The playlist
Audio ads’ appeal in numbers
Spotify report suggests that in 2022, around 222.7 million people in the United States listened to digital audio every month. And Insider Intelligence suggests that an average grown-up spent about 1 hour and 43 minutes a day hooked on digital audio in 2023. For active listeners, that number jumped to 2 hours and 20 minutes daily.
And be it enjoying music amidst losing the battle with the morning traffic, catching a podcast while waiting in a queue, or tuning into a radio sports broadcast discreetly during an office meeting — the overall audio content popularity explains why digital audio ads have become a sought-after opportunity for advertisers and brands:
1.6 billion users — the anticipated reach of the Digital Audio Advertising market by 2028.
$11.13 billion — the projected ad spending in the Digital Audio Advertising market in 2024.
50% — the expected growth in the US digital audio ad spend between now and 2026.
$12 billion — the anticipated revenue from podcast ads in the US by 2030.
73% of buy-side respondents allocate between 1-25% of their total ad spend to digital audio.
31.7% was the observed growth in programmatic digital audio ad spend in 2021.
80.5% — the increase in programmatic podcast ad spend in 2022.
What is programmatic audio advertising?
Programmatic audio advertising involves all the processes allowing the automated placement of audio ads within various platforms such as podcasts, digital radio, and music-streaming services. Apart from these audio inventories, advertisers have the option to incorporate audio ads in audiobooks, audio articles, online video games, and voice searches.
In general, programmatic advertising functions as a dynamic marketplace utilizing data and automation for real-time buying and selling of advertising space, with limited human involvement.
Oxagile’s expert takes the mic
- Even with the multitude of audio inventory options available, music streaming services like Amazon Music and Spotify remain the main source for audio ad spaces.
- While in Europe the primary audio ad spend in programmatic advertising goes to music, in the United States — to digital radio. This is largely facilitated by HD Radio technology, which enables the broadcasting of conventional AM and FM stations in a digital format along with additional digital content.
How does programmatic audio advertising work?
To grasp the factors fueling programmatic ad revenues, it is worthwhile to gain a general understanding of what stands behind it.
The history of programmatic audio advertising had a somewhat chaotic beginning, with processes being almost intuitive, primarily because of the lack of clear specifications and standards for many years. However, in 2014, the IAB, a digital advertising association, brought order with the creation of the Digital Audio Ad Serving Template (DAAST), basically the much-needed rulebook for the programmatic audio concept.
The voice of expert
In the past, there were separate standards for structuring ad tags for video (VAST) and audio (DAAST). However, in its latest version, VAST has evolved to provide support for both video and audio ads. This means that advertisers and publishers can use a unified approach to deliver their content across various platforms.
Today, the VAST protocol perfectly outlines the procedure for situating linear audio advertisements either prior to, following, or within the midst of the audio content. Typically, these ads are harmoniously paired with a spectrum of formats:
Companion Ads
Companion ads are supportive visuals or display elements that accompany the main content. In the context of audio, they may include relevant images or interactive components that enhance engagement without interrupting the primary audio content.
At times, you’ll find them lingering on the screen even after the audio wraps up, giving the user the option to interact with the ad whenever it suits them. Importantly, this format doesn’t require any immediate user action.
Skippable Ads
Skippable programmatic audio ads give users the option to skip the advertisement after brief viewing, respecting their time. At the same time, they provide advertisers with an excellent, cost-effective (as it is a more budget-friendly method of purchasing ads) opportunity to test content and identify what clicks best with their audience.
Rewarded Ads
Rewarded ads provide users with an incentive in exchange for viewing ads. It’s most popular in app genres such as games, where reward advertising boosts the brand’s message by offering extra lives, coins, daily rewards, exclusive content, etc. The appeal of advertisements in this format stems from their ability to evade ad blockers, ensuring substantial profits for all interested parties.
Podcast Ads
Podcast ads are integrated promotional messages within podcast episodes. These ads can take various forms, including host-read endorsements or pre-recorded segments, tailored to fit the podcast’s style and tone. Incidentally, this stands out as one of the most impactful audio advertising formats in the current landscape. Based on a podcast advertising survey conducted by Voices in 2022, more than 75% of listeners either made a purchase or contemplated buying a product or service promoted on their favorite shows.
