result of improved podcast technology, according to Dimitroulakos, is that advertisers can now perceive that power. “They use a scale-and-reach play approach to it. Discoverability is aided and the effectiveness of the campaign may be measured down to the impression level.
Nonetheless, of the more than 2 million English-language podcasts that Americans listen to, 44% of American advertising dollars are spent on the top 500 programmes. According to data provided by Acast, those programmes only contribute 12% of total monthly reach.
In actuality, 88% of the addressable podcast audience is being passed up by US podcast advertisers. Dimitroulakos contrasted it with a scene from a TV commercial.
Everyone wants to run a Monday Night Football ad, but there are only so many slots available. This creates intense competition, which raises CPMs and costs and reduces share of voice. There are alternative places where you may effectively and efficiently reach the same audience.
Helping advertisers capitalize on the sizable segment of the podcast audience that is underutilized might be a rising tide that elevates all boats for podcast platforms.
Even while it’s simpler for a large company to spend all of its budget on a single huge show, airing too many commercials during the same popular shows might hurt performance and drive up prices. Platforms will create new inventory to address advertising unhappiness with the channel as they attempt to combine smaller and mid-sized podcasts and audiences.
Many marketers have expressed concern that “this podcast channel has altered somewhat.” However, if you’re only purchasing the most popular podcasts, it’s changed because you’re not receiving as much value for your money as you formerly did, according to David Hanley, chief revenue officer at podcasting service Libsyn.
Modification in the market Future podcasting partnerships that made headlines are probably going to be less common, as are the ones that platforms are apparently taking off the table as they cut spending. According to Dimitroulakos, the sector is trying to devote resources to improving reach, scalability, and assessment.
You can tell that there is a desire for investment, she continued. “You want to be able to offer the size for someone like a P&G who would want a $80 million global advertising expenditure, and wants to be able to look at that holistically,” says the speaker.
Podcasting can aid businesses in increasing reach and cutting through ad clutter. Podcasting has lower ad loads than TV, streaming music, and streaming video, which raises the share of voice, improves performance, and increases return on ad expenditure. Nevertheless, marketers and their agencies also want to be able to purchase podcast advertising through their demand-side platform (DSP) partners in the same way they purchase other digital advertising.
“We’re collaborating with these agencies to determine what you’re looking for. What options does your DSP offer for establishing such relationships and enabling customers make their purchases how they prefer? Hanley from Libsyn explained. Programmatic may be essential for obtaining the scale that major advertisers desire, together with stronger buying tools.
According to an Acast analysis, marketers should anticipate that 11–15% of podcast ad spend will be transacted programmatically by 2027, with the share of podcast spend purchased programmatically anticipated to roughly triple in the following five years.
According to eMarketer, programmatic podcast share increased by 127% in 2020, greatly exceeding connected TV programmatic expenditure, which only increased by 34%. The industry will need to work together to promote programmatic buying in an open ecosystem in order to fully realize the promise of podcasts.
In order for advertisers to know what they are purchasing and the outcomes of that purchase, Dimitroulakos noted that “we must collaborate to offer further transparency in programmatic.”
Advertisers need to reassess how podcast advertising fits into the media mix, in addition to trying to establish industry-wide standards with organizations like the IAB, according to Dimitroulakos.
“You must arrive with a clear head. You can’t approach podcasting with the expectation that you can apply your display, video, and streaming skills in the same way and make the transition smoothly, she suggested. “Podcasting has value as a stand-alone media.”