December 10, 2024

WARC Research: Podcast Ads Deliver Outsized Impact, But Most Advertisers Are Missing It

By Audacy Insights Team

WARC research reveals a staggering audio investment gap, with podcasts representing the biggest untapped opportunity for brands.

These days, Audio is everywhere—whether it’s sports radio, streaming music, or binging a favorite podcast, people are spending more time listening than ever. But here’s the catch—advertising dollars haven’t yet caught up. New research from WARC highlights this major disconnect, leaving a huge opportunity for brands to reach highly engaged audiences and see serious returns.

Audio commands a significant portion of daily attention. In fact, this year Audio will account for 25% of all ad-supported media usage. Yet, it only receives 8.4% of ad budgets. This disparity—the “audio investment gap”—underscores a glaring inefficiency in the advertising landscape. As Paul Ruscoe, Senior Director at Incubeta, puts it:

Audio is the most underutilized medium in terms of the payback it can potentially offer advertisers… A lot of this comes down to bias. People have a preconceived notion of what works and what doesn’t, irrespective of whether it’s true or not.

In the world of podcasting, this gap is even more dramatic. Despite ad spending doubling since 2020, it still needs to increase by a whopping 4.5 times to catch up with current podcast consumption.

Audio’s share of ad spend doesn’t come close to audience consumption.

As it stands today, podcasts are the most underfunded audio channel — surprising given its popularity and proven performance. Why the major shortfalll? Misconceptions about podcasts and Audio advertising in general persist, keeping many brands on the sidelines.

With some of the highest levels of attention and engagement in all of media, there may be no better opportunity for brands to make an impact than with podcasting. Look no further than the 2024 Presidential campaign, dubbed ‘The Podcast Election’, as proof of the rising power of podcasts to drive brand messaging and to influence audiences.

Ray Borelli

SVP, Research & Insights, Audacy

Myths Holding Advertisers Back

WARC’s research points to three common myths that prevent advertisers from fully embracing Audio:

1

The Measurement Myth
Advertisers often view podcasts as difficult to measure, or impossible altogether. This simply isn’t true. Innovations in ad tech and attribution now allow brands to track conversions, brand lift, and ROI with precision.

2

Targeting in the Dark
We’ve grown well-past the days of broad-brush demographics, or relying solely on show-level buys. Advanced targeting capabilities allow brands to zero in on specific audiences with laser precision, reaching them based on interests and behaviors. Today many successful advertisers are choosing a hybrid model of podcast buys—where marketers select specific shows and hosts for deep engagement, and layer on cross-network addressable buys for audience targeting at scale.

3

The Awareness-Only Misconception
Many brands wrongly typecast Audio as an awareness-only medium. But the evidence tells a different story. Audio drives impressive results throughout the entire marketing funnel, from awareness to conversion, outperforming some current channel favorites like TV, social media, and video ads.

Allbirds: A Case Study in Podcast Success

One brand breaking through these myths is Allbirds, the sustainable footwear company. Partnering with Ad Results Media, Allbirds leveraged programmatic podcast and Audio streaming buys to deliver targeted campaigns with real-time optimization. The outcomes speak for themselves:

Media objective:

Leverage new channels and tactics to grow orders profitably, while maintaining brand equity benchmarks.

Media strategy:

Ad Results Media worked with Allbirds to test competitive, high-reach CPM investments via programmatic – the first time the brand had bought Audio this way. The strategy focused on targeting the most successful podcast and streaming audience segments, as well as the highest performing interest groups identified by Allbirds’ paid search and social campaigns.

Results:

Within two months of launch, programmatic was delivering
47% more site visits, 39% lower cost-per-order, and 24% higher ROAS.

This case study demonstrates the untapped potential of podcasts to drive measurable business outcomes—when paired with the right strategy.

What the Experts Are Saying

Industry leaders are increasingly urging advertisers to rethink their approach to Audio:

Kurt Kaufer, CGO, Ad Results Media

“At a macro level, podcasts do an amazing job of driving conversions because of the trust that’s developed between the show host and the listener.”

Jed Meyer, Ex-SVP, Media Solutions Leader, North America

“There’s a lot more listening than people think, but the industry has to talk about it more. Otherwise, these 24-year-old media buyers will say, ‘I never listen to radio, so why would I buy it?”

Mike Follett, CEO of Lumen Research

We know from our attention studies that visual ads are really easy to ignore. However, that’s almost impossible with audio advertising: you can’t close your ears. The content envelops and surrounds listeners and so do the ads. Consumers have a strong emotional relationship with the medium. As a result, they have a deep and intimate relationship with the advertising.

The Opportunity: Closing the Gap

The Audio investment gap isn’t just a missed opportunity; it’s a call to action for brands looking to drive more revenue with their existing ad budgets. By reallocating a greater share to podcasts brands can unlock significant benefits:

Tap Into Highly Engaged Audiences
Podcasts capture undivided attention, offering an unmatched opportunity for advertisers to connect deeply with listeners.

Forge Emotional Connections
Podcast advertising fosters trust and intimacy, especially when delivered by a beloved host. This emotional resonance translates to stronger brand loyalty.

Achieve Measurable ROI
Attribution you need is here. Brands can track the effectiveness of their campaigns with clarity, from brand lift to conversion rates.

It’s time to turn up the volume on audio advertising. By closing the investment gap, brands can unlock significant growth potential and gain a competitive edge in today’s competitive media landscape.