Podcasting Ad Revenue to Grow, Still be Small Piece of Pie

MediaWeek reports on an eMarketer study that predicts that

… podcasting advertising will quintuple over the next five years, from a paltry $80 million base in 2006 to a $400 million market in 2011. (Granted, this is still on the small side, considering the $20 billion interactive ad market expected this year.)

Muhammed Saleem over at 901am seems pleased.  He writes

Every once in a while someone accidentally runs into a magic lamp and a guru pops up telling us that Podcasting has already had its 15 minutes and is a fad that is ready to pass.

In spite of that, Podcasting has managed to stay relatively hot …

Still I don’t believe $400 million in total market is likely to lure too many big players to the table.  Of course, if they came they might help juice that number substantially through providing more mainstream content to lure in average iPod users who probably don’t even know what a podcast is.

And I guess while I’m at it, I should note my general skepticism toward these types of market predictions, especially in extremely young markets like podcasting.  I realize analysts do it in all sorts of sectors, but it is still more art than science.  In larger, established industries, at least one can make educated guesses by assessing past performance and looking at key economic indicators and forecasts.  But in podcasting, I have believe it is much more of a crapshoot.

Mark Evans makes a similar point when he blogs:

Riddle me this: in a new report, eMarketer expects podcast advertising (aka pod-vertising) to grow to $400-million by 2011 from $80-million in 2006. Sure, it’s a drop in the overall bucket but $400-million will still be more a bigger market than blog-vertising, which is expected to be about $300-million in 2010, according to PQ Media.

Todd Cochcrane is also skeptical and writes over at Geek News Central that “While I would love to see 400 Million dropped annually into the space, the podcasting listening and producing community is going to have to get a lot bigger.”

Finally, Frederic over at The Last Podcast says that podcasting is harder than blogging and the barriers to entry are higher because of all the production effort.  In addition:

Advertisers would need to be able to produce good, radio-style ads to make a mark on a podcast and podcasters will want those ads to at least match their own production values so that there is no cringeworthy ad that will turn listeners off. Besides, when hiring a production company for the spot, the costs suddenly rise exponentially when compared to just writing five lines for an AdWords campaign.

I disagree with this assessment.  I think the obstacle to podcasting revenue growth is not the production effort of creating podcasts (it’s actually pretty simple to get something of AM radio quality).  And it isn’t the challenge for advertisers to create ads (listen to the local radio, there are all sorts of low-cost ads being produced, for better or for worse). 

To me, the challenge is audience.  There isn’t a large enough one right now.  Podcasting needs to become more mainstream, as does blogging, in order to realize truly significant advertising revenues.  Niche advertising is great, but the value of blogs and podcasts — for the most part, there are certainly exceptions — lies in the indirect revenue they can generate by improving the reputation of the content producers, rather than as a lucrative direct revenue generator.