The economic downturn brought about by the coronavirus pandemic is expected to hit the podcast industry, according to a new report.
Podcast ad revenue will increase this year, but the gains will be smaller than previously predicted, the fourth annual IAB Podcast Ad Revenue Report reveals. In 2020, U.S. podcast advertising revenues will near $1 billion, up 15 percent compared with 2019. Previously, revenues were expected to grow nearly 30 percent.
The report, which was prepared by PwC, cites canceled or paused campaigns as the likely reason for the dip in revenues. But it notes that revenues are expected to rebound during the second half of the year.
The podcast industry was able to mitigate the drop-off in advertising by offering flexibility for advertisers looking to make last-minute changes to their messaging. “In the early days of COVID-19, the media formats that remained resilient were those that provided agility to marketers to change messaging,” Sue Hogan, senior vp research and analytics for the IAB, said in a statement. Because 66 percent of podcast advertising is host-read, she noted that podcasts were able to provide “a very valuable, fast way for brands to stay in-market with the right message at the right time.”
It’s a stumbling block for an industry that has been on the rise in recent years, fueled by increased interest from big tech players like Spotify as well as Hollywood, always hungry for new sources of IP.
In 2019, podcast revenue topped $708 million, a 48 percent increase year-over-year. The revenue gains came hand-in-hand with an active M&A market as Spotify acquired studios Gimlet and Parcast and tech firm Anchor. This year, the consolidation has continued with Spotify’s purchase of The Ringer and SiriusXM’s deal to buy Stitcher for $265 million plus performance incentives.
The report also found that 47 percent of marketers make podcasts part of their annual buy. Direct-to-consumer brands still make up the largest share of podcast advertisers, followed by financial services firms. The podcast genres that attract the most advertising are news, comedy and society and culture.
The podcast industry is still significantly smaller than many other forms of entertainment. Global box office revenue was more than $42 billion in 2019. And the radio business brings in more than $1 billion in revenue just on digital advertising alone, according to the Radio Advertising Bureau.