Podcasting to Generate $400 Mil. in Ads by 2011

Mike Shields
FEBRUARY 12, 2007 -
Podcasting, the hot new media darling before YouTube mania swept in, is poised for a major growth spurt in ad dollars, despite the fact that the young medium’s usage has failed to match the recent proliferation of Apple’s iPod and other MP3-playing devices.

That’s according to a report to be released by eMarketer this week, which finds that spending on podcasting advertising will quintuple over the next five years, from a paltry $80 million base in 2006 to a $400 million market in 2011. (Granted, this is still on the small side, considering the $20 billion interactive ad market expected this year.)

eMarketer analyst James Belcher is betting that a familiar Web power player will spark much of that growth: Google.

Belcher expects that by 2008, the 800-pound algorithm gorilla will develop a version of AdSense that can be easily adapted to podcasts, theoretically allowing any Joe Schmoe podcaster to implement advertising. “That should help grow the market,” he said.

Currently, despite some 90,000 podcasts available on the Web and close to 90 million iPods in the market, podcasting is universally thought of as a supplemental medium by advertisers. That’s because “the percentage of people who use podcasts regularly remains pretty low,” Belcher said. Just 12 percent of Americans report having ever consumed a podcast, according to a recent survey by the Pew Internet & American Life Project, and just 1 percent do so regularly, which translates to roughly 3 million people. “I’m not convinced that it’s going to grow so rapidly,” Belcher noted.

Despite the small base of users, podcasting represents an attractive medium, given its targeting, its low cost and its obsessive/passionate user base, says the report. “These people constitute an excellent media target,” Belcher said. “It’s a self-selecting medium. These people are into it, and they’re really into it.”

And while Google would likely bring in many smaller advertisers to podcasting, several major brands have jumped into the medium. “We’re seeing steady growth,” said Mark McCrery, founder and CEO of Podtrac, a startup company that is building a podcasting network while also working to establish some measurement standards. Podtrac has run podcast campaigns for Warner Bros., Paramount, Dell, T-Mobile, HBO, Honda and others, with most coming in the second half of last year. “They are investing in podcast advertising, getting some good learning and coming back for more.”

That’s despite a common complaint among buyers and sellers that it’s very difficult to measure exactly how many people actually listen to or view individual podcasts right now. “It’s very unlike the Web in a way,” said Ira Becker, senior vp and general manager of the 1UP Network, a division of Ziff Davis which has produced 63 episodes (and counting) of The 1UP Show, a gaming-themed video podcast. “It’s a vanity buy right now,” explained Becker. “Advertisers are asking for it as part of multiplatform buy.”