Audio and TV have been dragging their feet into the digital age of addressable media – but with social media, video, search and display reigning supreme – innovation wasn't that high on the agenda.
That was until COVID happened.
And now, all of a sudden, we live in a world where social distancing and lockdowns are the norm, Google has cancelled the third-party cookie and Apple has its own plans for advertising on iOS.
The world seems to be ready to give digital audio another chance.
Digital audio is growing – audio streaming users have doubled since 2017.
And the global market is expected to reach over 900 million users by 2025.
Tencent Music has the largest share of music streaming in China. Outside of China Spotify, Apple and Amazon collectively share 69% of the global market.
The popularity of smart speakers is raising the tide for all types of audio services.
In addition to streaming music, people are regularly using smart speakers for many different activities:
- asking for the weather (55%)
- asking fun questions (46%)
- confirming information (39%)
- setting reminders and alarms (39%).
This also means that digital audio ads are growing.
Between 2017 and 2020 ad-spend on digital audio doubled, and it's expected to reach 9 million by 2025.
Like most other forms of advertising, the percentage of budgets going towards digital audio took a hit; falling to 15% when it was 25% pre-pandemic.
The percentage share of media budgets going to digital audio are expected to reach pre-COVID levels this year, but the overall share is expected to drastically decrease over the next 4 years.
Don't worry your head over the bleak outlook.
I don't think there will be a breakout adoption of audio-ads – but based on the recent technological innovations, I believe we'll see a lot of experimentation in this format during the next 5 years.
The United States is the largest market in terms of growth, followed by China and Japan, which together made less than half in digital audio ad revenue last year. By next year, the voice-based ad market in the US is expected to be worth $19bn.
And that's good news for advertisers because consumers don't seem to mind the ads all that much.
According to Adobe, 58% of consumers find smart speaker ads to be less intrusive than other formats (TV, print, online and social), which is up from 43% last year. Another 52% actually find smart speaker ads to be more engaging, which is up from 42% in 2019—and 57% said the ads are more relevant.
And there's more good news.
51% find it easier to recall the brands in smart speaker ads, and 53% said a smart speaker ad has spurred them to make a purchase.
What are Google, Amazon and Spotify doing?
Google is making digital audio advertising a larger part of its offering to brands and publishers.
Last year they added a dedicated audio section to their DSP platform (DV360) and introduced new measurement tools to make audio ads more attractive.
Audio ads were first introduced by Google in 2018 but they're now bolstering their audio offering for the buy- and sell-side as the medium continues to grow.
Now publishers can sell audio ads programmatically through Ad Manager and sellers can benefit from dynamic ad insertion along with improved forecasting capabilities.
YouTube is the obvious choice for Google flagship audio platform.
In November last year with music streaming at an all-time high, YouTube positioned its own audio ad offering for brands to grow their reach and awareness. According to YouTube, more than 50 % of logged-in viewers who consume music content in a day consume more than 10 minutes of music content.
YouTube also introduced Dynamic Music Lineups - dedicated groups of music-focused channels across popular genres as well as moods and interests. Adding this additional layer of addressability means that brands can capture a global audience when YouTube is being watched or playing in the background.
Amazon recently acquired the podcast network Wondery.
The world goes abuzz anytime Amazon buys anything, but especially so when the acquisition has anything to do with media.
Amazon already owns the bottom of the funnel advertising through Amazon Network and the various ad-formats available for its marketplace. With the recent interest and growth in content-driven e-commerce, Amazon's latest acquisition brings it closer to consolidating its ownership of the top and the bottom of the e-commerce purchase funnel.
Amazon currently offers audio ads in the US, UK and Germany.
Amazon is already the third-largest music streaming service after Spotify and Apple. After the Wondery acquisition is finalised they'll be able to extend the ads to the podcasts as well.
We're looking at a formidable ad offering if Amazon manages to gather and combine first-party data across streaming, browsing and purchase behaviour.
Spotify already controls the lion's share of the global market.
Spotify launched its ad-offering in 2011 as a part of its Freemium service and ad-supported trial model. And brands can purchase programmatic ads on Spotify through Google's DSP.
During the pandemic, Spotify's revenue from music streaming initially took a nosedive but recovered by Q3. In the meantime, its podcast revenue kept growing. The number of monthly active listeners grew from 19% to 21% and the number of podcasts people were listening to more than doubled!
