Audio advertising: What podcasts can learn from radio

Radio has been the dominant audio format for a century — and arguably, it still is. According to MIDiA’s Q1 2024 Consumer Survey, 49% of respondents in all tracked markets (excluding China) say they listen to radio weekly. That is higher than music streaming (44%) and podcasts and audiobooks combined (33%). Radio is still on the decline year on year, but the state of the industry is not yet dire. 

At around $15 billion in the US  alone, radio advertising revenue is still many orders of magnitude higher than podcast advertising revenue, which MIDiA’s podcast forecasts estimate at $4 billion globally. Podcast advertising revenue still will not reach the height of radio advertising revenue for many years to come — maybe not even in the next decade. To accelerate that revenue growth, podcasting can learn some important lessons from radio advertising, from ad format to ad sales.

Innovation in radio advertising

On Aug. 22, 1922, New York City radio station WEAF aired the first radio commercial: a 10-15-minute promotion for a real estate company. In the intervening decades, ad spots would get progressively shorter, eventually reaching the 30-60 second format that dominates radio broadcasting today. 

One of the most common types of ads to develop through radio was the sponsorship, where a company would combine its name with a radio program or show in order to raise brand awareness. However, live reads, jingles, and dramatic ads soon gained popularity as well. These are the types of ad formats that listeners most associate with radio.

In podcasting, the sponsorship and the live read have carried over from radio, but ads with more dynamic audio (i.e., jingles and dramatisations) are much less common. By many measures, podcast advertising already provides brands with significant upside, from increased brand trust to higher return on ad spend (ROAS). However, one big difference between radio advertising and podcast advertising is the ability for listeners to skip ads they do not like. Another big difference is the subdued nature of podcast ads relative to radio ads.

Like television ads, radio ads have to grab listener attention immediately in order to keep listeners tuned in to the station. The need to prevent listeners from changing stations to avoid ads has forced innovation in radio ad formats. Beyond host reads and sponsorships, radio advertisers have developed a wide array of techniques to capture audience attention, from catchy songs to sound effects and mini audio dramas. Podcast ads, on the other hand, are largely still characterised by host reads and sponsorships, and are easily skippable without jeopardising engagement with the podcast itself.

The challenge of podcast advertising

Advertising, therefore, is both responsible for the economic success of podcasting and also the most expendable aspect of the format. In contrast, advertisements are inextricable from radio. While this may make the podcast format preferable for some consumers, it also means that advertisers run a higher risk of not reaching their target audience with podcast advertising — regardless of an increased precision in microtargeting. 

In order to drive revenue growth forward, podcasting will have to think about how the industry can push innovations in advertising forward in order to ensure it is capturing audience attention — just like radio did. While it is true that podcasts allow advertisers to reach more narrowly defined audiences than radio, part of what attracts a company with a broader audience to radio advertising is the ability for radio ads to capture and hold attention — anyone’s attention.