Modern Retail+ Research: The current state of podcast ad spending and strategies

Although the pandemic-inspired podcast boom has passed and marketing budgets are tightening due to economic concerns, agencies that invest in podcast advertising have yet to experience significant client budget cuts. In fact, some companies like iHeartMedia, The New York Times and The Wall Street Journal are even expanding their podcast teams during uncertain times, with the belief the medium still has room to grow.

And, they might not be wrong. Podcast advertising is expected to account for $2.25 billion of ad spend in 2023 and grow to $3.53 billion by 2026, according to Insider Intelligence. Digital audio listening time for programming such as podcasts and music is anticipated to rise as well. On average, U.S. adults will spend about one hour and 43 minutes per day listening to digital audio in 2023, per Insider Intelligence. That figure is expected to increase slightly next year to an hour and 45 minutes per day. 

With listening time and ad spend on the rise, podcast advertising appears to be poised for further growth, especially as diversification of media spend remains a hot topic. However, podcast advertising still faces plenty of inherent challenges and market obstacles, as with all advertising. 

For instance, Paul DeJarnatt, vp and head of digital at media agency Novus, said that, in his experience, about 70% of audio budgets are spent on music-related content, while only about 30% are spent on podcasts — underscoring the dominance of music in audio ad spending.

And Adam McNeil, vp of marketing at podcast ad agency Adopter Media, said podcasting successfully blends traditional and online media advertising, but results can be hard to measure and relay to clients. “Podcasting is a weird channel,” McNeil said. “It is smartly stupid and stupidly smart at the same time, where it bridges the worlds between offline media and digital media, and it doesn’t do either of them great. It does both of them at the same time.” 

In light of these challenges and to gain a better understanding of podcast advertising’s future, Modern Retail+ Research, in partnership with Sounds Profitable, conducted an in-depth analysis of advertisers’ current podcast ad budgets and ad strategies to ascertain whether real-world spending tracks with expert predictions for growth and overall optimism about podcast ad spending.

In May and June, Modern Retail+ Research worked with Sounds Profitable to study the current perceptions of podcast advertising with a broad sample of over 300 buyers, distributed as follows:

• Quantitative: 293 online interviews with buyers from both the brand and agency sides

• Qualitative: 11 interviews (mostly agencies, with some holding company and brand representation) with Sounds Profitable “Insiders” – veteran buyers of podcasts

• Respondents were asked a variety of questions about their past and current podcast buying, as well as general perceptions of the medium as an advertising vehicle

Although advertisers aren’t yet cutting podcast ad budgets, and despite forecasts for podcast ad spend growth, Modern Retail and Sounds Profitable’s recent survey found that more than half (52%) of brands and agencies have never purchased podcast ads. Another 13% of respondents said that, while they have purchased podcast ads in the past, they don’t plan to do so in 2023.

Glenn Rubenstein, CEO and founder of Adopter Media, said a lack of sophistication in implementing podcast ad campaigns using technology like programmatic ad buying, ad targeting and frequency capping may make some advertisers hesitant to invest in the channel and could be holding back growth. “This attitude of turnkey — we’ll make everything impression-based and [advertisers] will buy these ads, and we’ll roll them out and implement them however we see fit based on internal network guidelines —- the promise of the tech has been amazing for the industry, but the implementation has been somewhat disastrous for many advertisers for many campaigns,” Rubenstein said. 

“It’s almost malpractice for the industry to keep promoting these ideas about how tech is going to improve this space until people can utilize and implement it in a way that makes for more efficient buys because, right now, it’s ending a lot of relationships,” he added. “We’ve got advertisers … that are just sprinting for the safety of YouTube and a more old-school embedded ad approach.”

However, at the IAB’s annual Podcast Upfront in New York City in May, podcast networks and platforms encouraged marketers to spend more on the medium, which they said isn’t getting enough ad spend relative to the growth and listenership in audio. “Today, two out of every three people have listened to a podcast. And young people in the U.S. are spending nearly as much time with podcasting as they are with linear TV,” said Jeanine Wright, COO and gm at Wondery. “That’s why podcasts can no longer be an experimental bucket of your annual spend. They are now a must-buy for advertisers looking for premium content at scale.”

