Chasing Dollars, Losing Sense: The Hidden Cost of Podcast Monetization for Listeners and Advertisers

Open nearly any podcast network or industry newsletter and you’re likely to find an article about the increasing growth of the podcast channel, evidence that podcasts are the fastest-growing media channel today, and lists that tout the “top networks” in the channel along with announcements of their newly-acquired shows and multi-million dollar deals. 

While it’s all exciting news, what we don’t see nearly as often is the context of that growth or an explanation of the experiential or business costs of that growth. 

Audiences are growing and so are the ad dollars investing in the channel, but what does “growth” actually mean for the longevity of this channel?

It all started with a personal anecdote

A colleague shared a story in one of our internal Slack channels about how the listening experience of their favorite podcast had changed over time, and every other member of our team responded with their own spin on the same theme: Podcast listening is changing, and it’s largely been a negative experience. While we could chalk this up to coincidental opinion, the observations were similar enough to set off alarm bells for this team of podcast advertising experts. 

While we work in this channel as advertisers, many of us started as consumers of podcasts. We experienced the creativity of host-read ads, which were funny, quirky, or helpful, and gave a glimpse into the host’s life—often inspiring us to buy products, too. 

However, over time, the format started to shift. We started seeing more ad stuffing, the same ads running over and over (likely due to errors in ad insertion or lack of ability to frequency cap), a decrease in advertiser variety, and ads not read by a host—all reasons to hit the skip button. Over time, the experience continued to worsen, feeling more akin to unpersonalized radio or TV commercial breaks, and nothing like the host-read, entertaining, organic ad integrations we originally enjoyed.  

With that anecdotal experience in mind, we decided to put data behind this gnawing feeling that the way the podcast channel is growing is in fact not all positive—not just for the listener, but for advertisers as well. We feared that some of the evolution may actually be accelerating a decline in advertising effectiveness and efficiency, which could erode the long-term viability of the channel if we don’t get ahead of it now. 

‍The data is clear: Podcast advertising is losing what made it special

Seven years of testing, data collection, and deep analysis has shown us that 60-second host-read ads are the gold standard of podcast advertising. When shows have higher prevalence of host-read ads, and lower prevalence of ads in general, we see a more engaged audience, which leads to stronger conversion rates and the ability for advertisers to scale in the channel.

We know host-read ads perform better than the alternative, but to understand the impact ad load has on performance, we did a deep-dive analysis for eleven shows—each of which have a minimum of five years of data from Magellan as well as five years of statistically significant RSU advertiser performance data. This analysis showed a connection at the show level among ad load increase over time, whether that trend suggested ad load would continue to climb or fall, and the change in performance across advertisers for each of those shows during the same period.

To get more granular on how we looked at performance, we evaluated each show’s Performance Index, a metric that measures multiple advertisers' performance against a single show to determine overall success, while still controlling for wide variation in category, CPA target, and volume of conversions.

In the chart below, the orange line reflects percent increase in ad load (right axis) and the bar chart reflects the percent in Performance Index decline (left axis). We do see a general relationship between the percent increase in ad load and whether Performance Index has increased or decreased over time.

• Shows with increased ad load have generally seen a decline in performance; shows with lower ad load increases have also seen a performance decline, but to a lesser extent than those with greater ad load increase.
• 10 of the 11 shows saw increased ad load over time; 9 of these also saw lower performance over time.
• 9 of the 11 shows saw lower performance over time; of the 2 shows that did see an increase in performance, one of them had among the lower in ad load increases, and the other actually saw a decrease in ad load.
• 8 of the 11 are trending toward higher ad volume; and all 8 of these have seen performance decline over time.
• 3 of 11 shows are trending toward lower ad volume, and 2 of these actually saw a performance improvement over time; the third saw one of the sharpest performance declines, so the recent trend toward lower ad volume could be a response to that decline (in an effort to improve).