At the same time, Spotify is continuing to invest in growing its podcasting talent.
The most recent addition is their partnership with filmmaker Ava DuVernay and her Array media collective. DuVernay will launch a collection of scripted and unscripted programmes, joining an already star-studded line up including Joe Rogan, new shows from Kim Kardashian West, Prince Harry and Meghan Markle, as well as the Obamas’ production company Higher Ground.
The latest innovation in digital audio ads to come out of Spotify is Digital Audio Insertion ads currently available in the US, UK and Germany.
For the first time, podcast hosts and advertisers are able to use data such as ad impressions, frequency, reach, anonymised age, gender and device type to create content and target their ads.
Spotify is also testing a new ad product that aims to move away from the most distinguishable radio advertising tactic - repeating the promo over and over again - to what they are calling In-App Offer.
This new feature allows listeners to claim promotions or visit a brand’s website directly within the app and hop back over to where they left off once they're done.
Ads that talk back
Spotify may be the undisputed champion of in-stream digital audio advertising but they're not the only one pushing the boundaries.
Pandora is also expanding on its voice-control features through voice-activated ads. Pandora offers voice-activated ads where listeners are prompted to agree (by saying 'Yes' or 'No') to hear additional branded content.
Ad-fatigue is a real problem across every medium.
And even though getting your advertising read out loud by a familiar voice during a podcast doesn't sound too abrasive, it's only going to take you so far.
Pandora's solution aims to hit two birds with one stone:
- People who are listening to music while driving can activate additional content using a voice command.
- Brands want to pay for audiences that engage with their content – verbally agreeing to get more content from a brand is as good as it gets.
Pandora is initially partnering with 13 companies to test this feature including Acura, Doritos, Volvo, Xfinity, and T-Mobile.
But why stop at 'Yes' or 'No' when you can directly talk to your audience.
That's exactly what Instreamatic's voice-driven ads are offering.
Instreamatic can interpret and anticipate the intent of a user's words using Natural Language Processing. This means that brands can have a continuous voice dialogue with their consumers - much like chatbots that use AI but through voice.
Using this technology brands will also be able to continue this conversation across different channels and publishers by customising new content based on the listener's past engagement and responses.
A bit creepy, right?
Instreamatic is positioning its adtech as a user-centric and interactive solution to delivering audio ads. It gives users the possibility to verbally opt-out of specific campaigns and allows brands to better optimise the ad-experience and the promotion to better match the user's preferences.
Really successful audio campaigns inspire the listener
Just outlining the features of the product isn't enough.
Having witty copy – in addition to a great product – is still the bread and butter of getting sales, but in the engagement economy, you also need to connect with your customer emotionally.
Digital audio has created new opportunities for publishers and apps, but brands have struggled to catch up, and many have not been able to capitalise on this format.
Here are some of my favourite examples of audio ad campaigns:
The Maze Alexa skill: Westworld
This immersive campaign for Westworld takes fans on their own quest for consciousness.
The campaign takes users on an interactive story where the choices made by the listener determine what happens next, and how the story turns out.
Spotify x BBC - 7 Worlds, One Planet
In conjunction with David Attenborough's Seven Worlds, the Spotify campaign used soundscapes to transport you to a different continent. The campaign gave Spotify Free and Premium users access to seven exclusive videos, each dedicated to different wildlife stories and endangered species from around the world.
The collaboration between Spotify and BBC also made the BBC Earth podcast available to listeners, giving them behind-the-scenes access to accounts from show producers and camera crew.
City Lodge Hotel Group
These beautifully written ads (1 and 2) talk about the real experiences about travel and about making memories. Although these are radio ads, they're a great reminder that there are no boundaries to compelling storytelling.
The bottom line
Despite the drop in popularity, audio ads will continue to be an important part of top-of-funnel advertising. And as our habits evolve, so do the technologies powering how audio ads are created and delivered.
Beyond Spotify, Google, Amazon and other adtech vendors are introducing new innovations in the form of ad formats, improved addressability and features such as audio ads that talk back.
The chances that audio ads will ever become as widely adopted as search or display ads is slim.
But as we continue consuming more types of content, despite being an ancient medium of advertising, digital audio will continue to offer new possibilities for those who want to go against the grain.