Neal Lucey, evp of product and strategy at audio ad agency Oxford Road, noted that the average age of podcast listeners is 39. “So certainly, if I’m buying television with an average age of 55, I need to find ways to bring in that younger audience, and podcasts are a great way to do that,” Lucey said. “The ability to engage that younger audience is definitely something that is relatively unique to podcasts.”

Some advertisers may be receptive to that message. Thirty-five percent of respondents to Modern Retail and Sounds Profitable’s survey said that they do plan to invest in podcast advertising this year. 

Kristen Coseo, director of podcast and digital audio strategy at Ocean Media, told Digiday in February that she’d seen clients pull back from channels like linear TV and reallocate dollars to podcasts. “Right now, podcasts have just been — on a performance standpoint — killing it for all clients. I don’t think we’ve had one client yet that hasn’t proven successful within [podcasts and streaming audio],” she said.

While interest and enthusiasm for reaching new audiences with podcast advertising may be gaining traction, actual budget allocation for podcast ads is lagging, Modern Retail and Sounds Profitable’s survey found. The majority of advertisers (67%) who said they currently purchase podcast ads currently devote 24% or less of their media spend to podcasts. Meanwhile, more than one-third of brands and agencies (36%) spend between 10% and 19% of their budgets on podcast ads, and only 5% of respondents said they allocate more than 75% of their media spend to podcast ads.

The lack of confidence in going all-in — or just more in — on podcast ads as a budget segment is likely due at least in part to overall ad spend slowing down as advertisers’ scrutinize their budgets amid rising interest rates, inflation and overall uncertainty around the economy — and consumer spending. 

At the beginning of this year, Ocean Media’s Coseo told Digiday that clients were “still overly cautious” with ad budgets and the “softness” in ad spend seen in other channels would likely trickle into the podcast space. According to Coseo, Ocean Media had quadrupled audio ad spend year over year from 2021 to 2022, but she didn’t expect to see the same growth in 2023.

But lower budget allocations still have growth potential. Maria Tullin, vp and managing director of advanced and digital audio at Horizon Media, said clients generally come in with low test budgets for podcasts initially, but often return with “three-times that budget” and add podcasts to their quarterly or annual media plans. 

“Over the last few years, several brands that our agency already had [as clients] started asking questions organically, and we’ve gotten a lot of clients to dip their toes in,” Tullin said. “We’ve continued to grow budgets because of timing. We planted seeds a year or two ago that have now grown.” But, she added, “I don’t think that experience necessarily reflects the marketplace.”

While overall allotment of resources to podcasts is low, those who do invest have devoted significant resources to tap into the medium’s potential. According to research firm Magellan AI, the top 15 podcast advertisers in November collectively spent about $47.7 million on podcast ads, with the leading spenders being online mental health platform BetterHelp at $9.2 million, Amazon at $6.0 million and Shopify with $3.9 million. Other notable spenders — all devoting at least $1.8 million to podcast ads that month — spanned various industries, ranging from beverage and snack food maker PepsiCo to pharmaceutical company Pfizer.

When considering why brands and agencies choose to place ads on podcasts, whether they be for large- or small-ticket items, their reasons are about the same as on any other channel. Just over half of respondents (51%) said increasing brand awareness was the top reason to buy podcast ads, followed by audience engagement at 47%. Audience engagement can raise brand awareness by creating meaningful brand-consumer interactions.

Across the board, raising brand awareness tends to be the main reason advertisers have diversified their ad spend to include channels such as podcasts. But podcasts, in particular, have the added advantage of capturing a listener’s full attention thanks to their immersive nature. 

Adopter Media’s Rubenstein said one of his favorite things about working with podcast advertising is playing matchmaker for brands with audiences they might not have thought were obvious. “We have a client that is a sleep-related product, and one would think that they’re targeting biohackers and athletes — people of a certain age who are starting to have more joint pain or issues,” he said. “[But] we got them on a subset of nerd and geek culture podcasts. … It’s really been the discovery and revelation.”

