A young and loyal audience makes podcasts attractive to advertisers. Therefore, the market is growing every year. Spotify's music and podcast listening service has bought a podcast from American comedian Joe Rogan for $100 million, according to The Wall Street Journal. In 2019, Techcrunch wrote that Spotify had bought the American podcast studio Gimlet for $200 million. The Guardian says that the cost of advertising contracts for podcasts exceeds hundreds of thousands of dollars. Why are companies and advertisers willing to pay big bucks for production, and how can they make money?
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A study by The Infinite Dial 2020 from Edison Research shows that 169 million Americans regularly listen to podcasts. The audience of audio shows grows by an average of 16% every year. At the same time, the global media market is growing by only 8% per year (Global Media Market Report, 2021). This rise in podcasts is characterized by many factors: increasing Internet coverage in the world, demand for audio content, and a variety of ways to obtain information.
Podcasts have become a great alternative to the perception of information. Now you can not be distracted by the video and do not delve into reading. On average, active listeners spend about 54 minutes a day listening to podcasts. At the same time, for reading newspapers or online media, more than two hours a day, according to the Digital 2021 Report from We Are Social and Hootsuite.
Selling advertising is the main source of income for any media, and podcasts are not an exception. Big brands and marketing agencies around the world have audio content production included in their media strategies. An IAB study estimates that companies and agencies will have spent about $800 million on podcast advertising worldwide in 2020. By 2024, that figure will double to $1.7 billion.
In 2020, Westwood One and Advertiser Perceptions conducted a survey in which they asked marketers from various companies a few questions about podcasts. To the question "Are you going to buy advertising in podcasts over the next six months?" 37% of marketers answered "Yes." In 2015, only 10% replied positively.
There are two main reasons why podcasts can take a significant share of the advertising market:
The audio content production sphere is quite dynamic and filled with an enormous number of topics, previously unexplored. Hence, why this niche has so many opportunities for newcomers, but only if they are presenting high-quality materials.
The development of podcasts in the near future tends to increase the number of shows and the audience. The performances will be progressive materials with the listeners that can compete in numbers with other media. However, publications will use podcasts as side projects to expand their audiences and draw attention to information about their core resources. Some platforms, such as Spotify, Apple Podcasts, Google Podcasts, and Castbox, will continue to accumulate exclusive content on their sites. The web services will also implement separately paid services for listening to podcasts, as Apple has already done. Big businesses will develop their own shows because they are easy to produce, and it is easy to occupy your niche.
However, the death of podcasts may come as suddenly as their birth. Tom Webster, Senior Vice President at Edison Research, writes about a possible "existential podcast crisis" that will cause the industry to stagnate. Because of the ease of production, the number of audio materials will no longer match the number of listeners. Thus, the supply will exceed the demand, and some podcasts will not wait for their listeners.