First published here.
The industry needs to work together to convert the promises of online audio advertising into reality, writes IAB Europe's Marie-Clare Puffett
The audio advertising market is enjoying a renaissance. The traditional FM/AM, analogue and DAB advertising market alone is now worth €6 billion in Europe, and these formats are being supplemented by a new range of digital audio options – from IP radio to music streaming services to podcasts.
The growth of these new audio services is exponential: there are now around 700,000 podcasts, comprising 29 million episodes, up 27 percent from last year. This explosion in content shows little sign of slowing; and new channels, such as connected cars and radio apps in smart speakers, will help increase the opportunities for advertisers to reach listeners.
As a result of new audio services, and the increase in opportunities for such services to be consumed, IAB Europe has forecast that the European digital audio advertising market will grow to around €1.5 billion by 2023 – up from €471 million today.
The foundations for a renaissance
However, audio advertising is still a nascent market. The monetisation of the audio market has not kept pace with the growth in consumption of audio services, while challenges around measurement and attribution have limited its appeal to advertisers. The industry needs to work together to convert the promises of audio advertising into reality.
The foundations are already in place - several core characteristics make digital audio highly attractive for advertisers:
Digital audio currently only accounts for around 3 percent of the total display market excluding social, and the programmatic audio market is still too small to measure with any degree of accuracy. But it is early days and the foundations are strong.
Overcoming the barriers to programmatic audio
For the audio market to fully realise its potential, scale is key. And for that, there will need to be rapid growth in programmatic audio. However, until the barriers to unlocking programmatic audio are overcome, the audio advertising renaissance will be stuck in first gear. Some of the barriers are:
The market heats up
While significant barriers remain to the realisation of the programmatic audio market, and therefore scaling the audio market as a whole, there are some indications that key industry players are beginning to make moves on this front. Recent M&A activity speaks to a heated market and suggests that the audio advertising market will reach maturity rapidly.
To give just one example: Spotify, a streaming platform, has recently purchased a podcast network (Gimlet), creator tools for podcasters to build and monetise content (Anchor) and a production agency (Parcast).
The renaissance requires work
The boom in audio content, along with the emergence of new technologies that will give people more time to engage with audio content, is a huge opportunity for advertisers. However, the promised renaissance of the audio advertising market will only occur if the industry works together to define new measurement standards, puts in place the requisite pipes and data analytics tools, and finds a way of uniting fragmented inventory while integrating audio with other programmatic channels.
There’s much work to be done, but from the example of video streaming the industry has a good template for how to achieve these goals. The market is already heating up and when end-to-end audio streaming giants start to breakdown the barriers currently holding the market back, the sky's the limit.