Not only does podcast programming itself grab listeners’ attention more fully than some other marketing channels, but brands and agencies who have experience buying podcast placements note that podcast ads themselves are more engaging than many other ad formats. Nearly three-quarters (71%) of respondents said they agreed that podcast advertising is more engaging than most forms of advertising — 38% agreed strongly, while 33% agreed somewhat.

Katie Kelly, director of programmatic at digital agency Code3, said people have “more empathy and connection” when listening to audio compared to visual media. “Recent studies show that 60% of people have bought something they have heard from a podcast ad,” Kelly said. 

Lisa Jacobs, svp of media at Ad Results Media, noted that a main selling point for podcast ads is the sense of authenticity they offer and a sense of trust between the audience and the host. She said Coors Light’s partnership with comedic sports podcast “Pardon My Take” has been particularly effective. 

“They started small with podcast reads and built from there to proliferate into what hosts do on podcasts and also on the road,” Jacobs said. “When Pardon My Take goes on their Grit Week tour the buses are wrapped with Coors Light messaging. There’s great integration between the two brands. … That’s something special and unique that can come out of podcast advertising.”

Adopter Media’s McNeil said he saw a similar level of brand engagement develop when he worked on a product intended to help people quit smoking at a previous position. “One of my favorite things about the podcast industry is that it’s been a home for brands that are hard to explain and need more depth to a talking point,” McNeil said. “It was a complicated product to sell, but getting a few influential voices talking about the brand was what allowed us to grow that business, and now they have become a big podcast brand.” 

For top podcast ad spender BetterHelp, the ability to explain products like virtual mental health therapy sessions has worked well for promoting its services. 

Courtney O’Connor, director of podcast media at Veritone One, said she’s observed growth in cross-channel engagement that begins with podcasts when brands partner with networks, influencers and shows that align with their products. “It starts with podcasts, then goes to YouTube and to Instagram Reels, and it turns into the listeners and viewers engaging so well with that content,” she said. “That’s been a really cool thing we’ve seen over the last nine to 12 months of tapping more into the podcast host or the influencer on several channels, not just audio.”

Among advertisers that have purchased podcast ads, a slightly larger percentage of respondents have chosen to buy announcer- or producer-read ads over endorsed or non-endorsed host-read ads. Fifty-eight percent of respondents said they have purchased announcer- or producer-read podcast ads compared with 55% that have purchased endorsed host-read ads and 32% that have purchased non-endorsed host-read ads.

Announcer- or producer-read ads are pre-produced ads that follow a specific script and are recorded in advance by someone other than the show’s host. They are standard fare in radio advertising, so it’s not surprising that podcast ad buyers gravitate toward them. Brands and agencies may also prefer to buy announcer- or producer-read ads because marketers can set precise audience targeting parameters and can insert an ad across multiple shows, according to SXM Media. However, announcer- or producer-read ads lack the personal touch of a show’s host voicing the ad copy and, therefore, may not do as well of a job connecting with listeners as host-read ads. 

Indeed, endorsed host-read ads came in a close second in advertiser ad preference to announcer- or producer-read ads, with 55% of marketers saying they have purchased endorsed host-read ads. Similar to announcer- or producer-read ads, endorsed host-read ads follow a script, but they leave room within the script for the host to improvise talking points and provide anecdotal stories from their own life, implying that the host has used the product or service.

Conversely, non-endorsed host-read ads only require a direct read of advertiser-written copy, without a host ad libbing a description of their personal use of the product or service. This type of ad was the least popular among survey respondents, with 32% of advertisers having purchased non-endorsed host-read ads.

Interestingly, when Modern Retail asked focus group participants and individual interviewees about podcast ad types, most said they preferred host-read ads because of their ability to personally engage listeners and to produce tangible results, like site visits. According to Nielsen, host-read ads drive a brand recall rate of 71%, which subsequently creates high levels of consumer interest, purchase intent and recommendation intent.

Adopter Media’s McNeil said, in his experience, endorsed host-read ads by far outperform pre-produced spots. “We’ve recently done a couple run-of-network buys on networks where it was pre-produced, non-endorsed spots that still had a coupon code on a show, just [read] by a producer at the network,” he said. “Then we simultaneously changed to doing a run-of-network on a particular show, with a host endorsement with their promo code, and it almost tripled the performance.”

