Opportunities in podcast advertising in Europe and the US: A two-tier growth

In terms of audiences, the two continents have experienced a tremendous growth since 2015. The penetration of podcast listeners in Europe tripled between 2015 and 2020, reaching almost 25% of the European population while in the US, the penetration rate almost doubled in the same period, reaching 41% at the end of last year. But despite similar audience figures in volume, the state of podcast monetization remains far more advanced in the US. In fact, while the podcast industry in the US generated almost $800 million in advertising revenues last year, the whole European continent generated only $75 million. Hence, a US listener generated twelve times more revenue than a European listener on average. Over the last few years, the US market has been increasingly aware of the high potential of podcast advertising, and the pandemic even accelerated the pace. A plethora of studies has emphasized the high retention rate of podcasting and its capability to engage audiences. Even better, a recent study ordered by Cumulus Media, noted that “Listeners feel podcasts are under-commercialized: Weekly podcast listeners are comfortable hearing ads and the more time they spend with podcasts, the more ads they will accept”. In a nutshell: “Podcasts have the greatest ad attentiveness compared to other media”. During the 2021 IAB Podcast Upfront, AdsWizz revealed that 72% of pure podcast campaigns drove consumers to make a purchase. A growing number of independent ad sales companies has followed this trend, with some success. Hence, the Swedish company Acast managed to increase its footprint both in Europe - leading the podcast advertising market in the continent - and in the US. But if the US podcast ad market has been thriving, the European market has faced a slower growth. In fact, apart from the UK, it has almost stagnated. Among the different factors explaining this tardiness, the lack of original content in local language curbed the global adoption of podcasting and thus the advertising opportunities until very recently. Contrary to the US, where the content offer has been diversified for years, the majority of the podcasts available in Europe are in fact catch-up content from Radio networks’ libraries, while the native podcast offer has remained scarce until very recently. Moreover, a significant share of this catch-up content comes from public broadcasters, which generate little or no revenue from advertising: while the NPR network generated $50 million in the US last year, we estimate that Radio France generated only a few hundreds of thousands of dollars in France from podcasting. Contrary to the other European countries, the UK is already in an advanced situation in terms of monetization. More than 30 actors are now competing in the podcast market: Spotify, Acast and...

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