Radio still reigns supreme over streaming services. In the US, 68% of the population frequently listen to digital audio, while radio reaches over 83% of Americans. However, technological progress is continuing to move forward, and with it, listening preferences are changing. Instead of higher-reaching general radio stations, younger generations are choosing streaming services, which have their own music playlists or podcast collections.
That is where audio advertising comes in. Simply put, it is programmatic ad insertion in various types of digital audio content, including streaming services and digital broadcasts. What differentiates it the most from traditional radio ads is personalization. For users, this means that programmatic algorithms will suggest the most likable songs and podcasts, automatically adapting to the listener.
For advertisers, the digital format allows for data collection and analysis, making it possible to suggest ads that would most interest the audience. It is an especially noticeable difference when compared to analog ads, which provide higher reach but almost no targeting.
As with all other digital content, digital audio has seen a surge in recent years especially during the recent global health crisis. Podcasts, for example, enjoyed a 42% growth in global usage during the pandemic, while music streaming service usage rose by 26.4%. As a consequence, audio advertising is growing in popularity as well, with global ad spend increasing by 5.07% by 2027, according to Research And Markets.
Let’s find out more about this rapidly expanding niche: what are the main ad types and benefits, and how can you capitalize on the digital audio marketplace?
Popular Digital Platforms: The Vast Aural Array
When it comes to choosing an audio streaming platform, users often make their choices depending on a number of factors including the subscription cost, the available library, and the overall quality. The one aspect that usually interests marketers the most is the subscription service; many users subscribe to avoid ads as much as possible. For some though, the prospect of being able to use the service without paying at all is even more attractive.
As a consequence, the most popular audio streaming platform is Spotify, with the highest market share of 31%. With over 400 million users and a 15% early growth rate, it has the most users of any audio service. One of the reasons it is so popular is that it is possible to listen for free, with a premium subscription being optional.
For marketers, this presents a huge opportunity because the free model comes with a major caveat: ad insertion. Currently, there are 422 million users, with only 182 million subscribers. This means that a larger portion of customers regularly listen to ads, making Spotify a perfect platform for streaming audio advertisements.
About 30% of Spotify users consume podcasts at least once a month. The streaming app uses a dynamic ad system for these podcasts, meaning that advertisements are not limited only to free users but also reach paid subscribers. With the right campaign, you can reach a large number of customers on a single platform.
It doesn’t stop with Spotify. When talking about the US demographic, Pandora deserves a mention as well. Though it has fewer users overall, Pandora’s USA-centered streaming service reaches 52 million subscribers. It also presents a diverse selection of ad services, including sequential, platform-specific, and dynamic programmatic audio advertising that can satisfy even the most demanding marketer. The list continues with other services: Amazon Prime Music, Tencent Music, YouTube Music Premium, and Google Play Music, among others. Yet, the majority of these smaller services may have certain obstacles for audio advertisers.
Prime Music is best used in combination with other Amazon advertising tools, while Tencent is almost exclusively China-focused. YouTube Premium and Google Play do not boast a large enough subscriber count to have a good reach in comparison with the aforementioned giants. Still, wise sellers can use these services to their advantage with the right approach.
Types of Audio Advertising
Depending on the platform the marketer has chosen, they will have several advertising choices. Some, like the aforementioned Pandora, have more intricate settings and opportunities, but in most cases, it boils down to three main types.
– Audio Ads: The simplest method is to place ads before, during, or after the piece of content. These ads rarely require visual content and usually last 15–30 seconds, with 60-second outliers. This is the most popular approach, with around a 90% completion rate. While it is the most common audio advertising strategy, it also has shortcomings. In the case of Spotify, for example, marketers may lose out on paid subscribers. This format also lacks any visual content, which might result in a lower conversion rate. Still, 81% of media agencies use this format to their advantage, with 69% of them making it their main activity.
– Ad-sequencing: This method is more commonly used in podcasts and other longer formats to introduce your product to listeners. The use of sequencing allows the narrative to be broken down into smaller chunks, gradually unfolding and ending the marketers’ ad with a powerful call to action. Because it requires the customer to listen to several ads in one sitting, it is almost exclusively used in podcasts. There, listeners tend to be more engaged in the content and interested in finishing the story.
– Skippable Ads: Relying on intriguing the listener within the first few seconds, this advertising approach looks similar to audio ads. The main difference is the ability to skip the ad, providing the user with a greater sense of control and comfort during their streaming experience. This type of streaming audio advertising is the most valuable when it comes to analyzing the behavior and interests of the audience. This option exists both for pre- and mid-roll ads, but not for post-roll. The obvious disadvantage of this approach is its lower completion rate and engagement.
Apart from these types, there are also more individual approaches: marketers can strike a deal with a podcast to insert a native advertisement or make an entire branded audio program that will constantly reinforce their ad campaign.
Advantages of Audio Advertising
Even when compared to digital video ads, audio advertising has many distinctive and desirable qualities that other media do not.
One of the main benefits of audio advertising is targeting. Streaming services always collect customer data, which, if used correctly, can become very useful for marketers. With its help, listeners can be separated by age brackets, gender, location, and interests. Niche podcasts, for example, often attract fans of the selected topic, making it easy to pinpoint the most relevant advertisements.
However, targeting is not unique to audio marketing and can be applied to other mediums. What makes audio advertising unique is its customer engagement. Although it is simple to skip or avoid ads while watching a video or playing a game, it tends to be more difficult to do so while listening to a podcast or a favorite playlist. Currently, it is also almost impossible to effectively use an ad blocker to avoid audio advertising. This is the reason for the high ad completion rates in this format. In comparison with display ads, audio is also more memorable, with a 24% higher recall rate, according to Spotify. When combined with precise targeting, this results in an immersive ad experience that has the potential to significantly influence purchase intent.
Another valuable point is ad monitoring. With a vast array of tools provided by streaming services and programmatic advertising platforms alike, advertisers can watch the success of their campaign in real-time. This also means that any changes can be made immediately, adjusting to the audience as needed. Data insights also simplify the attribution of ad spend to listeners, making budgeting less complicated.
Finally, the universal presence of audio also significantly benefits marketers. With 42.1% of the US population using smart speakers at home and 66% of them using streaming services while driving, audio is one of the most pervasive media formats. For that reason, it is a strong medium for building a semi-constant ad narrative and establishing strong brand recognition among customers.
Audio: A Building Block For Future Marketing
In 2020 alone, digital audio advertisement income increased by 13% to $3.085 billion and is continuing to expand. This correlates with the yearly growth of streaming service subscribers and has already become an important part of the marketing world.
While audio marketing can act as a single channel for advertisers’ needs, it works best in combination with other mediums in a complex omnichannel campaign. Its ubiquity is fundamental to reinforcing the narrative, while the lack of visual content makes it easier to produce and launch an ad.
With the simplicity of launching and analyzing their audio campaigns, advertisers have already taken advantage of the format. Currently, podcasts stand out the most, with 36% of marketers considering regular advertising on this medium. However, as the market is still growing, it is still relatively easy to become a part of this ecosystem.