Audio Is Booming, but Ad Spend Hasn’t Caught Up

Why Audio and Podcasts Deserve a Bigger Slice of the Ad Budget Pie…..according to the IAB

Imagine this: you’re driving, cooking, or even just chilling, and you’ve got a podcast or a playlist playing. Sound familiar? You’re not alone. Americans are spending more time with audio content than ever, yet, ad budgets haven’t kept pace. Back in 2021, a study by WARC found that audio accounted for 31% of media time, but only 9% of media spend. Fast forward to now, and that gap is even more pronounced in digital audio, a space covering streaming audio, online radio, and, the ever-growing favourite—podcasts.

It’s a missed opportunity, to say the least, as brands overlook an engaged audience. Think of it as planning a party, but skipping out on the DJ. Without the right music, you’re missing out on half the vibe, right? That’s how brands are treating audio—they’re invited to the party but not dancing.

Audio’s Massive Audience Growth Shows No Signs of Stopping

The growth is undeniable. In the past decade, digital audio audiences in the US have doubled, with over 200 million weekly listeners. And podcasts? Their reach has skyrocketed by 325% to nearly 100 million weekly listeners. Platforms like Spotify, Apple Podcasts, and Amazon are household names, and podcasts now serve as a major source of information, entertainment, and community.

Podcasts are no longer a niche thing; they’re mainstream. For Gen Z, in particular, audio has become a gateway to learning, community, and self-expression. They see it as more than just background noise—it’s their news, cultural pulse, and even comfort. Picture them walking around with earbuds, connecting to something real. This emotional connection to audio makes it an ideal environment for brands to engage authentically.

The Attention Economy Loves Audio

So, why exactly is audio such a compelling choice for advertisers? In an era where attention is currency, audio is giving video a real run for its money. Research by dentsu and Lumen found that audio commands 56% more attentive seconds per thousand impressions than all other digital channels, including video and social media. Podcasts, in particular, drive impressive engagement. Listeners describe podcast ads as 6.6 times more trustworthy than video ads and 23 times more so than social media ads.

Here’s why: people often consume podcasts in situations where they’re more open to absorbing information—like during a commute or while unwinding. They’re already in listening mode, so a well-placed ad feels less intrusive and more like a natural part of the experience. When Conan O’Brien plugs his favourite coffee or a podcaster mentions a brand they genuinely love, listeners tend to trust it, and this creates a golden moment for advertisers to connect in a way that feels sincere.

Turbo-Charge Your Campaigns by Adding Audio to the Mix

One of the most exciting findings from IAB’s research is how audio supercharges the entire ad mix. It’s a bit like adding the perfect seasoning to a dish; it makes everything else work harder. When Neustar analysed ad spends, they found that a mere 1.8% shift of media spend to audio boosted ROAS by 23% for auto brands. Retailers, financial services, and telecom companies saw similar results, with boosts in campaign effectiveness and sales across the board.

So why does audio have this “amplification effect” on other channels? Part of it is the unique place audio holds in people’s daily routines. Picture your target customer tuning in to their favourite podcast while commuting. They’ve already seen your ad on social media, but now they’re hearing about it from a trusted podcast host. That repeated exposure across channels helps solidify your brand in their minds, creating a seamless experience across digital touchpoints.

Storytelling That Sticks: Connecting in Real Moments

Digital audio is special in how it aligns with the rhythms of everyday life. Around 74% of listeners consume audio during daily routines like commuting, exercising, or even winding down in the evening. Brands have a chance to connect at these moments—like New Balance did with a recent campaign targeting Gen Z basketball fans via Audacy sports podcasts, achieving a 342% return on ad spend. For New Balance, podcasts weren’t just another ad channel; they became an authentic way to reach their audience in moments when they were naturally more receptive.

Think about it: your message isn’t competing with loud, flashy visuals or getting lost in a social media scroll. Instead, it’s woven into an experience that’s both personal and immersive. Listeners are choosing to be there; they’re not distracted—they’re engaged.

The Podcast ROAS Is Hard to Beat

Research has shown time and again that podcast ads deliver serious bang for the buck. A recent study revealed that podcast advertisers enjoyed an average return on ad spend (ROAS) between $4 and $6 for every dollar spent. And it’s not just about short-term gains—another study from OMD Sweden found that podcasts delivered a long-term ROAS of $4.9, outperforming traditional media channels like TV and social.

This high ROAS comes from more than just attention; it’s about trust and loyalty. Podcasts have cultivated communities of like-minded listeners who trust their hosts. When brands become part of that ecosystem, they’re seen as part of the “in-group.” And with more listeners looking to podcasts as a primary source of information, the potential to drive actual sales is undeniable.

A New Frontier for Precision Marketing

If you’re worried about targeting and measurability in audio, don’t be. Just like with digital video, audio now offers precise audience targeting and programmatic options. Publishers are using first-party data, which allows for accurate audience segmentation, so you can reach listeners based on demographics, interests, and behaviour. This data integration means that audio can stand on its own or be part of a broader omnichannel strategy, making it easier to track performance alongside channels like video and social.

And with advancements in transcription analysis and contextual targeting, audio content is now safer and more suitable for brand messaging than ever before. Brands can confidently place ads within relevant podcast episodes, knowing their content aligns with both their values and their audience’s interests.

Closing Thoughts: The Untapped Potential of Audio

The bottom line? Audio is an essential ingredient for advertisers aiming to create a meaningful, high-performing media mix. While brands continue to throw money at social media and video, they’re missing out on a highly engaged audience that spends hours with digital audio every day. It’s time to rebalance the scales and give audio its fair share of the budget pie.

By incorporating audio into their media plans, brands can connect with audiences on a more personal level, amplify the effectiveness of their other channels, and unlock the potential of a rapidly growing medium. So if you haven’t already, it’s time to turn up the volume on audio advertising—because this isn’t background noise; it’s the future of advertising.