Advertisers who buy digital audio channels are more likely to invest in online streaming (59%) and podcasts (59%), while publishers are selling more ads against podcast content (68%), according to the latest IAB Europe and GroupM Nexus research. 

Earlier this year, IAB Europe’s AdEx benchmark study revealed that audio gained the largest growth across all formats in 2022, with a 22.1% increase to €0.7bn. The latest survey revealed that just under half (47%) of buyers state that audio advertising is “either their top or amongst their top media options.”

Although the percentage of buyers who invest more than 50% of their ad budget in digital audio has doubled since 2019 (from 4% to 8%), the majority of buyers invest less than a quarter (1-25%) of their budget in this channel.

Despite limited knowledge of digital audio campaigns from the buyer side – in contrast, one-third of the publishers claim they “have a lot of knowledge of selling” – advertisers invest in audio mainly to complement the media mix (65%) and raise brand awareness (55%). It’s also noted that audio is important to “reach a young audience” and offers a “cost efficiency compared to TV”.

Spotify – which has managed to maintain consecutive ad revenue growth in a softened ad market – recently released its Q2 earnings, one day after it confirmed price hikes. It reported an 11% growth in subscription revenue and a 12% increase in ad revenue. The firm says podcast ad revenue growth “reaccelerated” to more than 30% year-on-year.

Its music ad revenue grew in mid-single digits, partially resulting from “softer pricing due to the macroeconomic environment.” To further attract buyers, the company announced the launch of Spotify Ad Analytics for ad measurement.

However, the reported net loss despite subscriber surge further reflected the profit and cost dilemma many digital publishers are facing: Spotify recently eliminated 200 jobs within its podcast division, after reportedly spending $1bn on podcasts over the past four years acquiring companies and signing on celebrities.

Credit: WARC