The global economy offers many mixed signals, but the direction podcasting is heading is clear for ARM. Its latest Global Advertising Market Update indicates that worldwide podcast advertising is on track to grow 19.3% this year to $2.6 billion. And its early outlook for 2023 includes more growth. WARC estimates that podcast ad revenue will grow 8.1% next year, to $2.8 billion.
James McDonald, director of data, intelligence and forecasting at WARC, says podcast advertising is growing alongside acceptance of the format. “It has been found that listeners not only understand but embrace the value exchange of podcast advertising when it supports content, and this can be a powerful pull for brands as audiences often have deep engagement and an affinity with shows,” he told Digiday.
Overall, WARC says global ad spending is expected to rise 8.3% to $880.9 billion this year, boosted by a positive first half for ad agency holding companies and a jolt in US midterm elections and the FIFA Men’s World Cup in Qatar this year. November. But after that, WARC’s latest forecast calls for growth to slow to 2.6% in 2023 as ad spend is inhibited by slowing economic conditions and the blocking of third-party cookies online.
The new projections, based on data from 100 ad markets around the world, reflect a slowing economy worldwide. This equates to a 4.3% downward revision to the 2022 growth rate and 5.7% to the 2023 outlook, compared to the previous global forecast released by WARC last December. Together, the new forecast translates to a reduction of almost $90 billion in the growth potential of the global advertising market this year and next.
Total audio revenue is expected to grow 7.2% this year, with online sales seeing the strongest year-over-year growth (+25.6%). Not only podcasters benefit from this, but audio streaming in general as well. WARC estimates streaming ad revenue will grow 27.7% this year.
Customer interest in podcast ads led media buying boutique Ocean Media to launch a dedicated podcasting team. CEO Jay Langan told Digiday that after testing a few shows for car sales website Vroom, the brand achieved 10% more efficiency in its upper funnel metrics and 43% efficiency in more in the lower funnel.
“We’re pretty optimistic about the continued growth of podcasts,” Langan told Digiday. “Over the past two years, a lot of spectators have come through the roof.”
Broadcasting is more muted this year, with global radio ad revenue expected to rise 3.2%. Audio is expected to be flat in 2023 with radio down 2.4% and online up 10.1%.
WARC says that very few product areas are reducing their advertising investments. Of the 18 categories monitored, all are on track to increase ad spend this year, with the exception of automotive. Only four categories are expected to cut spending in 2023: transport and tourism (-0.4%), alcoholic beverages (-1.1%), financial services (-4.5%) and automotive (-12.4%).
The technology and electronics sector – the third largest of the 18 tracked by WARC – is expected to lead growth this year and next (+25% in 2022 and +11.5% in 2023). It is followed by the pharmaceutical and healthcare sector, which is expected to grow by 11.0% this year and another 7.5% in 2023.
Retail is the largest category monitored by WARC and is expected to increase ad spend by 6.8% this year and 3.6% next year, despite retailers seeing their margins squeeze due to from the wrath of inflation.
“With the growth rate of global output now halving and strong supply-side pressures stoking inflation, the economic downturn has taken nearly $90 billion off the outlook for global oil market growth. advertising this year and next,” said James McDonald, Chief Data Officer, Intelligence & Forecasting at WARC. “Yet brands continue to spend as the COVID recovery continues, and the global advertising business remains on track to reach $1 trillion in value by 2025. Platforms with rich First-party data sources – including Amazon, Google and Apple – are well positioned to weather future headwinds by delivering measured performance in a climate where ROI becomes paramount.