Everything you need to know about programmatic podcast advertising

Podcast ad spend is predicted to grow from $1.75B in 2022 to $2.66B in 2024 - an increase of 52%.  While programmatic podcast advertising represents a small fraction of the overall spend against podcast advertising, programmatic podcast buying is expected to grow from $117M in 2022 to $238M in 2024 - an increase of over 100%.  As the overall podcast advertising pie grows, the portion of that inventory purchased programmatically will continue to grow at an astounding rate.1

As trailblazers in the audio industry, Ad Results Media is really excited about this momentum and believes we are at a real tipping point for programmatic audio. Programmatic audio advertising is the automated selling and insertion of ads in audio content such as podcasts, audio articles, digital radio, and streaming music services. As a result, advertisers get better targeting, measurement, and retargeting to execute campaigns with great efficiency

How programmatic advertising works

According to eMarketers’ Programmatic Advertiser Explainer report, “programmatic advertising includes any ad that is transacted or fulfilled via automation. If technology takes on any decision-making in the ad serving process, it’s programmatic advertising”. In 2022, programmatic encompasses over 90% of US digital display ad spending and 87% of all digital video ad spending.

In a perfect world, programmatic media benefits both buyers and sellers by enabling them to reduce the number of people required to buy or sell media.

But for advertisers specifically, they can be more efficient with their media investments by shifting spend from less valuable audience segments and reallocating them toward more efficient segments and placements.

Publishers can increase ad revenues by accessing real-time demand from advertisers - this is particularly advantageous during periods of high demand and competitive bidding. Programmatic also allows publishers to monetize any remnant inventory.

Programmatic podcast advertising

Programmatic podcasts buys are seeing some momentum behind them, but most podcast ads are still sold through direct buys. eMarketer forecasts that by the end of 2023, 10% of podcast ad spending will be programmatic1.

In 2022, podcasts will account for 10.6% of programmatic digital audio ad spending. A few reasons that programmatic podcast advertising has been slower to grow than other programmatic channels are: ad tech stacks are still maturing. podcasters fear that programmatic could reduce their ad prices and many advertisers prefer baked-in host-read, which they don’t realize can be bought programmatically1.

How podcast media buying has evolved

According to eMarketers US Podcast Advertising Report 2022, ad spending on podcasts continues to grow at double-digit rates annually and will exceed $2 billion in 2023 and $3 billion by 2026. Podcasts will account for more than one-fourth of digital audio ad revenues this year. 

In 2021, the number of brands buying podcast ads increased 14%, per MediaRadar. Tech, media, and finance brands spent the most on podcast ads in 2021, with finance increasing their YoY ad spend the most at 43%1.

How programmatic podcast advertising works

The digital audio market has been experiencing incredible growth, especially within podcast advertising that recently surpassed $1B in 2021 for the first time ever.  This growth represents a 74% YOY increase in revenue; which is more than twice the 35% YOY increase the entire internet media category experienced2.  As a result, we are seeing our industry innovate and advance the audio buying experience. 

As trailblazers in the audio industry, Ad Results Media is really excited about this momentum and believes we are at a real tipping point for programmatic audio. Programmatic audio advertising is the automated selling and insertion of ads in audio content such as podcasts, audio articles, digital radio, and streaming music services. As a result, advertisers get better targeting, measurement, and retargeting to execute campaigns with great efficiency. 

According to Ad Results Media’s Partner & Co-CEO, Mike Kropko, “The rapidly increasing adoption of programmatic podcast buying is one of the greatest tailwinds our industry has seen to date.  This will open up podcast inventory to all the well-established benefits of audience-based buying - including better targeting and retargeting, measurement, and overall performance efficiency”.

Some of the players in the space we see as emerging leaders, due to being audio-native and having the greatest scale are:

DSPs:  

SSPs:  

Benefits

  • Audience-first buying precision and efficiency
  • Pixel-capable for counting, optimizing, and modeling
  • Creative testing to learn in real-time
  • Control the reach/frequency of your ads
  • More efficient  CPMs vs direct buys
  • Transcription-based brand safety options to ensure your brand bid call controls the context in which your ads appear
  • Find your exact audience when they are listening
  • Turn-key with the right agency with the right infrastructure

Challenges

  • Buys are most scalable with produced ads, however, in some cases, you lose the ability to have a turn-key host endorsement campaign 
  • Exclusivity is attainable only with direct campaigns
  • Podcast hosts are still warming up to the idea of automated buying so inventory is smaller than streaming 

The future of programmatic advertising and podcasts

At Ad Results Media we don’t believe this either direct buys or programmatic podcast buying is inherently better than one or the other.  Some of the most effective campaigns we have run for our clients utilize both buying approaches. However, programmatic podcast ads help brands win with contextual relevance and efficiency; a balance that is often hard to achieve with other mediums. 

According to Ad Results Media’s VP of Media, Gretchen Smith, “Securing actual contextual relevance through digital programmatic ads can be challenging.  While some of the challenges can be addressed using DCO, I believe that it still falls short of the contextual alignment we can achieve through programmatic podcast ads. The organic nature of the conversations that occur on podcasts are the perfect environments to authentically insert topical ads or products”.

__

Sources:

1eMarketer, May 2022

22021 IAB U.S. Podcast Advertising Revenue Study