A busy morning in the podcast world as the IAB has released the 2023 podcast advertising study & iHeartMedia reported Q1 earnings. Let's dive in! First: IAB The headlines are simple: - Podcast ad revenue grew by 5% in '23, just shy of $2b (US). Yes, this is slower growth than we have seen previously (I can hear those misinformed headlines being typed as we speak!). If you look at the major players and their quarterly earnings over the last year, they all saw growth. So, what slowed down overall revenue? Simply, it was the middle & lower tier of podcasting. Brand dollars went to Spotify, iHeartMedia, SiriusXM, etc., increasing the delta between those platforms & the independent publisher. - But wait, there's more... Podcast revenue is projected to more than double its 2023 ad revenue growth rate in 2024 and is tracking to a total spend of $2.6b by 2026. So what does this mean? This means that podcasting remains very healthy and the best revenue growth opportunity in digital media for the foreseeable future. We're seeing increased revenue growth from all the big players, and those dollars do trickle down to the mid-tier, especially as they tap into existing marketplaces. All is good. https://lnkd.in/eCGxgnUs --- Now, onto iHeartMedia: Overall, the company made $799 million, down YoY by 1.5%. If you take out political revenue, they're down 2.5% (and the stock reflects that, down ≈31% today as of writing this... eesh). Their Digital Audio Group saw revenue of $239m, up 7%. Not bad! Thankfully, iHeart breaks out their podcast numbers, which were $91m, up 18%! If you remove podcast revenue, the digital group is only up 1%. So, like with SiriusXM, we see podcast revenue as the tide raising all boats. So what does that mean? It's the same story as SXM: a declining business focused on radio that is desperately trying to grow its digital initiatives to offset losses from its bread and butter. And podcasting is the only digital venture that is working—and it's working well! But will it work quickly enough? That's a tough one. Podcasting now makes up 11.3% of the overall revenue, which is tremendous growth but needs to be bigger to offset the rest. So, what happens? While the company tries to grow digitally as quickly as possible, it is also creating quite a valuable asset that could be attractive to an outside buyer. $400-500m/yr in revenue with an extensive podcast network, ad marketplace, and technology could be quite the bundle for larger companies that have yet to enter the podcast space... 👀 Never a dull moment! --- I'm the CEO and founder of DWNLOAD Media, a fund focused on acquiring majority stakes in podcast companies. With continued audience and revenue growth, podcasting continues to be the most under-valued medium, making it time to invest in audio. If you're interested in investing in the podcast space, DM me! #podcasts #audio #investing #podcasting #iheart #radio
Tutuwa Ahwoi
2mo
Great breakdown of the IAB report and iHeart earnings! The slower growth in overall podcast revenue is interesting, but the focus on the continued strength of major players and the projected growth for 2024 is a positive outlook. It highlights the need for mid-tier publishers to explore new strategies. On the investment side, I completely agree that podcasting is undervalued. For those considering entering the space, it's crucial to have a solid understanding of audience demographics, content niches, and monetization strategies beyond just advertising.
Alan Hirschbein
2mo
Great synopsis Chris of an otherwise alarming headline. Another area for optimism is that many bad deals will eventually expire increasing margins and freeing up cash flow to reinvest in marketing, AdTech and human capital
Frank Hajdu
2mo
Can't tell you how much I appreciate your breakdowns.
Andrew Curran
2mo
Chris, thanks for your insight.
CEO | Board Advisor | Tech + Audio Enthusiast | Passionate Music Fan
2moIs another PE play in the future for broadcast radio, with the high-growth podcast (and some other digital assets) stripped off and sold for a healthy revenue multiple while the declining radio assets — which still throw off a lot of cash — get the roll-up slash and burn treatment? Your thoughts?