These were the theoretical concepts embedded in programmatic audio advertising. Now, let’s briefly explore how it works in real life.
Audio streaming platforms use supply-side platforms (SSPs), offering valuable ad spaces within podcasts, music streams, or other digital content. These spaces come in various forms, including pre, mid, or post-roll slots.
Advertisers access this inventory through demand-side platforms (DSPs), fine-tuning their preferences with specifications such as target audience, budget, and campaign details.
An ad exchange, serving as a mediator, facilitates the efficient matching of available advertising inventory from publishers with the real-time demand expressed by advertisers through bidding protocols.
It acts as a digital marketplace connecting DSPs with SSPs, managing the automatic auction process that determines the most suitable ad for display on a publisher’s platform.
And just like that, once the ad exchange automatically connects DSPs with SSPs, the story ends with the most suitable ad displaying in the right place on a publisher’s platform. No manual intervention, no bias, only data-driven ad placement with optimized relevance and impact.
The power of audio ads can upgrade your advertising strategy
Oxagile experts can guide you through all technical and operational nuances of introducing or optimizing audio ad insertion across various media platforms and help you enhance their ROI measurement capabilities.
Major benefits of programmatic audio advertising
If you’ve already come across the definition of programmatic advertising anywhere online, you’ve likely encountered terms like “seamlessly” and “conveniently” right from the start.
Does this imply we’ll overlook its merits when they’re already so evident? Quite the contrary. Our aim here is not just to provide basic information, but to encourage advertisers and publishers to recognize the less obvious yet substantial ways in which these advantages of programmatic advertising profoundly influence the ultimate return on investment.
Precision in targeting
The first clear advantage of programmatic audio advertising is that it allows for the incorporation of specific audio data from partners, enabling the accurate targeting of precise demographics, playlists, niches, and genres that resonate with the campaign’s theme or mood.
Beyond that, programmatic audio advertising has opened up new possibilities for measuring and analyzing campaign performance. Apart from usual good things like a publisher’s ability to keep tabs on data from users who are logged in, providing marketers with helpful insights, programmatic advertising allows tracking the cost per thousand impressions (CPM) in real-time, allowing to easily make necessary adjustments without waiting for reports from publishers.
Do you hear? It’s the sound of expertise
About 90% of users in America continue to listen to the radio daily, with the majority preferring to do so outside their homes. And despite stereotypes suggesting that it is a relic of the past, digital radio provides a unique opportunity for programmatic targeting that is hard to find elsewhere.
It enables advertisers to adapt the ad content to the weather, car brand, and type of car audio system or device used for listening.
Moreover, there are great possibilities to get data from third parties, such as radio stations, which, in its turn, can be integrated with information from operators, creating the potential for highly targeted advertising strategies aimed at increasing brand awareness.
And although radio audio advertising is mainly dominated by large businesses, the ability to choose a specific radio station, city, or age group provides small enterprises with unique opportunities to precisely reach their target audience.
Unhindered audience outreach
The audio content format presents a distinct advantage as it remains immune to ad blockers, safeguarding publishers from potential revenue losses associated with blocked impressions.
The unique characteristics of the audio format eliminate the need for publishers to struggle for user attention, setting it apart from other advertising methods. Unlike visual creatives, programmatic audio ads are delivered one at a time, ensuring they are not placed adjacent to each other. This distinction minimizes competition for user focus, allowing advertisers to capture attention more effectively and potentially enhance the impact of their message.
And on top of this, his approach is deemed cost-effective in comparison to alternative advertising methods.
Unaffected by the removal of cookies
Digital audio naturally comes with a good dose of organization. You’ve got music neatly sorted by genre, the latest trends, and playlists to suit every mood. And don’t forget podcasts — they’ve got their own categories to make it easy for us to find more of what we love. So, in a nutshell, digital audio is like a champ when it comes to making advertising fit right into the conversation, without relying too much on our online behavior.
