Last month, Apple made a half-hearted podcast analytics announcement right as the Interactive Advertising Bureau released its first podcast revenue forecast. As a local advertising medium, podcasting shows promise, but it has a very long way to go. BIA/Kelsey’s U.S. local ad revenue forecast debuted last week with some local radio numbers that put audio advertising in perspective. Local marketers — whether multi-location brands or local merchants — should take note.
The IAB, working with PwC and sponsored by a handful of podcasting networks and related services, projects that the top 20 podcast companies will generate $220 million in revenue this year, up impressively from $119 million in 2016. The IAB didn’t try to size the rest of the market, but even if it’s not an 80/20-style power distribution, the entire business is dwarfed by local radio, which BIA/Kelsey says will hit $15.6 billion this year.
Will Apple, the dominant podcast distributor, radically alter the dynamics of the market? That appears unlikely. The newly available analytics are very basic, and aimed at programmers rather than advertisers. True, programmers will be able to see whether ads are skipped, which will help in format testing, but they won’t really be able to target specific audiences.
At the same time, podcast network Panoply and ratings powerhouse Nielsen are working together to build a podcast marketplace that would enable anonymized audience targeting by the types of data Nielsen gathers, including demographics, geography, interests, and purchase behavior. But so far, that’s a fairly vague announcement, and local podcast advertising depends on contextual targeting, that is, placing ads in shows that feature local content.
That’s tricky. The top podcasts overall aren’t particularly local. There’s a lot of NPR and comedy. The New York Time’s The Daily is a short discussion of a couple of big news topics that are generally national or global. The top local podcasts are often government-oriented – that’s how iTunes categorizes “local.” Still, local newspapers and chains are definitely in the game, and their cross-channel capabilities could help with discovery and with marketing campaigns. The Dallas Morning News has a handful of titles, with lots of local sports. The Houston Chronicle has a barbecue show; McClatchy has a few politics, sports, and culture shows scattered across its regional papers.
Plenty of life left in local radio
Meanwhile, Nielsen says radio continues to have the highest reach of any medium in the U.S., and usage in terms of time spent is holding steady. If podcasting is to steal away users’ ears, it’s only aimed at a relatively small portion of radio listening. While news/talk is the top radio format overall, it only has a 10% share the way Nielsen counts, and the bulk of listening is music programming. Radio still owns drivetime, as in-car podcast consumption appears light, at least according to an Edison Research survey.
Street Fight’s upcoming report on enterprise local marketers will show that 29% of multi-location brands use radio regularly to market their local stores, franchises, and distributors. Even Amazon made a huge radio push to promote Prime Day. About 14% of enterprise local marketers list radio as one of their top five most effective tactics. Twice as many put email, social media, digital display ads, and local TV in that list, so it looks like agencies and service providers have some work to do.
Radio is getting some investments in targeting and measurement analytics, too, but new efforts center on digital streaming. Radio syndicator Westwood One announced a program with NextRadio recently, but it depends on using the NextRadio app to listen. Similarly, Pandora is working with FourSquare on online to offline attribution.
So for the next 12-to-24 months at least, it looks like local radio will remain a stable if somewhat stagnant medium for marketing. Podcasting doesn’t pose an immediate threat, and music streaming is a difficult advertising medium — Pandora and SoundCloud are barely alive, and Spotify depends on ad-free subscriptions for most of its revenue.
Local podcasts should be an interesting niche for local marketers to explore. The medium is fresh and growing, and ad inventory is far less cluttered than radio, although a little pricey at $18 to $25 CPM. The IAB says direct marketing still dominates podcasting, though brand awareness gained some ground and branded content is just getting started.
David Card is Street Fight’s director of research.