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Consumers Are All Ears

Written by: Scott Porretti | September 10, 2019

What Does the Future Hold for Audio Advertising?

By Scott Porretti

RADIOThe consumption of audio content has come full circle. We’ve gone from the quintessential communal experience of families sitting around the household radio listening to FDR’s fireside chats to people sitting on the subway with their earbuds, which is the ultimate solitary experience. Data shows that even after nearly a century of disruption from television to satellite radio, radio remains the number one reach medium.  Today, AM/FM radio still reaches more than 92% of consumers weekly and is now available across multiple platforms.  Thanks to digitization and the myriad ways people can listen to audio—including the smart speaker (which Deloitte predicts will have sales of $7 billion in 2019)—audio is once again becoming a communal experience, fueling what has been deemed the audio renaissance. As voice takes center-stage with enabling technology and smart speakers boost at-home listening, consumers have more choice of content and ways to listen than ever before. And that experience is even extending to automobiles, as carmakers from Toyota to Ford are adding voice-activated virtual assistants to new vehicles. The bottom line: Audio is hot!

Listening Far and Wide

Listeners now have the ability to stream their favorite radio stations and programs from far outside their region—be it on a phone, smart speaker, computer or tablet—meaning they are listening to more content, and advertisers can reach them in more effective ways. Under the traditional “one-to-many” model with radio, everyone listening to a station hears the same advertisement—a fantastic capability that builds reach for brand awareness unlike any other medium out there. Thanks to the digitization of those radio signals, however, advertisers can now harness dynamic ad insertion, where a person sitting in New Hampshire listening to a program from Boston will hear different ads from a person in Hawaii streaming the same program. Moreover—whether the consumer is streaming on a phone or other device—because the signal is sent and received digitally, advertisers can easily track listenership. Ultimately, the advertiser now can harness the power of audio with the best of both worlds: one-to-many reach and one-to-one relevance.


That’s just the tip of the iceberg, however, because consumers are also listening to new forms of audio, including music streaming services and podcasts. This not only significantly widens the array of content options for listeners, but also gives advertisers new outlets to engage them. Let’s go back to our example of the listener in New Hampshire. Advertisers can now reach that listener (or all listeners in New Hampshire) on streaming services with a dynamic ad or customize their ad reach to listeners in a certain demographic. The ad reach is no longer defined by the radio signal, which means advertisers can define a geography in a way that wasn’t possible before. The layering options that are now available to an advertiser through audio create new opportunities, limit waste (i.e., serving an ad to an unintended demographic) and allow for that 1:1 experience with consumers. This also benefits listeners, who will hear ads more relevant to them.

The Power of the Podcast

Companionship is the heart of radio, and podcasts are an extension of this relationship. Increasingly, consumers are using their various devices to stream podcasts. There are currently around 630 million podcasts out there, all of which are fueled by passion.

How do advertisers get their arms around that? Here’s how: by pooling podcasts into a package, so an advertiser can reach a customized audience—all of whom share similar passions. These are pulled together based on various behavioral and demographic criteria. Hence, listening to the podcast becomes a quasi-communal experience for the consumer and the advertising brand is associated with that passion.

The other big advantage is that, in addition to advertising being embedded in the content of a podcast (i.e., the host reading an ad or talking about a product) advertisers who have thus far sat on the sidelines of podcasting are now able to reach their target audience—which is also a captive audience—by dynamically inserting their own creative.

Advertisers are moving off the sidelines and onto the field, and we’re only at the dawn of the podcast era. Podcasting isn’t just for the talk radio audience; it also has huge penetration among Millennials and Gen Z. According to The Podcast Consumer study by Edison Research earlier this year, 44 percent of all respondents had listened to a podcast, and 26 percent (an estimated 73 million people) had listened in the past month—up from nine percent a decade ago. Of the monthly listeners, the share of listeners in all three age categories (12–24, 25–54 and 55+) has grown every year since 2014.

The sphere is white-hot and advertisers are paying attention. U.S. podcast advertising captured $314 million in revenue in 2017—a rise of 86 percent over $169 million in 2016—according to a joint report from the Interactive Advertising Bureau and PwC (also known as Pricewaterhouse Coopers). Streaming music services are also paying attention, exploring ways to harness the power of podcasts to attract and retain customers and to boost advertising revenue.

Taking the Audio Experience on the Road

With smart speaker sales booming for at-home listening, carmakers want to extend that voice-activated experience to automobiles, making new cars a mobile smart speaker. 

At this year’s Consumer Electronics Show, Toyota unveiled plans to include Amazon’s Alexa in new Toyota and Lexus Models. Other brands, including Ford, Hyundai and Kia plan to either include Alexa or car-specific voice-activated assistants. This will give drivers and passengers access to the same plentiful audio options they enjoy at home, all on voice command. They may choose to listen to their favorite local station, a station from another state (or country), or simply tune in to specific programs. Moreover, advertisers will be able to target ads to those listeners based on content or geographic location.

All of this adds up to an audio landscape bursting with opportunities. Today’s consumer has a proliferation of choice when it comes to audio and ways to access it. As radio continues to evolve and listenership in all categories continues to grow, advertisers will have an equally dynamic range of options of where and how to reach them.  Audio is at the dawn of a new era.

Scott Porretti is executive vice president of digital for Katz Media Group.

Scott Porretti is executive vice president of digital for Katz Media Group.