Feb 14, 2024

Analysis Shows How Important Digital Audio Is Becoming For Retailers.

Digital audio ad spending continues to grow, with estimates that it will make up a fifth of all time spent with digital media in the U.S. this year. But where are the ad dollars coming from to support the medium? A Million Ads conducted a comprehensive analysis of over half a billion ad impressions over a three-month period and its data shows that a third of ad spend and impressions comes from a single category: retail. No other ad category is even close, with No. 2 travel accounting for less than half (15.3%) as much digital audio ad spending.

Steve Dunlop, founder and CEO of A Million Ads (AMA), says the appeal of dynamic audio for retail is driven by an ability to rotate through offers by date, product and location at a national scale. The result is large retail advertisers like Walmart, Target, Albertsons, and Kroger can deliver personalized and localized messaging at a national scale. It also means they can plan their advertising for the entire year ahead of time, and then use dynamic creative to keep the ad new and fresh over time by switching in dynamic lines for new products or offers or for seasonal moments.

“The personalized and targeted nature of digital audio allows for tailored messages that resonate with consumers’ immediate needs and preferences,” Dunlop says. “This immediacy and relevance of audio ads can significantly influence purchasing decisions, making them a powerful tool for boosting sales and enhancing the overall shopping experience.”

AMA has worked with most of the big retailers since it launched in 2015. Dunlop says the current Target campaign is especially noteworthy since it was their first “circular” campaign when it launched in 2022. Target embraced the always-on ad format using dynamic lines that are updated every week to match the offers and promotions that listeners can find at their local Target. “This is something that can only be achieved with dynamic audio,” Dunlop says.

Even though retail has the biggest share of digital audio ad spend and impressions, it was down by one metric. When AMA compared to a similar analysis conducted in 2022, it found retail had a 38.25% share. But while total retail ad spending went down six points year-to-year, it also reports retail ad impressions more than doubled during the same period.

“Retail is a category that consistently spends but experiences seasonal highs, such as the back-to-school period. As we observed, Q4, which includes Black Friday and Christmas, was likely even more significant for retail,” Dunlop says. “Looking ahead, in Q1, we expect to see increases in ad spend from travel, automotive, and health and lifestyle categories.”

Among some other categories, food and drink dropped from a 17.6% share in 2022 to a 7.0% share in 2023. Fashion went from a 13.4% share to a 3.0% share. And the share that came from ecommerce held relatively steady year-to-year. It includes such online retail brands as Amazon or eBay, while brands like travel site Booking.com have been added to their respective industry vertical.

Looking ahead, Dunlop sees digital audio playing a greater role in the marketing mix as media planners take stock of where consumers are turning.

“Digital audio’s rising popularity, with 75% of U.S. individuals tuning in monthly, is reshaping the media mix for brands, especially in retail. This surge in audio consumption has sparked a significant increase in audio advertising, a trend expected to persist into 2024,” he predicts. “Retailers are recognizing digital audio as a potent tool for reaching vast consumer bases, leading to increased investment in this channel. This shift is informed by the substantial engagement digital audio commands, offering an effective platform for marketers across the funnel.”

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