July 14, 2020

Podcast Revenue Expected to Be Up Despite Loss of Commuting Caused by COVID-19

When COVID-19 first hit, one of the big concerns was that podcast downloads were going to drop. The commute was over. When were people going to listen to podcasts versus watching more Netflix?

And for a short while, we did see a quick pullback in download numbers. However, listeners adapted and they continued seeking out their favorite shows.

Now it appears that podcast revenue not only didn’t drop, but is actually expected to rise, despite the impact of COVID-19 on the advertising market.

According to a report put out by the IAB prepared by PwC:

With an estimated growth rate of 14.7%, US podcast advertising revenues are nearing the $1b mark

Podcast advertising considered more resistant than other media against COVID-19 for multiple reasons; the channel’s agile and flexible format enables a quick shifting of ad messaging; the News genre, which was already favored by podcast advertisers, is seeking greater adoption by consumers in 2020; the already strong podcast ad industry categories, DTC and Financial, are maintaining overall market strength despite COVID-19.

The report articulates that it expects that, despite revenue dropping in Q1 and Q2, it does anticipate a rebound in the second half of the year. The 14.7% is a pullback from the original 29.6% that had originally been anticipated.

There’s good news in this, but also somewhat confounding news. It’s good to see that podcasts are continuing to see growth in revenue. With so many publishers rushing to the podcast space, hopefully that means that there is money available in a format that marketers like.

What confounds me, though, is the fact that the report finds the News category to be the one advertisers like the most. This seems antithetical to all we’ve heard about advertisers adding specific topics to their keyword blocklists. For example, The Wall Street Journal just reported that articles that mentioned “Breonna Taylor” and “George Floyd” were not seeing as much ad demand.

“It’s defunding our journalism at a time when it’s imperative for us to be the front lines doing this kind of work,” said Paul Wallace, Vice Media’s vice president for global revenue products and services. Black Lives Matter coverage was Vice’s most popular news in June, yet commanded ad prices 57% lower than news about other topics because so many brands are actively avoiding placing ads in those articles, he said.

A Target spokesman said the retailer’s ad blocking “does not discount the importance of reporting on topics like Black Lives Matter or the murder of George Floyd. It’s intended to acknowledge that the person consuming that content may not be receptive to a marketing message from a mass retailer like Target at that time.” The spokesman added, “Target stands with our Black team members, guests and families.”

If advertisers are going to block heavy news topics, I find it a little paradoxical that advertisers would then want to spend money on podcasts that cover the news. It could simply be that news is a broad category and there are plenty of other types of news not including stories about police brutality.

Either way, there were a few other interesting tidbits in the report, comparing FY 2019 to FY 2018 that are worth calling out.

The structure of deals are starting to change for podcasts. In 2018, most agreements were sold on a quarterly basis. However, in 2019, 47% of all podcast revenue was sold on an annual basis.


Part of the reason advertisers are interested in going for annual deals is likely because of the ease of changing messages. One week a brand can be promoting one product and then in the next week, it can quickly change messaging without having to do an entire commercial, like for TV.

What interests me about the annual deals is how the different publishers sell the ads. If it’s on a true CPM basis, as your show grows, you have either more unfilled inventory or your advertiser gets more value ad. If it’s on a time-based and you grow more quickly than planned, your advertiser gets more value, capping your upside. Finding the balance between growth and guaranteed revenue can sometimes prove tricky. But as the saying goes, one in the hand is equal to two in the bush.

Something else that I found interesting in the report was that host-read ads increased to 66% of all ad revenue from 63% in 2018. Again, I don’t understand how a News category podcast could then have host-read advertisements—if I asked our journalists to read ads, I’d be breaking a cardinal rule of any media business. This could just be another example of the news category being broad and not everything being hard journalism.

To go along with the news that podcast revenue continues to gain steam, The Wall Street Journal reported on Monday that Sirius XM had agreed to buy Stitcher from E.W. Scripps for $265 million—with an additional “$60 million if Stitcher achieves certain financial metrics in 2020 and 2021.”

Stitcher runs a free podcast listening app and a premium $4.99 monthly service that lets subscribers listen to podcasts without ads. It owns podcast networks such as Earwolf, Stitcher Originals and Witness Docs, and its shows include “Freakonomics Radio,” “SuperSoul Sunday from The Oprah Winfrey Network” and “Conan O’Brien Needs a Friend.” With outside networks and shows, Stitcher distributes and sells advertising for more than 250 podcasts through its Midroll media advertising unit.

There is a consolidation taking place among some of the major platforms out there to try and assert control over the podcast ecosystem. With Spotify going on an acquisition spree, it only made sense for Sirius—which also owns ad-supported Pandora—to make a play for the space as well.

Here’s what I am curious about…

Spotify is clearly moving toward a “closed” ecosystem around podcasting where it wants people to consume on its platform. This runs counter to how podcasting has always been; specifically, open and multi-platform. Part of Stitcher’s business is Midroll, which sells ads for over 250 podcasts. Could Stitcher, with Sirius’ backing, give a big push to podcasts staying open?

Or, does this simply lead to additional attempts at creating walled gardens around audio where people either have to be selective or need to have multiple podcasting applications.

Suffice it to say, the podcast market is hot right now and revenue is growing. The question is whether we should all be rushing to launch shows. It’s obviously situational, but high level, publishers need to be cautious. Back in December, I wrote:

While it’s true that ad revenue is growing—and it certainly is—it’s not growing fast enough to support all of the podcasts that are coming out.

If we hit $1 billion in total podcast revenue in 2021 and $261 million of that is dedicated to news podcasts, then how much would each podcast earn? If it were an even distribution, let’s say there are 50,000 news podcasts. The answer is approximately $5,000 per podcast.

Naturally, we know that’s not how it works. The Daily will obviously get tens of millions of dollars. So, just removing that one podcast and its revenue cuts the mean down under $5,000 per podcast.

Even if we were to 10x the news podcast revenue and we’re sitting at $2.61 billion, the amount per podcast is only $50,000. That’s not even enough to hire one good journalist let alone the sound technician to go along with it.

This was in connection to a report that 18.4% of podcast revenue went to news shows in 2018. In 2019, that had increased to 22%, according to the IAB report. With so many shows, the big players will gobble much of the ad budget and the rest of us will be left with small amounts of revenue.

High level, this is very good news for the industry. Seeing growth when most people are quarantining is a sign that in this attention economy we’re dealing with, people are still seeking out podcasts even when there are plenty of other options for content consumption. While that doesn’t mean I believe everyone should be rushing off to launch a show, it could demonstrate the staying power of podcasts. And ultimately, if there’s an opportunity in your specific niche, though, there’s no reason not to take advantage of it. I am.