The rise of digital audio, both by listeners and by advertisers, shows no signs of slowing after a strong year in 2023.
Total digital audio advertising spending in Australia jumped 16.2% to $68 million for the September quarter, when compared to the same period last year, while streaming audio ad spend grew 14.5% to $43.2 million.
The GfK Radio Survey 6 showed that commercial radio now tallies 12.1 million listeners, while both Breakfast (up 2.6% year on year) and Drive (up 1.2% year on year) grew their audiences.
Australians aged 10+ are listening to more commercial radio year on year, with an average of 13 hours, 10 minutes per week, up 23 minutes from last year.
"The smart money will follow the audience"
SCA has been no stranger to headlines this year, with one of the biggest stories of 2023 – ARN launching a takeover bid for the its competitor - carrying on across to 2024 as the Takeovers Panel last week ruled that ARN must now sell down its holding in SCA after being found to be in contravention of takeover rules.
At its results reported in October, full year revenue for SCA fell 3.7% to $505.6 million and net profit after tax was down 20% to $21.9 million, but broadcast radio revenues remain steady and are tracking in line with last year and digital audio revenue continues to perform strongly and ahead of industry peers.
ARN Media also reported a drop in revenue, down 4% to $165.9 million for the half year to June, but digital audio advertising revenues were up 37% to $8.8 million and ARN's podcast network increased listeners by 23% and downloads by 25% for the first half of 2023,
Ciaran Davis, the CEO of ARN, told AdNews in August that the traditional radio content that broadcaster produces is just as relevant in the digital world, saying "that gives me great confidence on the sustainability and future of the radio industry."
Seb Rennie (pictured right), chief commercial officer of SCA, said that although radio revenue has remained stable in a tough market and digital audio has been the fastest growing digital media type – with SCA experiencing double digit growth for LiSTNR - investment in audio remains below consumption and there is a huge opportunity for advertisers to take advantage of engagement with audio.
"There is still an education and awareness job to be done around the benefits of total audio and the great news is that the briefs we are receiving are focused on understanding the best ways to plan, buy, measure and prove the efficacy of audio with an intent from those already on the audio journey to increase their investment," he said.
"There is also a real willingness to test and learn from those who are beginning to understand the potential of audio.
"At SCA we have a rapidly growing digital customer base of diverse advertisers and categories from large multinationals to local SMEs who are activating everything from integrated multiplatform campaigns all the way through to highly targeted local campaigns."
When coupled with ever improving data and technology capabilities through the deployment of CDPs, and audio's ability to provide more insights and data points to guide informed implementation, Rennie said investment is "improving significantly".
"There is a perceived complexity of audio that can be simplified with an understanding of how each component delivers," he told AdNews.
"Radio will continue to drive awareness with efficient and effective reach. Streaming delivers targeted reach. Podcast sponsorships deliver context, integration and endorsement form highly trusted creators. Run of network podcasts deliver contextual reach.
"When combined, audio can deliver all the way through the marketing funnel on awareness, consideration and conversion."
Rennie said that advertisers ultimately want to reach audiences, at scale, that are in the right mood and receptivity to receive their message and the companion nature of audio – when driving, at the gym, work, relaxing, or to educate – means there is no better place to do that than audio.
"In 2024 the smart money will follow the audience and audio audiences continue to grow – commercial radio is in growth, with record audiences in the last survey of 12.2 million and time spent listening up by more than two hours a week," he said.
"Podcasting and streaming are no longer an emerging trend but a well-established way for Aussies to seek entertainment and information with Australia now ahead of the US for the first time in monthly podcast listening to 43%.
"And ad revenue is starting to follow. Podcast advertising spend rose by 19.2% in the September quarter compared to the previous corresponding period."
Conversely, Andrew Murray (pictured right), head of trading at UM Australia, said that audio has failed to thrive in 2023 despite audience improvements in most areas, particularly digital audio.
"At Mediabrands there has been a whole program of work, led by Magna on building out a Total Audio approach which is designed to take audio down the path we have been on for screen," he told AdNews.
"For audio, we expect our refreshed approach at UM to Total Audio to bring fresh life into the channel in 2024 and remind our clients the role that each pillar of the audio category can deliver for their campaigns.
"As a result of this refreshed approach to Total Audio we are forecasting a year of growth for audio in 2024, however it does have a larger gap to close to be back to pre-COVID levels."
Spotify prioritising innovation, education and effectiveness
Adrian Bingham, Spotify's head of sales for AUNZ, said 2023 has been both challenging and rewarding, with navigating through the noise and negativity that spread throughout the market requiring a commitment to running your own course.
"In doing so, we found that doubling down on making sure we understood the needs of the market and our clients, as well as addressing pain points, was essential to our success," he said.
"Innovation has been at the forefront of our strategy, and in 2023 we continued to break new ground for our industry.