“It was night and day in terms of getting people from the ad to the website in terms of visits,” McNeil added. “So, a non-endorsed spot is about less than a third of the value of an endorsed spot from what I’ve seen on the data side.”

McNeil’s colleague Rubenstein noted that host-read ads have the added benefit of not alienating consumers by sounding too scripted and inauthentic. “Listeners hate these pre-produced garbage spots that remind them why they left radio in the first place,” he said. “They would rather have a host-read ad for a product they absolutely have zero interest in that might entertain them than listen to [an ad for] something that they’re genuinely interested in that just sounds like a radio script. If we kill the listener experience, this medium is doomed.”

Horizon’s Tullin said endorsed host-read ads in particular can boost listener purchases of more expensive consumer products. “You’re not just going to randomly hear an ad and say, ‘Hey, let me spend $3,000 on this [item],’” she said. “People know a lot of brands exist, but having someone they trust talk about it authentically and integrate it into things that the audience already knows are going on in that person’s life, that helps to drive those bigger ticket items more significantly than other types of inventory.”

Ad buyers are fairly enthusiastic about podcast ads’ abilities to engage listeners and, according to the survey results, a large proportion of advertisers seem to be satisfied with podcast ad targeting as well. More than one-third (38%) of respondents to Modern Retail and Sounds Profitable’s survey said that they were very satisfied with audience targeting capabilities in podcasting, and 44% said they were somewhat satisfied.

However, evidence from our focus group and other Digiday reporting shows there’s still room for improvement, especially among more seasoned buyers who might have more sophisticated audience demands. In Modern Retail’s initial fielding of the survey, fewer than half of the respondents (39%) told Modern Retail that they were somewhat satisfied with audience targeting capabilities in podcasting, and fewer than 3% said they were very satisfied. 

Targeting in podcast advertising likely hasn’t been a resounding success because, for the most part, marketers have relied on show-based contextual targeting — placing ads within shows they know have audiences they want to reach. Additionally, the majority of those contextual ads have been host- or announcer-read ads that are baked into content and don’t offer as much flexibility once inserted. 

Brittany Clevenger, senior director of audio partnerships at BetterHelp, said in past years ad targeting in podcasting was fairly rudimentary. “[The question was] ‘Who do you want to reach?’” she said. “[And the answer, for example, was] ‘We know that female millennials listen to true crime. These are the shows that you should advertise on.’”

But, Clevenger added, targeting has been improving in recent years. “With the coming age of DI [dynamic ad insertion] and programmatic, there’s more targeting,” she said. “And we’ve started seeing some well thought out campaigns that combine seasonality with creative, with audience targeting, and with contextual targeting and content. We’re excited to test more, there.”

While programmatic advertising in podcasting has garnered some advertiser interest, it’s still very much in developmental stages. On the plus side, brands, agencies and large media networks like the fact that dynamically-inserted ads can begin to automate the ad buying process, making it quicker and easier — and usually cheaper. One creative spot can be inserted across multiple shows and, with targeting maturing, advertisers have more control over the audience and geographic regions they want to reach.

However, despite improvements that have made it easier to buy ads through programmatic channels, buyers are slow to adopt true programmatic podcast buying through a demand-side platform, according to agency executives who spoke with Digiday in February. 

Reasons for their reluctance include: many advertisers prefer host-read ads, as noted previously; not all networks or shows have inventory available to buy programmatically; and buyers often want to vet content to ensure contextual alignment when targeting specific audience segments across podcast networks. Programmatic ads tend to raise brand safety concerns because an advertiser doesn’t know what show content their ad will run against. 

Horizon Media’s Tullin said podcasters also need to be vigilant about monitoring which ads air during their programs. “It’s kind of a tightrope because as iHeart and Spotify and Sirius XM are buying more inventory to add to their overall networks, they’re able to do more exciting things with geo targeting, behavioral targeting and audience segments, but it’s a double-edged sword,” Tullin said. “Smaller podcasters who haven’t been given a lot of attention from the seller side are now getting ads and revenue. At what cost? What advertisers are going to your show? Is it something that you do or don’t like? That’s a very personal question.”

Relatedly, survey results and in-person interviews with marketing and media executives revealed mixed results regarding the level of comfort industry leaders feel about brand safety in podcasting. 

