Podcast Advertising: A $400M Business by 2011?

Podcast advertising will skyrocket over the next five years, climbing 400 percent to US$400 million by 2011, according to a report released this week by eMarketer, an aggregator of e-business research.

Podcasting's allure to advertisers can be attributed to the growing number of podcasts -- 90,000 and climbing -- and the medium's ability to target an audience, said eMarketer Senior Analyst James Belcher, author of the report.

Despite predicting phenomenal advertising growth for podcasting, Belcher acknowledged that the medium by itself won't be battling toe-to-toe with traditional media outlets for ad revenues.

"Is it going to take away advertising dollars from traditional media like radio? The answer is, not really," he told MacNewsWorld. "It's going to continue to be a niche advertising medium."

Salivating Advertisers

Podcasting appeals to two target markets that make advertisers salivate, according to Leo Kivijarv, research director for PQ Media.

"It reaches two audiences better than many other media: young, 18- to 34-year-olds, and the influentials," he told MacNewsWorld. "Both are very engaged in the advertising and content in podcasts."

Podcasting -- like all alternative media -- is also benefiting from a general trend in the advertising market: A shift by brand marketers away from traditional advertising and marketing media and toward the Internet, Kivijarv asserted.

Robust Growth

PQ Media predicts robust advertising growth for all user-generated online media, including blogs, podcasts and RSS feeds. Advertising for the media will grow at a compound rate of 106.1 percent from 2005 to 2010 and reach revenues of $757 million by 2010, according to a report released by the company last April.

Right now, Kivijarv noted, the advertising charge in podcasting is being led by three sectors: technology, auto and media.

Technology advertisers are bird-dogging their audience, he explained. "When the geeks went online and away from traditional media, the advertisers followed them," he said.

"The auto industry has some of the most money to spend on marketing, so it's willing to experiment with this medium," Kivijarv continued, "especially with podcasts, because things can be shown visually on them."

As for the media industry, he added, it has been a case of chasing ad dollars that have been siphoned from it to the new media outlets. "They're following their users, who are moving to online formats, too," he said.

Better Image Than Blogs

Currently, blogging is capturing the lion's share of online advertising among in the user-generated content sector, according to PQ Media -- but that will change over time.

"Podcasts have an audio and video aspect to them that brand marketers like," Kivijarv explained.

What's more, podcasts have a better image than blogs in the minds of marketers, he maintained.

"Podcasts don't have the same reputation as blogs that an ad might be placed next to questionable material," Kivijarv asserted, "something negative about the brand, for example, or X-rated or violent material."

Crossing the Chasm

In its report, eMarketer also predicted strong audience growth for podcasting until the end of the decade, with active U.S. podcast users climbing 500 percent, from three million in 2006 to 18 million in 2011, and the total podcast audience jumping 450 percent during the five-year time frame, from 10 million to 55 million.

"You're not seeing particular properties crossing the chasm into big audiences, but the medium as a whole is," Gregory Galant, CEO of RadioTail, a podcast advertising network, told MacNewsWorld.

"Podcasting has had a steady growth over the last year," he observed. "It's never had a moment like YouTube video did where it went from nothing to shooting up in three months. What we've seen from most of the publishers that we've worked with is, if they're doing a good job increasing their content, they'll find that they'll get 20, 30 percent month-over-month growth."