"The introduction of Spotify Ad Analytics (SpAA), Vodcasts, short form (6") video, new brand safety tech and controls, Objective-based buying, Audiobooks, AI Voice Translation, and other cutting-edge initiatives have not only kept us at the forefront of technological advancements but have also positioned us clearly as market leaders.
Bingham said that one standout aspect of the year was the realisation of the need for continual education on digital audio's role and impact on the media plan as the gap between investment in digital audio and its actual growth in terms of engagement and time spent has become apparent.
"Recognising this incompatibility offers a unique opportunity for brands that can seize the moment, providing a first-mover advantage and also securing category share of voice," he told AdNews.
"We've also remained committed to heavily investing in third-party research which helps to identify trends and inform strategy. Recently, our 2023 Podcast Trends Report identified a significant growth in the 45+ demographic, a segment that's historically been under-represented in podcast listening in Australia.
"We also worked with MindProber on a Sonic Science study, that found 88% of content engagement on Spotify podcasts transfers into ad engagement, a conversion rate well above industry averages.
"Additionally, we have worked with Amplified Intelligence across a custom digital audio study measuring both podcast and music content that gives us access to valuable Audio Attention data that can be used to turn theory into practise, leveraging STAS measurement (Short. Term. Advertising. Strength)."
In 2024, Bingham (pictured right) said the landscape is ripe with opportunities for businesses that are willing to embrace change and innovation.
"Continued education on 'the power of Spotify' across different consumer need states will be crucial for us," he said.
"While audio has been our superpower for some time, Spotify is becoming more visual and reaches a highly engaged audience with immersive ad experiences across audio, display and video formats, resulting in multi-platform experiences that perform across the full funnel."
"We will continue to work to ensure brands recognise the full potential of the Spotify platform and harness its capabilities for effective communication. Furthermore, as cultural moments continue to play a significant role in shaping consumer behaviour, brands are expected to take advantage of and lean into planned or recurring cultural moments strategically."
Bingham said that another key focus will be on quality and impact metrics, emphasising the importance of measuring environments, targeting, attention, attribution, and overall ROI rather than just reaching a wide audience at a low cost. Brands will increasingly expect more from publishers and media to drive touchpoints across all layers of the consumer journey, creating more meaningful and engaging interactions.
"As the decline of linear channels such as TV and radio persists, the acceleration across digital and streaming platforms will be a central opportunity," he told AdNews.
"Adapting strategies to align with the evolving media landscape will be essential to stay ahead in a digitally dominated market."
Bingham said that similar macroeconomic conditions are expected in the short term of 2024, demanding resilience and strategic planning from businesses. Marketers will likely face the challenge of doing the same or more with fewer resources, necessitating efficiency and creative solutions to maintain or enhance market presence.
"One of the prominent challenges that has echoed across the industry is the increasing demand for greater ROI and proof points from agencies and clients," he said.
"This emphasises the need for businesses to demonstrate the effectiveness of their strategies and campaigns. The introduction of SpAA, which we have made available and free to all, is designed to address this challenge directly, providing a tool for agencies and clients to substantiate the value and impact of their digital audio investments on and off our platform."
Looking at the current state of the market, Bingham said Spotify has seen strong forward bookings and expects to close the year with momentum.
"But we must contend with pockets and categories of lower visibility or budget fluidity, especially across ‘middle market' clients, likely due to greater scrutiny of where their budgets are going and why," said Bingham.
"As the year wraps up, we expect a strong end to Q4 as brands continue to trade late into December, looking to close the year and set up well for 2024.
"Looking back, 2023 has been a year of resilience, adaptability, and strategic innovation. As we move forward, the lessons learned will undoubtedly shape our approach in the ever-evolving ANZ media landscape."
Programmatic and podcasts taking centre stage
Henrik Isaksson, MD of Acast AU/NZ, said audio has always been a highly consumed medium yet the dynamics have shifted, with audiences now accessing audio in a range of different ways, at times that suit them and across multiple platforms.
He said the marked increase in podcasts being created has had a positive impact on growth this year, and in 2023 advertisers continued to realise that they can reach a highly engaged audience through not only this medium but also across creator's extended assets.
"As predicted last year, programmatic advertising in podcasting has continued to grow alongside advertisers who've realised its importance, and want to include assets beyond the podcast medium including TikTok, Instagram and live events," Isaksson said.
"The loyal audience a podcast creator attracts spans far beyond the RSS-feed which advertisers are now realising and embracing."
From a revenue point of view, Isaksson (pictured right) said the uncertainty seen by the audio industry in 2022 carried over into the beginning of 2023, yet it was a pleasant surprise that performance in the first half of this year was quite strong.
"There was a minor pullback in spending as we entered the new financial year but audience confidence grew throughout the year and as 2023 draws to a close, we can class the year as a success," he told AdNews.
If revenue and expenditure in 2024 are anything like the end of 2023, Isaksson said the industry is going to see another good year, with more advertisers turning to audio and in particular podcasting.