These applications have the capability to access users’ first-party data and leverage first-party trackers, providing advertisers and publishers with comprehensive insights and enhanced analytics, devoid of any challenges associated with cookies’ elimination.
Real-time adaptability
In addition to its real-time tracking of ad exposure and engagement levels, programmatic advertising gives the capability to make necessary adjustments and improvements to the creatives themselves.
A notable aspect of programmatic advertising is dynamic ad insertion, allowing advertisers to deliver personalized ads tailored to the specific audience viewing them. This involves creating numerous ad variations that are highly targeted.
Enhanced creative opportunities
Nothing holds more value than personalization, except perhaps interactivity. A recent study by Neuro-Insight found that smart speaker ads with a brand connection can ignite a 25 percent surge in brain activity compared to traditional audio ads. This makes them not just memorable, but emotionally gripping.
Excitingly, in today’s landscape, there are abundant opportunities to create attention-grabbing ads featuring voice-driven interactivity, when listeners, for instance, can request information or order products directly from an audio ad.
Oxagile’s expert is on air
Motion-activated ad technology is one more great way to interact with users. It can prompt listeners to shake their phones to complete a specific action, such as downloading a mobile application or registering for a discount.
Programmatic audio advertising challenges
Lack of measurement standardization
The limitations of measurement standards for audio advertising are evident as metrics undergo continuous refinement. Since there’s no agreed-upon standard for measurement that everyone uses, it’s tough to compare how effective ads are on different platforms. This lack of universal agreement on measurement criteria makes it difficult to draw accurate comparisons and assessments of performance, poising challenges to making informed decisions and optimizing strategies.
Limited inventory
It’s true that the shift towards premium, ad-free subscription services and the availability of music for purchase online have posed challenges for advertisers in the audio space. The preference for ad-free content can limit the reach of traditional audio ads. Additionally, the dominance of visual and video channels with more scalable inventory has made brands approach audio advertising cautiously. This is further complicated by the fact that many streaming audio platforms control a significant portion of ad spending through their self-serve platforms and are rather slow to make more of their inventory available through programmatic platforms.
However, there is a positive trend emerging, with companies recognizing the potential of audio advertising for building brand awareness and driving sales. This growing awareness is expected to result in greater investment and enthusiasm in audio platforms, potentially causing a change in industry dynamics and creating more chances for brands to engage with audiences in the audio space.
Trends in the programmatic audio ads
The overarching trend revolves around the increasing listenership of digital audio and audio ads being utilized to deliver comprehensive value throughout the entire marketing funnel. In our fresh article, we extensively explored this phenomenon and other most promising trends for the upcoming year, so here we’ll briefly highlight what is currently most relevant in programmatic advertising:
- Audio advertising proves its effectiveness in reaching diverse audiences across different settings and influencing various stages of the consumer decision-making journey.
- Dynamic Creative Optimization (DCO) taps into user data and AI to create personalized ad variations in real-time, allowing for seamless testing and optimization.
- Interactive programmatic audio ads redefine audience engagement by incorporating Natural Language Processing (NLP) through smart speakers, mobile music streaming services, and in-vehicle infotainment systems.
- Acknowledging the growing global gaming community, brands leverage games as a platform to connect with new audiences. In-game programmatic audio ads offer a subtler and less intrusive way for brands to engage with gamers.
Should you leverage digital audio ads in 2024?
To wrap it up, we are sure that the digital audio programmatic advertising scene is set to boom in 2024 and later. The incorporation of data-driven targeting, alongside heightened creative opportunities and a robust resistance to ad-blockers, solidifies digital audio programmatic advertising as a cornerstone in the future of advertising.
More listeners, a surge in smart speakers at homes, and the rising popularity of podcasts and streaming services mean advertisers have a goldmine here.
Bottom line? For advertisers seeking to optimize their media mix, now is an opportune moment to delve into the potential of digital audio ads. Can Oxagile help? Without a doubt. Our extensive experience in deploying audio advertisements across both linear and non-linear platforms, coupled with a nuanced understanding of dynamic ad insertion mechanisms, positions our AdTech developers to create a seamless and effective engagement with ads for your audience.
