Omnicom Plans To Spend $20M On Spotify Podcasts

Omnicom Media Group plans to spend $20 million on advertising in podcasts distributed by Spotify Technology SA under a deal covering the second half of this year, The Wall Street Journal reports citing a company release.

It isn’t the first plan for significant spending ahead of time for the fast-growing podcasting industry. iHeartMedia Inc. has been handling much of its podcast sales through upfront negotiations for almost a year, according to Conal Byrne, president of the company’s iHeartPodcast Network.

But advertisers typically sponsor individual series when it comes to podcasts, where advertising is growing rapidly but remains relatively small. Marketers are projected to spend $863.4 million on advertising in U.S. podcasts this year, up from $678.7 million in 2019, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. By comparison, ad revenue from digital video in 2019 was $21.7 billion, the IAB said.

“It’s a big deal, a very big deal versus what we’ve done in the past,” said Catherine Sullivan, chief investment officer at Omnicom Media Group North America. Clients spent several million dollars through Omnicom to advertise in podcasts in 2019, she said.

Omnicom Media Group, part of advertising-agency holding company Omnicom Group Inc., is increasing its podcast investment now partly because audiences continue to grow and partly because technology is making the ads more targetable and measurable, Ms. Sullivan said.

“We know that audio works very well at increasing consumer attitudes and driving action, but we believe that adding addressability to the podcast format may increase metrics even further,” she said.

The deal also calls for collaboration on research and a first crack at new shows for Omnicom Media Group clients, which include McDonald’s Corp., PepsiCo Inc. and AT&T Inc.

Podcasting’s rise has been slowed in part by fragmentation and the lack of digital marketing tools such as addressability, said Dawn Ostroff, the chief content and advertising business officer at Spotify. “There’s not even a unified metric by which podcasts are being looked at by advertisers,” she said.