Podcast Ads Versus Terrestrial Radio Ads - Which is More Effective?
Over the last decade, while radio listenership has remained consistently high, advertising revenue has been in decline even as revenue for podcasts is growing. This is because podcast audiences are incredibly engaged and attentive to podcasts and host read advertisements have been shown to be more effective in generating brand recognition and purchase decisions than radio commercial spots. Below, you will find a deep dive into these findings.
In the last few years, there has been a host of articles and studies highlighting the incredible effectiveness of podcast advertising. As recently as last month, Westwood One released the results of a study it commissioned from the Advertising Benchmark Index (ABX) on the relative effectiveness of podcast advertisements compared to other media. It found that in terms of generating clear branding, podcasts were comparable to TV ads and marginally more effective than radio ads. But where podcast ads really shine is in their success in calls to action, with a podcast ad for a personal grooming subscription service scoring a 90 in driving purchase decisions compared to a score of 68 for a radio ad for the same.
This is in line with a 2017 Nielsen study which showed that 70% of podcast listeners reported increased brand awareness after hearing a podcast ad, and 62% demonstrated "successful brand recall." In addition, over half of the ads "did better than pre-roll in increasing purchase intent lift." The reason for this may be related to the fact that 66% of respondents say that they listen to podcasts to "learn something new," compared to just 40% of TV viewers. While the study, unfortunately, did not draw a direct comparison with terrestrial radio, the fact that 57% of podcast ads "outperformed the video pre-rolls for intent to purchase" makes it likely, based on Westwood One's data, that they would have found similar performance compared to radio ads.
Marketers report the same in their case studies. For example, Henry Hwong, interim CMO of Sling Media, states, "We’ve seen two to three times the engagement in podcasts, than we’ve seen in radio." Engagement is particularly high, he notes, when the podcast host endorses the product in their advertising read, a trend noted as well in Westwood One's report. The Nielsen report likewise notes that 85% of the podcasts which outperformed video ads included host read sponsorships: "Host read ads included in the study were significantly more likely to be described as authentic and believable, and two times less likely to be perceived as forced."
THE PSYCHOLOGY OF PODCAST ADVERTISING
While, of course, some radio hosts do ad reads, it is more common to play commercial spots due to the fact that their listeners often have the radio playing in the background, "so commercials have to grab listeners' attention to cut through." Indeed, one of the recurring themes among experts when talking about podcast ads is that listeners are less likely to tune out of the ads--or worse yet, skip them entirely--in podcasts compared to other mediums, including radio.
Conversely, podcasts are a "lean in" medium, with audience members listening more actively. Another study commissioned by Westwood One in 2018 found that podcasts generate an "extraordinary level" of concentration in the listener, with 71% reporting high levels of concentration compared to 51% of those listening to music. Consequently, there is a high degree of interest among brands and agencies, with 70% reporting that they "have discussed the potential of investing in podcast advertising, according to the latest 2018 survey from Advertiser Perceptions." Westwood also noted that of the 36% of marketers planning on advertising in podcasts in the latter half of 2018, 29% were redirecting their money from their terrestrial radio budgets. In fact, Pew Research shows that while radio listenership has remained fairly stable over the last decade, average station revenue is in slow declined.
Interestingly, the greatest factor by far in whether a given advertisement generates sales and a good ROI is how creative it is (47%), with the second most important factor being the ad's reach (22%). Also of interest, the study found that TV ads do not have "sight, sound, or motion," which is to say that they rely on their audio due to the expectation that a considerable part of their audience will look away from the television or even go to another room (e.g., into the kitchen to grab a snack) during advertising segments.
The two main factors the help podcast advertisements surpass radio advertisements in effectiveness, especially in effective calls to action, comes down to engagement and the illusion of a personal connection with a host. Avid podcast listeners generally go to podcasts specifically to learn about the world. In the process, the semi-informal nature of podcasting allows the host's personality to shine through, and this plus the greater attention paid to podcasts over radio makes the user feel connected to the host. Consequently, when the host seamlessly blends an advertisement read with the rest of the show, the audience remains engaged, thus remembering the brand, and the illusion of spontaneity in the ad spot makes the ad more believable and authentic to the listener. It is this combination of intimacy and authenticity which makes podcast advertisements more effective than ad spots on terrestrial radio, especially when combined with a creative pitch.