The State of Podcast Advertising: Q3 2023

Earlier this month, Spotify made a new round of cuts to its podcast division following a broad round of layoffs in January and job cuts in October. The company reduced its workforce by about 2%, representing around 200 jobs. In addition, Spotify will merge its Parcast and Gimlet into a single Spotify Studios division, which will join The Ringer in producing Spotify originals.

As described in The Verge: 

“Spotify knows something is wrong with its podcast strategy — and these past few weeks have proved it. The company’s missteps reveal how fundamentally different the formula of success is in podcasts from film, video games, books, and even music. Franchises, IPs, and name recognition can be enough to deliver a hit across many different mediums. But in the world of podcasts, a series from an acclaimed filmmaker, best-selling author, or even a former president can barely register on the charts. And after years of chasing this hit-making strategy, it all seems to be falling apart.”

How will Spotify’s changes affect the world of podcast advertising?

Podcast advertising is still a powerful platform for advertisers to connect with engaged and loyal audiences. Unlike other forms of media, podcasts often cater to specific niches and offer content tailored to the interests of their listeners. According to the latest available data:

• There are 460+ million podcast listeners worldwide (that’s 22% of all internet users)
• Around 1 in 5 internet users listen to podcasts
• There are an estimated 4 million podcasts
• There are well over 100 million US podcast listeners
• The average American tunes in to 8 podcasts per week
• Spotify and Apple Music have over 60 million combined US-based podcast listeners
• Half of US 12 to 34-year-olds listen to podcasts

Listeners don’t need splashy, celebrity-driven shows to be engaged

Spotify’s most troubled celebrity deal — with Prince Harry and Meghan Markle’s production company, Archewell Audio — came to an anticlimactic end. A lack of output led to the $20 million deal’s demise, and the couple reportedly didn’t receive the full payout. But one of the remarkable aspects of podcast advertising lies in its ability to create an intimate connection with listeners, regardless of the host’s fame. 

Podcast listeners are known for their active engagement and attention. Unlike radio or television, where listeners might switch channels during commercials, podcast listeners tend to be more invested in the content they consume. They actively choose to listen to specific episodes or shows, demonstrating a higher level of interest and engagement. This captive audience is more likely to absorb and respond to the messages conveyed through podcast advertisements.

Unlike traditional advertising channels, where ads can feel intrusive, podcast ads blend seamlessly into the content, creating a natural and engaging conversation between the host and the listener.

Podcast advertising doesn’t always have to directly tie to ROI (but it’s possible)

Not every marketing channel needs to have a direct ROI. Most podcast consumption occurs during activities like commuting, exercising, or relaxing, providing a dedicated and uninterrupted listening experience. Podcast advertising can be more focused on building your brand, while other channels might be more suited for achieving immediate business objectives. 

As with all marketing efforts, the key to successful podcast advertising lies in a balanced and diversified approach. Moreover, podcast advertising platforms often provide advanced targeting capabilities, allowing businesses to reach specific demographics, interests, or geographic regions.

Compared to traditional media channels, podcast advertising often offers a more cost-effective solution. With a lower barrier to entry and a wide range of pricing options, podcast advertising enables smaller brands and startups to access a highly engaged audience without breaking the bank. Additionally, the inherent trust and credibility associated with podcast endorsements often lead to a higher return on investment when that’s the goal, as listeners are more likely to convert into customers.

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