The podcast industry expected to create $1 billion in annual revenue by 2021

Vjeran Pavic

The podcast industry is growing fast; the industry generated an estimated $479.1 million in revenue in 2018 and is expected to produce more than $1 billion by 2021, according to a new report from the Interactive Advertising Bureau (IAB) and PwC. The latest revenue figure represents an increase of 53 percent in just a year.

The shift to podcast ads backs up what industry titans, like Spotify, have been saying for months. The company plans to spend up to $500 million this year on podcast-related acquisitions. It’s acquired not only content studios — Parcast and Gimlet Media — but also a creation app — Anchor. Another Spotify-owned entity, Soundtrap, also released a new tool specifically designed to help with podcast creation. The Spotify team has already said it plans to build out its podcast ad business, which could end of conquering a decent portion of the revenue.

Multiple startups are trying to get in on all aspects of the podcast industry, too, including the tech, creator, and platform side. Luminary and Himalaya each raised $100 million in venture capital; podcast marketing tech company Chartable raised $1.5 million; a new podcast creators fund, PodFund, raised $2.3 million; and already established companies, like Sony Music Entertainment are entering the space.

Podcasters are slowly transitioning to dynamic ads, which allows them to change ad content over time as opposed to having one ad baked into a show for its entire existence. Dynamically inserted ads now account for 48.8 percent of podcast ads business, the report says.

But with that said, today’s report says that host-read ads remain the most popular form of advertising, and those require specific relationships with the podcasters and their shows. Meanwhile, some big companies are trying to build out their podcast ad business. Spotify’s ad formats, for example, could involve branded content in the form of specially made shows, or inserted ad breaks for non-premium users, as well as host reads from Spotify-exclusive shows. It’s unclear how much interest advertisers will have in these formats versus the traditional host read, but regardless, Spotify will likely have ample space to pitch advertisers to try and generate more revenue.

Comments

I believe the Interactive Advertising Bureau is the IAB.

Please keep your podcast going Ashley! It’s hilarious & I look forward to each episode!

Does anyone else despise 3rd party ads like I do? You get going with your podcast, you’re in to the host, you’re enjoying the clever banter between them and their guests, and…BOOM. Some well-produced clever message from a former host of a TV show that would like you introduce you to an engineer that’s done some really amazing things with cloud storage to disrupt the razor industry. Incongruent. Jarring. Face Palming.

Really, ads are a necessary evil, I get it, Vox and everyone else needs them to be in there. But the ads I’ve enjoyed the most (and that’s likely got me to think favorably of a product) have been the ones that are read by the host, then somehow worked in to the social institutions of the podcast’s cast. IIRC, the Polygon show did this recently with a Zip Recruiter ad where one of the hosts pretend-claimed to be looking for new co-hosts. If there has to be an ad…that was about as good as it gets.

Just hoping that the entire podcast industry can survive this new influx of cash with its integrity intact…

My guess is patreon style funding will remain a prime funding source for most podcasters that touch on anything political or controversial. Getting a devoted 1% of the audience to pay for extras or just to support a podcast is far more stable than advertising could ever be. We see what happens with youtube ads. But the neutral content will probably be better funded now.

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