Throughout radio’s history, advertisers have followed listeners to the hottest formats, and now that same pattern is playing out on digital audio. With a record number of Americans tuning into podcasts and streaming audio on mobile and digital platforms, ad spending on digital audio is surging – and creating a fresh revenue source for radio.
As local radio stations are doubling down on their own podcasting and on-demand audio efforts, they’re making digital audio advertising a priority, as well as offering clients digital marketing services. There is big money at stake.
Just how big is the digital audio ad market? Digital audio ad revenue hit $2.3 billion in 2018, up 23% from $1.8 billion in billings the previous year, according to a new report from the Interactive Advertising Bureau and consulting firm PwC. Mobile audio is particularly hot, with mobile ad spending accounting for about $1.8 billion of all digital audio dollars and growing 26% from 2017 levels.
Podcasting is fueling a lot of digital audio’s growth, as advertisers want to capitalize on the format’s growing popularity and increased – and experimental -- marketing opportunities. “Digital audio is now a significant piece of the pie,” Sue Hogan, SVP of Research and Measurement at the IAB, said on a webinar. “Part of that is due to podcasts. It is not the only reason for growth in audio, but it is a significant reason.”
While digital audio is enjoying robust growth, audio remains just a fraction of the total digital advertising pie, which, for the first time ever, reached $107.5 billion in billings last year, the IAB reported.
For radio stations, a key takeaway is that your investment in digital is beginning to pay off and you should be converting on your digital investments. At Federated Media, our stations are investing in podcasting, on-demand audio and high-quality streaming, all of which create additional high-quality digital audio advertising opportunities, as well as our robust websites and mobile apps. With Federated Digital Solutions, our clients can choose from a wide range of digital and web services. And, of course, we will always offer highly effective over-the-air radio advertising.
On the local level, digital is increasingly important to radio broadcasters’ bottom lines. Radio stations earned $900 million from digital ad sales last year and 80% of local media’s 60,000 sales reps now offering clients digital products, according to a recent report from Borrell & Associates.
In keeping with larger audio industry trends, local marketers are also keen on podcasting and digital audio marketing. Borrell forecasts that local businesses will spend $720 million on podcasting and streaming audio this year, up 22% from a year ago. Over the next five years, that’s expected to increase 74% to $1.25 billion.
In a cluttered advertising environment, digital audio is offering both national and local advertisers an opportunity to stand out. With audio in the spotlight, now is the time to grab your share of those ad dollars and offer clients digital solutions to meet their needs – and exceed their expectations.