The majority of survey respondents who have experience buying podcast ads said that they are comfortable with the average level of brand safety in podcasting. Eighty percent of respondents said they agree with the statement, “I am comfortable with brand safety and suitability in podcasting.” Of those, 40% strongly agreed, while another 40% only somewhat agreed. 

However, when Modern Retail spoke with executives directly, some voiced concerns about brand safety specifically within programmatic podcast advertising. 

Horizon Media’s Tullin said her agency tends to hold back from programmatic buys in general. “I don’t feel confident yet about brand safety,” she said. “We don’t work with any hugely controversial brands. … So, when you start allowing programmatic ads on your content, it could be anything. Spotify has started adding political ads and you don’t know what’s going to end up in your show. … Everybody has a different tolerance, so that’s something to be cautious about.”

Thus far, the share of podcast ad dollars being spent programmatically remains a sliver of podcast ad spending. In 2021, programmatic represented 2% of total podcast spend, per the IAB. By 2024, it is expected to account for just shy of 10% of U.S. podcast ad spending, according to Insider Intelligence.

Ad Results Media’s Jacobs said she believes programmatic podcast advertising will continue to expand regardless of initial advertiser hesitation. “It’s going to be something that brands want, and so, it’s going to grow,” she said. “There are certain audiences [advertisers] want to go after. If you’re targeting only pregnant women, [for example], that’s hard to do by partnering with specific podcasts. We have room to improve, but programmatic will keep growing.”

While programmatic podcast advertising may be poised for growth, when ad buyers were asked about podcast ad measurement, a surprising swath signaled that they thought the tools available were “robust.” Almost two-thirds (59%) of respondents to Modern Retail and Sounds Profitable’s survey said that they either somewhat agreed (34%) or strongly agreed (25%) that the measurement tools in podcast advertising were robust.

However, this was another unexpected result given feedback both from our focus group. The survey results could reflect a pool of buyers at varying points in their podcast ad buying experience, with many satisfied enough by the impact of initial buys, while not yet at the stage of trying to optimize their campaigns based on listener signals. 

Similarly to our findings on targeting, Modern Retail’s initial fielding of the survey found that only 18% of respondents somewhat agreed that measurement tools were robust and none (0%) strongly agreed that they were robust. 

To be sure, measuring the success of podcast ad campaigns is far from an exact science. Agencies and brands use numerous metrics, including coupon codes, easy-to-remember vanity URLs, pixel-based attribution and post-purchase surveys — tracked by third-party vendors or the brands and agencies themselves — to measure success. 

Kurt Kaufer, chief growth officer at Ad Results Media, said clients have begun asking about the disconnect between measurement on other digital channels and on podcasts. “Measurement is a real sticking point for us,” he said. “They’re questioning the methodology — whether it’s surveys, promo codes, URLs or pixel-based attribution — because we’re using third-party data to model this out.”

“It’s not necessarily correlating with what they’re seeing in the back end,” he added. “Questions of can we trust data from third-party vendors come to the forefront. … We need to make sure that the measurement piece is accurate, so clients understand how the data is captured and can translate that back into their media mix.”

Kaufer’s colleague Jacobs added that the ad tech itself is available, but differences in implementation remains the larger sticking point. “The other part is the fragmentation and the inconsistency,” she said. “As we look at measurement, we can’t have one source of truth because there is no one source of truth. It’s then that you start to have multiple data sources, which become even harder to reconcile against each other and tell the one true story to the client.”

From a marketer standpoint, BetterHelp’s Clevenger said she finds that too often it can fall on brands to make sure ads are being delivered in a beneficial way when it should fall to the vendor. Clevenger said she believes measurement problems aren’t intentional, but rather are a factor of podcast advertising having evolved so quickly. 

“Now, with DI and different ad-servers across the industry, there hasn’t been much transparency into frequency and delivery, and that’s why there are differences in performance when a show switches from one network to another,” she said. “The ads are being delivered differently, and it can negatively affect performance for the advertiser.” 

When it comes to measurement challenges on specific platforms, Horizon Media’s Tullin said YouTube presents unique problems due to the volume of podcasts that run on the platform, often as syndicated video versions of the audio programs. 

