Podcasts are all the rage and advertisers are noticing. With listenership soaring in recent years, podcast ad spending has become a bright spot amid lackluster digital radio spending. According to a forecast by research firm eMarketer, podcast advertising spending will surpass 20 percent of digital radio ad spending this year and cross the $1-billion mark in 2021.

For 2020, podcast ad spending in the U.S. is expected to reach $782 million, up 10.4 percent from 2019 and giving it 21 percent of the U.S. digital radio ad market. In 2021, spending will jump nearly 45 percent to $1.13 billion.

eMarketer attributes the mainstream success of several podcasts—“Serial” in late 2014, “S-Town” in 2017 and the rise of political podcasts like “The Daily” and “Pod Save America” after the 2016 presidential election—to helping introduce the medium to a wider demographic.

“Growth in podcast advertising spend will be more resilient this year relative to digital radio advertising as a whole, which will see double-digit declines,” says eMarketer forecasting director at Insider Intelligence Shelleen Shum. “The continued growth in podcast advertising is no surprise, as investments have made podcasts accessible to a wider audience. The news genre, a focus of many podcast advertisers, has performed well during the pandemic. While some ad campaigns were paused in H1 due to the uncertainty from COVID-19 lockdowns, we expect a rebound in Q3 and Q4.”

Only a very small percentage of podcast advertising is bought programmatically. This year, just four percent will be programmatic, with that figure increasing to six percent next year. eMarketer expects triple-digit growth to continue through 2021, as investments in audience measurement and the shift from un-trackable baked-in ads toward dynamically inserted ones pave the way for programmatic buys. By 2022, eight percent of podcast ads are expected to be traded programmatically.

“One of the key challenges in podcast advertising is the lack of uniformity in measurement,” Shum says. “The IAB [Interactive Advertising Bureau] has released a set of guidelines to establish a common set of ad metrics for podcasts, which should bring some standardization to the industry and give advertisers more confidence.”

Strong listener growth has driven podcast advertising in recent years, as significant investments from major audio streaming services made podcast content more accessible. This year, 105.6 million people in the U.S. will listen to podcasts, surpassing 100 million for the first time. That equates to half of U.S. digital audio listeners.

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