Shifts in consumer behaviors during the pandemic have led to a variety of unexpected consequences, like the decline radio advertising has taken because of less commuting. And, though digital audio is faring better than radio, trouble with campaign measurement has left some advertisers skittish. Understanding the factors at play with audio can help advertisers make better choices for 2021 and adapt to (possibly) permanently altered consumer behaviors.
Radio Ad Spend Is Down, But Terrestrial Radio Still Has Reach Across Markets
Prior to the pandemic, eMarketer predicted radio ad spend would decline 1%. However the impact of the pandemic led to a 25% drop off. As a traditional channel, similar to linear television, radio has had several challenging years. The news for radio isn’t all bad though, “AM/FM radio accounted for 42% of total U.S. time spent with audio in Q2 2020” and “76% of total time spent with ad-supported audio.” eMarketer predicts radio ad spend will rise 16.8% next year to $12.18 billion, but it’s likely this will be the ceiling for radio advertising. Other advertising options, like digital audio, are becoming the preferred choices for listeners and advertisers.
Digital Audio Is Expected To Bounce Back From Pandemic Losses, But Measurement Remains A Concern For Advertisers
Although digital audio is expected to overtake traditional radio among adult listeners in the next five years, advertisers are struggling with digital audio ad measurement. Whether people take action after listening to ads on digital audio is still a question mark for many brands, which keeps digital audio a top-of-funnel, largely unmeasurable media channel. In an effort to track what they can, several brands are pulling out old-school tracking methods known to have significant gaps, like promoting coupon codes or vanity URLs, providing at least a small measure of ROI feedback.
“We know there are definitely more customers who [listened to audio ads] without using a code, but we take that into consideration when reporting on numbers,” said Natalie Hauptman, senior acquisition manager at shaving brand Manscaped. “There are platforms you can use to dive deeper, where they will tell you if someone makes a purchase after listening to a podcast without using a code, but so far, we haven’t seen a need for that.”
With the growth of streaming behemoths like Spotify and the increase of listeners who prefer their radio on digital channels, the option to forego digital audio due to tracking challenges doesn’t make sense for many brands. Instead, brands are measuring digital audio more like a traditional channel than through typical digital media measurement methods. However, Google has developed several tools to help advertisers better track their audio spend, which digital audio advertisers are hoping will lead to more performance transparency.
Despite being a growing channel, digital audio took a hit during COVID-19 with digital radio ad spending expected to “shrink 17.0% this year to $3.72 billion,” according to eMarketer. Adding “digital radio advertising will have a strong rebound next year and continue to increase throughout our forecast period.” As digital audio becomes more popular with listeners, and terrestrial radio declines, the ability to target, track and scale campaigns will become more important for brands.
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