Revenues in the podcast advertising market reached nearly $1 billion in 2020 and are projected to grow 14.7% year on year.[1] Despite a global pandemic, this industry has continued to thrive, and there are now 900,000 podcast titles to choose from.[2] At Differentology, we have carried out close to 200 advertising effectiveness projects in the past year. Many of these include conducting research into advertising that runs alongside podcasts and we started to notice a trend: recall of podcast advertising is often high. I also find that when listening to podcasts myself, I can remember the advertising quite vividly. I was curious to discover why this might be, and why people have taken to the medium so much over the past few years.

A unique medium

In my opinion, podcasts touch upon an intimacy between audience and medium which is unique to its form. There are several reasons for this but a prominent one is the scenarios people are in when listening to podcasts. According to a study carried out by WARC, almost all listeners (94%) consume podcasts while performing other tasks.[1] This study found that rather than distracting individuals from the content, it actually made listeners more receptive. This is likely because it is an active medium where the listener chooses what they are going to listen to, meaning they can indulge in self-curation rather than rely on somebody else (or an algorithm) to do it for them. Linear TV, radio and social media are much more passive mediums whilst podcasts find their way into people’s most intimate moments and, most importantly, their downtime.

79% of British people use their phones to listen to podcasts…mobile phones are also the perfect tool to encourage new behaviours.

Perfect for behaviour change

Reaching people in these moments is made possible by the way podcasts are accessed. 79% of British people use their phones to listen to podcasts.[1] Interestingly, but unsurprisingly, mobile phones are also the perfect tool to encourage new behaviours. They are accessible, personal and always by our side. Behavioural economists use the term nudge to describe a prompt that can cause people to take on a new behaviour. “Digital nudges take advantage of the ubiquity of mobile devices and online communications to speed the adoption of new behaviours.”[2] The accessibility of podcasts, primarily through mobile apps like Spotify and Apple Podcasts, has contributed to their popularity, and subsequently, podcasts have easily become a part of people’s daily routines. 

Higher engagement, better retention

The dynamism of podcasts combined with the way podcast advertising is set up makes it a great space to advertise for many brands. A key one to consider is contextualised advertising, which is becoming ubiquitous within the podcast advertising market. As mentioned earlier, there is a vast range of podcasts and, therefore, a lot of scope for effective contextualised advertising. Radiocentre’s ‘Hear and Now’ study, which focuses on advertising with “situational relevance”, found that when an advert was heard in a relevant context e.g. hearing a Tesco advert whilst cooking, this “elicited significantly higher levels of engagement and left brain memory encoding than when heard in the control environment [non-contextual advertising]”.[1] When people could actively relate to the advert because of the activity they were performing, recall was also much higher than when they were performing a non-relevant activity. This is great news for advertisers because we know already that podcast listeners are participating in a wide range of activities whilst listening. The chances of catching a listener whilst performing a relevant task to the advertising is greater than many other mediums. According to a WARC study, the same can be said even amongst advertising avoiders, who responded to brand mentions in a podcast with higher engagement (on average 16% higher) and higher memory coding (on average 12% higher) than the surrounding content.[2]

“the majority do not mind ads or sponsorship messages because they know it’s a means of supporting the podcast.”

Avoiding ad fatigue

Another common method is “baked in” advertising which are often read out by the podcast’s host. Regular listeners have built up a connection with the host over time and because of this, according to a WARC study carried out in 2020, “the majority do not mind ads or sponsorship messages because they know it’s a means of supporting the podcast.”[1] Ad fatigue is negated through this method of advertising due to the connection between audience and host. A study carried out by Medital also found that over half of 18–34-year-olds trust podcast hosts more than traditional TV or radio presents, with 47% also saying this means they trust the information they hear on podcasts too.[2] This sense of trust between listener and host is important to note as trust is a key driver in brand engagement.

It is clear that podcast advertising offers a lot of opportunities to brands, especially being a medium that continued to grow in the landscape of a global pandemic. With so much range, podcasts suit a wide variety of interests making it a great space for listeners as well as advertisers looking to utilise the industry to increase brand engagement. As we move out of this lockdown, it may be that we see contextualised advertising used even more, as our lives, less shaped by office time and commuting, are filled with more home-based, intimate moments. We now know that these moments are what make podcast listeners most receptive, both to the podcast content and advertising. As trust between listeners and host also strengthens, especially as people indulged in podcasts for a slice of normality in the past year, it will be interesting to see how brands navigate this trust and use it to their advantage. Going forward, we’re excited to see what direction this sturdy industry heads in, and how brands use this dynamic space to engage with the podcast audience.