“One of the big issues that we’ve run into in terms of measurement has been that more impressions are running on YouTube, and we’re not capturing those,” she said. “We try to monitor and make sure when we buy inventory that our buying team knows exactly what they’re getting. We don’t want a surprise where, for example, we buy a show and then notice that only 20% of the impressions are running every week.”

“And the reasoning is, because 80% run on YouTube, it’s not necessarily a bad thing for them to run on YouTube,” Tullin added. “We have clients that are excited about that, but it’s something we want to make sure we’re transparent with our clients about because we don’t want there to be surprises.”

Nevertheless, ad measurement tools for podcasting have steadily been improving. In 2020, Spotify rolled out Streaming Ad Insertion (SAI) technology to help advertisers with digital planning, reporting and measurement on Spotify apps for shows hosted on Megaphone. And, increasing advertiser interest in programmatic podcast advertising — albeit slowly — will inevitably lead to more precise campaign measurement.

Despite positive industry reports on podcast ad revenue totals and predictions for continued growth — the IAB’s 2022 U.S. Podcast Advertising Revenue Study projected ad revenue will more than double between 2022 and 2025 to about $4 billion — a lack of demand from agency clients and brands, along with budgetary considerations, are the main challenges facing the podcast ad market. 

Among respondents who have never bought podcast ads, more than one-third (37%) said “no demand from client brands or my own brand” was the main reason they had never bought podcast ads. More than a quarter of respondents (27%) said “no room in the budget” was their top barrier to purchase.

Indeed, the overall economic climate and continued speculation about a looming recession has put a damper on media budgets across the board in 2023, affecting not only spending but probably hindering enthusiasm for experimenting with podcast ad buying as well. 

Adopter Media’s McNeil said, as a buyer, he has to closely weigh campaign results when considering brand spend. “With the economy coming down, we’ve had to ask for flexibility and transparency with our network partners,” he said. “The networks, in particular, and the podcasts that have not shown flexibility have not received offers. If they’re not willing to accommodate the economic downturns, and it’s not producing the same results or better, we can’t keep buying.”

Veritone One’s O’Connor said, while agencies may not be handling larger budgets or have as many podcast ad clients as of late, clients that do have money to spend are reaping the rewards. “If a brand is in the podcasting space right now and has dollars to spend, they’re the luckiest because they are getting killer deals,” she said. “We’re all hyper focused on keeping those dollars in the business. … It’s the year of the buyer and the seller and establishing connections and relationships. … Getting creative has been the fun part, and making lemonade out of lemons.” 

While budget constraints and lack of demand are holding some advertisers and agencies back from purchasing podcast ads, less than perfect ad targeting and campaign measurement is delaying others. Lack of ad effectiveness and delivery measurement and insufficient targeting and demographic information tied as the  third-place reasons survey respondents haven’t bought podcast ads, with 24% of respondents citing each reason respectively. 

Despite podcast ads’ abilities to engage audiences, if brands can’t reach their intended audiences and can’t measure the results of ad campaigns, it may not be worth it for them to invest in podcast advertising. Likewise, concerns about ad efficacy and measurement may play into the overall lack of demand from clients and brands for podcast ad spots.

According to Adopter Media’s McNeil, the future of effective ad measurement in podcasting will have to include integrations with e-commerce data platforms like Triple Whale or Rockerbox, so that “e-comm brands are able to bridge the siloed data that exists only in podcasting into other media mixes.” 

“That is one of the big growth opportunities for data attribution within podcasting,” McNeil said. “From an agency’s perspective of buying for brands, we’re held in a bit of a silo where it is just measuring podcasting, not how it impacts cost per acquisition on a Facebook campaign or something similar.”

Ad Results Media’s Kaufer said his agency is focusing on a more holistic approach to data measurement. “For us, it’s really proving the efficacy of the channel, but correlating that back to the efficacy of the data and the measurement that we’re procuring and producing for clients,” he said. “As an industry, if we want to see [revenue] scale beyond IAB’s [predicted] $4 billion next year, we need to make sure that the measurement piece is as accurate as possible — that clients understand how the data is being captured and can translate that back into their media mix — so that it seems more apples-to-apples for them.”