"The efficacy of the medium has instilled higher levels of trust among advertisers, with many renewing their podcasting spend or increasing their budgets," he said.
"It would not be unexpected to see triple-digit growth in programmatic, and high double-digit growth in podcasting overall in 2024. I'm pleased to see that sustainability in media buying has now been a focus on Australian shores and this will only continue."
Isaksson said that advertisers will continue to look for more sophisticated buying methods, rather than relying on a one-size-fits-all approach, and will look for advertising solutions across programmatic and host-read sponsorships to better meet the campaign objectives of their clients and budget.
"Programmatic will continue to play an important role in how agencies buy audio, with the further development in new technology products assisting advertisers to maximise reach and impact while benefiting content creators by increasing their monetary rewards," he told AdNews.
"Meanwhile, the personal endorsement of host-read sponsorships, and deeper integration in branded content, will continue to be a powerful component of podcast advertising with podcast listeners having a deep, intimate connection with the creators they love and truly valuing their recommendations."
Taylor Fielding (pictured right), MD at TFM Digital, said digital audio represents a great option for programmatic buyers.
"It offers businesses a highly integrated approach to reaching specific hyperlocal audiences, and podcasting is booming," he said.
"Active listens have increased by 15 million since 2020. And it's not just from the pandemic, with y-o-y podcast listens up by 21% and digital audio streaming increased by 18%."
Isaksson said that addressability, measurement and targeting is something Australian advertisers and agencies are passionate about and will only continue to play a more vital role in podcasting and audio in general.
"We will continue to be committed to developing leading ad tech solutions and partnerships to better identify hard-to-reach audiences in podcasting across Australia and international content creators," Isaksson said.
"With that said, the three key themes throughout 2023 whilst in conversation with agencies and brands have mainly been centred around addressability, measurement and data, and these will only become more important as revenues grow in 2024."
He said that media markets across the board will remain slightly uncertain due to inflationary pressures, talk of recession and other significant matters impacting the world, but despite these challenges, the industry is healthy and audio will continue to play an important role in the media landscape.
"Without sounding too dramatic, it's important to appreciate the current state of the market, recognising we are fortunate to be working within a viable industry," he told AdNews.
"The present condition of the audio market, particularly podcasting, is thriving. We have a strong creator economy, where an increasing number of content creators are embracing podcasting to deliver greater creative control over their own content.
"This shift allows them to earn a livelihood from their own efforts, avoiding the need to give up creative control to audio platforms or media owners."
The opportunities and challenges of podcast advertising
Jessica Miles, country manager for ANZ at Integral Ad Science, said in recent years, podcast advertising has grown in popularity, resonating deeply with listeners and drawing them into the intimacy of audio storytelling.
"The immersive experience of audio is truly unique with people listening to podcasts on the go - during their commutes, on long drives, during outdoor workouts, or even as they go about their daily household tasks," she said.
"This profound connection between the podcast and its audience stems from the ease of consumption, the richness of content, and the personal touch that audio brings."
Although podcast advertising slowed in 2022, the growth trajectory remains strong at double-digit rates and audio ad spending is expected to surpass $7.5 billion in 2024, solidifying audio's position as one of the most dynamic avenues for media investment.
Miles (pictured right) said that in the past few years, the Asia-Pacific region has witnessed an impressive surge in digital audio consumption, a testament to the enduring appeal and intimacy of the podcast medium.
"Building on this profound connection between podcasts and their audience, advertisers have a unique opportunity to form meaningful bonds with listeners. Ads on podcasts are usually short and their placement is similar to a video," she told AdNews.
"They can be seamlessly inserted at the beginning, middle, and end of an episode, making them both unobtrusive and effective in reaching the attentive ears of the podcast community."
Miles said that as audio advertising grows, it's imperative to recognise the evolving challenges that accompany this growth.
Since advertisers have always sought to protect their brands from controversial content - be it hate speech, terrorism, or misinformation - with the surge in audio content, Miles said it will become critical for advertisers to understand how these emerging threats to media quality impact consumers' engagement and perception of brands that advertise on digital audio platforms.
Integral Ad Science's latest audio research found that most digital audio listeners say it's important for ads to be relevant to surrounding digital audio content. 63% of digital audio listeners interacted with audio ads in the past year, 28% of digital audio listeners visited a store or website for an advertised brand and 20% of digital audio listeners purchased a product or service from an ad.
25% of digital audio listeners say they would avoid purchasing from a brand that advertises near unsuitable audio content - such as violence, sexual themes, drug use, and crime – while 44% of digital audio listeners say they're open to ads on audio platforms as long as the ads don't disrupt their listening experience.
Among consumers who purchase products from ads, nearly half did so in response to ads read by podcast hosts. 58% of digital audio listeners say it's important for ads to be relevant to surrounding digital audio content and 26% of digital audio listeners say related ads make them feel more immersed in the content they're consuming.
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