For the very first time since the much-discussed streaming boom accelerated the entertainment business into a brand new era, audio ad revenue output has surpassed both video advertising and social media marketing for the largest year-on-year growth rate on the market. Brandon Blake, industry insider and entertainment attorney with Blake & Wang P.A, analyzes this shift- and what it means for video streaming- for us.
IAB Report
This data comes to us via an Interactive Advertising Bureau report released last week Tuesday. Digital audio- classed as streamed music and podcasts- earned a commendable $4.9B in advertising revenue over the 2021 period. This represents a 58% year-on-year growth for the market, 13% higher than the previous year. It also vastly outpaced growth in most other ad revenue sources, including social media, streaming video, and search-and-display advertising over the same year.
Unsurprisingly, a majority of this growth came over mobile devices- think $4.1B of it, 85% of the revenue for the category. Desktop devices claimed the remaining $739M. That’s quite extraordinary growth for a streaming category that’s long been ignored next to video streaming.
Revenue Driver
That’s only half the picture, of course. If we’re talking total dollars spent, search still remains the advertising arena of choice, clawing in $78.3B. Display ads took a cool $56.7B. Digital video came in third place for sheer ad-revenue, pulling close to $40B. Talking growth, that’s 51% year-on-year, not too far behind audio streaming.
As for social media adverts? They’ve been on a decline since 2020, but still pulled in $57.7B last year. Much of this is blamed on tightening privacy regulations and opt-out tracking spearheaded by the Apple iOS across all devices last year.
The AVOD Revolution
What does this mean for the larger film and TV landscape, however? First up, the sudden rise of audio entertainment, last seen as a driver of the entertainment market when radio dramas were a compelling choice, is well worth industry attention. This is, after all, why we’ve seen some of the key agencies, CAA included, sign podcast stars into their ranks in the last 6 months.
More specific to the TV and film industry, however, is the indications of a clear gap opening in the advertising market. While there will always be social media and search-based advertising, many consumers have tired of incessant tracking and remarketing following them while browsing.
Yet, there’s been growing interest in AVOD models for the visual streaming platforms over the last 6-months to a year. People don’t like having their privacy breached behind the scenes and with no choice to opt-in, but they are proving willing to entertain some degree of advertising intrusion into their entertainment consumption in return for discounted (or free) access to their film and TV favorites. We’ve even seen Disney promise to enter the AVOD space later this year.
Overall, it’s smart to listen to what this report is showing us. Advertisers, who have felt somewhat on the fringes of streaming for a while now, are coming home. This is, no doubt, the reason we’ve seen several key streaming presences intrude on the traditionally broadcast-only Upfronts this year. It’s a trend that’s definitely going to see growth over the next few years. Not only do we have advertisers wanting their share of the streaming pie, but we also see consumers happy to allow them it provided they get something out of the deal.
It’s a little too early to name AVOD the streaming model of the future- there will certainly be those keen to keep advertising out their space with premium subscriptions, too- but it’s time to stop ignoring the elephant in the room, too. Productive streaming-advertising partnerships appear to be a growth spot for the industry. If video doesn’t want to be outpaced altogether by audio streaming, then embracing a model that includes advertisers, not just subscribers, as revenue growth opportunities is a market it is unwise to ignore.