‍Third-party data also confirms podcast advertising is growing… like weeds

We’ve worked with Magellan AI and its robust ad monitoring tools to analyze industry data dating back to 2018 and put context to the growth we’ve seen in the channel. Magellan estimated $170 million in podcast ad spend in 2018, and $2.3 billion in 2023. There have been years of budget feast and famine, due to the COVID-19 rebound and economic pressures, respectively, but the overarching channel-level trend has been the classic "up and to the right" high growth curve playing out in realtime.

The charts below show channel growth is not just from an influx of advertisers entering the space, vying for the same ad inventory and driving up prices. Ad volume has also grown substantially since 2018. In fact, it appears to be a combination of more advertisers AND more ads contributing to an overall increase in the number of ads podcast listeners are hearing in each individual episode across shows.

Spend in 2023 was 82% higher than in 2018, and the vast majority of that growth was from produced, non-host read ads.

The number of shows grew by 4x between 2018 and 2023, but the total number of advertisers in the channel increased by nearly 6x. Average episodic ad load has increased 82% (2.26 average ads in 2018 versus 4.1 in 2024 YTD). 

Volume of ads in all positions (pre-, mid-, and post-roll) has increased YOY since 2019, with more ad slots being monetized today than ever before. 

The average number of host-read ads has increased by just 9% since 2018, but produced ads (producer, voice talent, or brand spots) have jumped by 155%. As a percentage of overall ads, host-reads have actually dropped by 22%.

Across all shows regardless of length of content, we saw a 75%+ increase in ad load in 2024 vs. 2018. For shows 30-90 minutes long (~60% of all shows), we saw an 85%+ increase in ad load. 

There’s a notable drop-off in host-read ads in 2023 and 2024, which supports the trend of performance decline we’re seeing in our own internal data.

The TL;DR version of this data is that overall ad volume is rising each year, the ad load is increasingly dominated by non-host read ads, and the prevalence of host reads continues to fall. 

The effect this combination of factors is having on the channel is concerning; host-read ads and the positive impact they have on both the listening experience as well as marketing effectiveness is what attracted advertisers to this channel in the first place. The podcast listener-host relationship is powerful, and when it’s done right, authenticity and influence are arguably unparalleled; when the content flows naturally into host-read ads (without feeling like “commercial breaks”), the ads simply become an organic and entertaining part of the overall listening experience. The podcast audience should be the first priority in the podcast channel, because without an audience, there is no content for advertisers to support. 

Right Side Up is doing it best, with best practices supported by third-party research

Preserving host-read ads in shows with minimal ad load is paramount to our strategy, and more and more research is emerging supporting the best practices RSU has been preaching for years—and it’s all aligned with what it’s going to take to preserve the longevity of this advertising medium. 

The recent Ad Nauseum study published by Sounds Profitable and The Danger of Rising PodLoad  from Oxford Road and Podscribe both echo our concerns and the findings we’re discussing today. More networks and show hosts need to acknowledge this data and institute best practices for planning and ad creative, as well as implement RSU’s terms and conditions around the maximum ad load that should be tolerated in shows. If we can work together to align on industry standards instead of focusing solely on growth and monetization, we may have a shot at preserving the listening experience while likely improving efficiency of advertiser investments in the space, leading to more sustainable channel growth over time.

Ideal Future State of Podcast Ads: Lower Ad Load and More Host Reads

Our internal data and the outside research is clear: Over-monetization is hurting both the podcast listener experience as well as negatively impacting efficiency in this channel for many advertisers. Selling more impressions in sub-optimal placements with unpersonalized creative at the expense of engagement is not an impression worth buying. If we must, it will be at a reduced rate—which networks and show hosts will likely agree is not in the best interest of anyone’s goals for the future monetization of the channel.

We’re at a breaking point in the industry, and we need to make a course-correction in how we’re valuing and monetizing podcast advertising. We need to focus on what makes this channel special, so we can preserve it for the audience, which then in turn preserves it for advertisers, show hosts, and networks. 

If you’re a brand looking for help navigating the podcast channel, reach out to us—we’d love to connect.