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It looks like 2022 was the yr when podcasting got here again to earth. After years of go-go development, podcast hits going mainstream, main company funding, and hype in regards to the market to return ($4 billion by 2024!!), optimism in regards to the trade hit the wall of an unsure financial system. M&A took a breather, promoting bought tighter, and corporations began shedding audio staff after years of frenzied hiring.
What does 2023 have in retailer? If now we have realized something in any respect from the last decade to date, it’s to anticipate the sudden. However seeing as I’m in as dangerous a place to foretell the longer term as anybody, I spoke to some consultants about what they anticipate for the yr to return. The highest line: if the financial system avoids any large downturns, we’ll see extra of the identical for podcasting — slowing, however manageable, development. If there’s a recession, then it may set the trade method again.
What precisely is occurring with the promoting market?
The promoting market, to make use of trade terminology, is smooth. It’s not terrible — there are nonetheless loads of advert {dollars} flowing to varied kinds of media — however it’s not rising as a lot because it had been. And there may be potential for it to get considerably worse in 2023.
That is going to sound actually primary, and positively a lot of you studying this already know the way this works, however promoting is extraordinarily vulnerable to financial disruption. And there have been fairly a couple of disruptions in 2022: the warfare in Ukraine pushing up vitality prices; excessive inflation making everything from vegetables to auto insurance costlier; and rising rates of interest pushing inventory costs down. Altogether, these components make it costlier to run a enterprise. It additionally may drive customers to spend much less on items and providers, and though that has not really happened yet, it’s one thing that simply may if these financial situations proceed.
So companies that may in any other case be spending cash on promoting are both feeling the ache or are being conservative within the face of uncertainty. And when these companies have to select between issues like staffing, operations, client expertise, and advertising, advertising is often the primary to go. Meaning fewer advert {dollars} flowing to the companies that rely upon them: conventional media, digital media, and social media.
“The uncertainty that folks talked about as an abstraction for many of 2022 is de facto solely simply getting began.”
Which isn’t to say that the advert market has collapsed, however it’s wobbly. Max Willens, a senior analyst at eMarketer, says that he observed one thing odd when he spoke with an advert company government. The chief famous that solely 5 % of its consumer base had submitted their advert budgets for the yr. In keeping with Willens, that’s extremely uncommon this near the top of the yr. Usually, greater than half of these corporations would have achieved so by now. “The uncertainty that folks talked about as an abstraction for many of 2022 is de facto solely simply getting began,” Willens stated.
So what occurs subsequent within the advert market is de facto depending on what occurs in the remainder of the financial system. The job market remains to be tight (even when it doesn’t really feel that method when you work in media, however extra on that later) and inflation is starting to slow. However a Bloomberg survey of greater than three dozen economists is extra pessimistic. They put the probability of a recession within the subsequent yr at 7 in 10.
What does that imply for podcasting specifically?
Barring all-out financial catastrophe, podcasting needs to be okay. Not nice, not horrible, however nice. The issue is that the trade has been working underneath the belief that podcast development would proceed to be as sturdy because it has been for the previous a number of years.
For 2023, eMarketer estimates that podcast advert income ought to nonetheless develop by 28.8 % — almost the identical development charge as in 2022. However that can also be about half the expansion charge podcasting skilled in 2021. Worse, that charge is predicted to drop by greater than 10 factors in 2024. “Individuals overestimated and misinterpreted the bounce again in 2021 as an indication that was going to be a springboard into actual sustained blockbuster development,” Willens stated. “And also you see throughout media that has confirmed to be fairly incorrect.”
Through the increase time, corporations like Spotify, Amazon, and SiriusXM invested a whole lot of hundreds of thousands of {dollars} in podcast tech and content material with the expectation that the sector would proceed to develop. Even when buyers usually are not thrilled with how a lot they spent (and their present podcast revenue margins), they’re in a greater place to seize what advert {dollars} are flowing into the market. With the most important podcasts in the marketplace (Spotify and Joe Rogan, Wondery and SmartLess, SiriusXM and Crime Junkie) and most subtle tech stacks, they’re in a greater place to climate a downturn. Impartial creators, who’re already having a more durable time breaking out than they did a couple of years in the past, shall be left to select up the scraps.
Can we anticipate extra layoffs?
Most likely. At the same time as layoffs have been averted in lots of sectors of the financial system, that has not been the case in tech and media. Like I discussed up high, companies will lower advert budgets earlier than slicing staff. However these advert cuts simply find yourself leading to layoffs in ad-based companies. (Fortunate us!)
The again half of 2022 was suffering from freaky layoff information, and there’s no purpose to suppose that would be the final of it. CNN and Spotify lower podcast producers, Twitter ousted almost all of its Areas workforce, and Bloomberg reports that SiriusXM layoffs are on the horizon. However the job cuts usually tend to be a correction than an all-out gutting.
Matthew Harrigan, an analyst at The Benchmark Firm who covers SiriusXM, stated he wouldn’t be shocked if SiriusXM lower some jobs. He pointed to CEO Jennifer Witz’s latest remark to analysts about utilizing a “disciplined method to value administration” as a sign that some roles might be lower. Even so, he doesn’t anticipate widespread cuts. “I don’t suppose there’s any ‘oh, gosh’ second the place they regarded on the enterprise mannequin and actually want that that they had achieved all that a lot in another way,” he stated. “It’s only a matter of trimming just a little bit.”
However even a handful of layoffs can rattle individuals working within the trade, and never all corporations are in the identical place. NPR, which is a nonprofit, is fairly depending on company sponsorship, one other line merchandise companies lower when the financial system is messy. With an anticipated $20 million decline in such sponsorships, the community took the drastic transfer of cutting its summer internship program. Audacy must handle its huge debt and is reportedly contemplating promoting off podcast studio Cadence13, which has in any other case been a giant success for them. If Cadence13 lands elsewhere, job safety might be tenuous.
“There’s nowhere to cover in a more durable financial atmosphere. From an promoting standpoint, the whole lot will get hit.”
Then there are the information media retailers which have invested in podcasting in recent times. Publications which are depending on digital show promoting and subscriptions are experiencing deep cuts, together with Gannett, Vice, and, quickly, The Washington Post. Many audio staff are embedded at such corporations and might be liable to shedding their jobs, however what number of shall be let go relies on the corporate’s priorities. On one hand, audio promoting is faring higher than digital show promoting, so these jobs might be seen as extra useful. However, they aren’t essentially thought-about a part of the core enterprise and might be among the many first to go.
Media trade analyst Craig Huber doesn’t anticipate that publications are going to drag again from audio altogether. But when the financial system does get considerably worse, any job might be in danger. “There’s nowhere to cover in a more durable financial atmosphere,” Huber stated. “From an promoting advertising standpoint, the whole lot will get hit.”
On that gentle be aware, I want you a really completely happy vacation. And don’t despair! Issues go in cycles. As my personal lord and savior Bruce Springsteen wrote, “Every thing that dies sometime comes again.”
