5 sound predictions about audio advertising in 2023
Steve Dunlop and Paul Kelly of A Million Ads tell us how they see the audio advertising industry growing this year.
2022 was a banner year for the podcasting industry. We saw positive moments in virtually every metric that matters. Audiences continued to grow, maintaining a trend that withstood even the hardest pandemic months. Studios invested in content, either through acquisitions or by inking deals with household names. Technologists built products that are essential for the long-term growth and monetization of podcasting as a business.
These factors – which aren’t an exhaustive list – aren’t merely good for podcast creators but also for advertisers. And so, we expect this momentum to continue into 2023, bringing with it new opportunities for growth and innovation.
Here are five things we’re looking out for:
1. Audio advertising will rival visual advertising in 2023
As the net consumption of audio content rises, advertisers will increasingly appreciate the benefits and measurable impact of audio advertising, including the ability to effectively personalize ads while using less data than other digital media, and high recall rates bolstered by a connection to the audio consumers are listening to. With content ranging from low-calorie material – like podcasts and audiobooks – to high-brow business and educational content, more creative audio content creation is on the horizon to raise audio advertisements’ efficacy. Digital audio and ad spend increased by over 50% last year and 2023 will continue to see this category-leading momentum. Expect audio advertising to be just as or even more effective than visual advertising in 2023.
2. Companies that have heavily invested in podcasting will continue to reap the rewards
Podcasts as an advertising vehicle have yet to reach their full potential. To do so, the marketplace needs to build the capabilities of any modern scaled media channel – automation, measurement, attribution and brand safety. In order to scale and build the programmatically traded podcast market, advertisers need to start producing creative with personalization at the heart. Over the next 12 months, audio advertisers will bring those inventory sources together with a unified measurement and attribution product. Not only will this guarantee podcasting’s long-term sustainability, but its success – giving early investors the healthy returns they are hoping to realize.
Spotify, for example, has spent big on podcasts, inking deals with Joe Rogan, Gimlet, and The Obamas to name a few. Spotify is serving ads on its podcast even to those consumers who maintain a paid subscription to the company. This makes the channel an enticing prospect for advertisers because while listeners may have walled themselves off from other potential avenues for advertising, the fact they have paid membership to a streaming service like Apple Music or Spotify suggests they’re a high-value audience for advertisers.
In 2023, we’ll see more investment in monetizing the podcast business as brands need to start providing measurable ROI.
3. Audio advertising becomes a full-funnel channel
While the industry navigates through the looming recession, we will see a shift and refocus of budgets instead of slashes in 2023. Advertisers will steer away from focusing on only one part of the funnel and turn to mediums like audio that cement into a consumer’s subconscious and ultimately drive awareness and, more importantly, sales.
During a recession, advertising budgets are the first to be slashed. Awareness-building campaigns are sacrificed in favor of performance campaigns that drive sales. This has historically been an issue for audio advertising, as it suffers from the perception that it’s an upper-funnel awareness channel. But during the pandemic, many brands made that reflexive jump to performance and back again already – so brand building may stay front and center for many.
Throughout 2022, podcasting has overturned those long-held beliefs. Most podcast ads are a direct response medium. Think about those that end with ’use this promo code at checkout for 10% off’. And this means brands have something to measure their efficacy. They can track the number of leads a campaign generates.
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4. Podcast advertising will attract bigger brand advertisers
As the audio ad tech ecosystem matures over the next 12 to 24 months, we can expect more prominent brands from different verticals – retail, CPG, automotive and more (those with multi-billion-dollar advertising budgets) – to start investing heavily in podcasts and personalized ads
Since the pandemic, audio consumption has increased by over 80% and podcast advertising has become more sophisticated and personalized. We’ll see big brand advertisers devote greater budget to podcast advertising. Moreover, audio adtech now provides proven automation, cross-channel measurement and attribution, personalized creative content and, perhaps more importantly as platforms like Twitter change, brand safety.
Bigger budgets will allow podcast advertising to run more sophisticated and targeted ads like host-read or endorsement ads through programmatic, boosting brand affinity while optimizing for efficiency. For the 300+ million podcast listeners worldwide, hearing an ad read out by your favorite host creates a strong connection with the consumer – research also shows that podcast consumers are 54% more likely to consider the brands they hear advertised on their favorite shows. There will also be a trickle-down effect as podcast audio campaigns become available to smaller companies for the first time.
5. 2023 is the year advertisers need to embrace ad automation
We’ll see a rise in audio ad automation because it can take several different forms. We’re already seeing platforms like Audacy and iHeartRadio provide real-time analytics, actionable insights and even brand safety analysis with their automation platforms like Audacy’s Digital Audience Network and iHeart’s partnership with Sounder.
For A Million Ads, we focus heavily on creating relevant messages based on audience and contextual data – respecting privacy while getting results. From affinity data to time – or location-sensitive information like promotions or location, we can determine how best to personalize ads and deliver them automatically, leading to improved ROI. Of course, there are challenges, including assisting advertisers to understand the potential without the same breadth and depth of data available in other advertising formats. We’ve created over 800,000 ad variations automatically for one campaign for Benadryl, personalizing by real-time pollen data, location and even what the consumer was listening to at the time. We’ve proven that creative ad automation can work – 2023 is the time for more advertisers to embrace it.
2023 won’t be without its challenges. Across the world, macroeconomic conditions continue to worsen. But this adversity presents opportunities for both the podcasting and audio advertising industries.
With advertisers tightening their belts, their focus will shift to delivering the most efficient campaigns. They’ll look for the mediums that deliver the best results. This is audio’s time to shine.
As already mentioned, audio advertising is an incredibly effective tool, offering higher levels of recall than competing mediums. And now, the technology to deliver programmatic, contextual, and brand-safe campaigns is within reach.
This will set the audio world up for further success as we move into 2024 and beyond.
Steve Dunlop and Paul Kelly are, respectively, the CEO and chief revenue officer of A Million Ads.