With the possibility of a recession weighing heavily on advertisers’ minds and some of the overall luster of the pandemic-driven boom in podcasts beginning to wear off, it remains to be seen whether podcast ad revenue will hit the IAB’s predicted $4 billion mark. Some companies are already pulling back on launches of new podcast shows, which could certainly affect future ad spend. 

Earlier this year, The Guardian reported that the number of new podcasts dropped 80% worldwide compared with the two previous years. Similarly, data from podcast engine Listen Notes showed that only 236,000 shows debuted last year, down from 734,000 new offerings in 2021. Paramount said it will launch fewer podcast shows this year than in years past and will be more selective about which shows get developed going forward. And, just last month, Spotify canceled six true-crime podcasts and laid off 200 people (2% of Spotify’s overall workforce) as it merges its Gimlet and Parcast podcast units into a combined Spotify Studios operation and tries to become profitable.

“It was a phenomenally fun and exciting two years of a lot of big spending in the podcast space, and really big deals and a lot of money and things got a bit frothy,” Steve Raizes, Paramount’s evp of podcasting and audio, said in April at the Digiday Publishing Summit in Vail, Colorado. “What we’re now feeling is a market correction. It’s a ‘come back to Earth.’ Podcasting is going to be governed by actual economics.”

As podcasting continues to evolve, some media executives believe the medium will come to  rely more heavily on a combination of audio and video content to procure more listeners, and thereby ad dollars, in the future. 

“The most underreported story of the last two years concerning growth is — I’m going to conservatively estimate — 25% of this industry’s revenue comes from simulcasts that are also on YouTube, yet it gets lumped in with podcast ad revenue,” said Adopter Media’s Rubenstein. “In a weird way, YouTube has actually saved this industry from itself over the last two years in that they’ve preserved that old school, episodic embedded ad placement.”

In fact, platforms like YouTube and Spotify have begun investing in products to help podcasters link their audio shows to the accompanying videos they produce. YouTube’s search and recommendation algorithms can help surface video podcasts to users on the platform. Those videos have the potential to bring new listeners to podcast shows — one of the biggest challenges for podcasters. More views can lead to more ad impressions, and podcasters can monetize videos with YouTube ads.

Additionally, some podcast publishers are using YouTube Shorts as a marketing vehicle for their video podcasts. The 60-second-and-shorter videos are getting new eyeballs on the full-length, often video-based podcast episodes posted on their YouTube channels. For example, as of February, Shorts was driving about 40% of views to the YouTube channel for Betches Media’s “U Up?” podcast, which only had about 6,800 subscribers on YouTube, compared to a monthly average of over 1 million downloads across all podcasting platforms, per Betches. 

“While [YouTube Shorts] is still an experiment, that type of exposure, you’ve got to assume, is worth something,” said David Spiegel, chief revenue officer of Betches Media. And, because of that belief, he added that his team “shift[ed] a lot of our strategy around podcast promotion towards short-form, vertical video,” not just on YouTube Shorts, but also on TikTok, Instagram and other social platforms. 

BetterHelp’s Clevenger said there has always been some overlap between podcasts and YouTube, but she’s hopeful that increased use of the platform and its tools will help expand audiences further. “Having a video component to the actual podcast is becoming a lot more necessary,” she said. “I get excited if someone says, ‘We have a podcast and it’s also simulcast on YouTube’ … [because] traditionally YouTubers have been a separate audience from podcasters’ listeners. I’m interested to see if there’s a shift in audience overlap, or if we’re still going to be reaching different audiences of people, as the two channels start to merge.”

Veritone One’s O’Connor said podcasters and advertisers must meet consumers on the platforms where they’re consuming media in order to build audiences and grow ad revenue. “With the growth of simulcast, you’re bringing in that younger audience that is video first and loves that aspect,” she said. “Evolving in that way will continue to grow the space.”

“All of us are in this for the long game,” she added. “We can throw brand dollars and do small blips here and there, but that’s not going to make the industry last forever. Finding the efficiency for those dollars that have long-term success in the space is going to help us have a future here versus throwing money at the wall, seeing what sticks and then going away.”