This story initially appeared in Scorching Pod Insider, The Verge’s publication in regards to the largest occasions in audio. You possibly can enroll right here.
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 acquired tighter, and corporations began shedding audio staff after years of frenzied hiring.
What does 2023 have in retailer? If we have now realized something in any respect from the last decade up to now, it’s to count on the sudden. However seeing as I’m in as unhealthy a place to foretell the longer term as anybody, I spoke to some specialists about what they anticipate for the yr to return. The highest line: if the financial system avoids any massive 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 manner again.
What precisely is happening with the promoting market?
The promoting market, to make use of trade terminology, is tender. It’s not terrible — there are nonetheless loads of advert {dollars} flowing to varied forms of media — however it isn’t 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 lots of you studying this already understand how this works, however promoting is extraordinarily inclined to financial disruption. And there have been fairly a number of disruptions in 2022: the warfare in Ukraine pushing up power prices; excessive inflation making every part from greens to auto insurance coverage dearer; and rising rates of interest pushing inventory costs down. Altogether, these elements make it dearer to run a enterprise. It additionally may pressure customers to spend much less on items and providers, and though that has probably not occurred but, it’s one thing that simply may if these financial circumstances proceed.
So companies that will 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 choose between issues like staffing, operations, client expertise, and advertising and marketing, advertising and marketing is normally the primary to go. Which means fewer advert {dollars} flowing to the companies that rely on them: conventional media, digital media, and social media.
“The uncertainty that folks talked about as an abstraction for many of 2022 is actually 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 govt. The chief famous that solely 5 p.c of its shopper base had submitted their advert budgets for the yr. In response to Willens, that’s extremely uncommon this near the tip of the yr. Usually, greater than half of these corporations would have performed so by now. “The uncertainty that folks talked about as an abstraction for many of 2022 is actually solely simply getting began,” Willens mentioned.
So what occurs subsequent within the advert market is actually 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 manner when you work in media, however extra on that later) and inflation is beginning to gradual. However a Bloomberg survey of greater than three dozen economists is extra pessimistic. They put the chance of a recession within the subsequent yr at 7 in 10.
What does that imply for podcasting specifically?
Barring all-out financial catastrophe, podcasting must be okay. Not nice, not horrible, however nice. The issue is that the trade has been working underneath the idea 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 p.c — practically the identical development price as in 2022. However that can be about half the expansion price podcasting skilled in 2021. Worse, that price is predicted to drop by greater than 10 factors in 2024. “Folks overestimated and misinterpreted the bounce again in 2021 as an indication that was going to be a springboard into actual sustained blockbuster development,” Willens mentioned. “And also you see throughout media that has confirmed to be fairly incorrect.”
Through the growth time, corporations like Spotify, Amazon, and SiriusXM invested lots of of thousands and thousands of {dollars} in podcast tech and content material with the expectation that the sector would proceed to develop. Even when traders are usually 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 largest podcasts available on the market (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. Unbiased creators, who’re already having a harder time breaking out than they did a number of years in the past, will likely be left to choose up the scraps.
Can we count on 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 minimize advert budgets earlier than reducing employees. However these advert cuts simply find yourself leading to layoffs in ad-based companies. (Fortunate us!)
The again half of 2022 was plagued by freaky layoff information, and there’s no purpose to assume that would be the final of it. CNN and Spotify minimize podcast producers, Twitter ousted practically all of its Areas staff, and Bloomberg reviews 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, mentioned he wouldn’t be stunned if SiriusXM minimize some jobs. He pointed to CEO Jennifer Witz’s current remark to analysts about utilizing a “disciplined method to price administration” as a sign that some roles could possibly be minimize. Even so, he doesn’t count on widespread cuts. “I don’t assume there’s any ‘oh, gosh’ second the place they appeared on the enterprise mannequin and actually want that that they had performed all that a lot otherwise,” he mentioned. “It’s only a matter of trimming a bit of 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 minimize when the financial system is messy. With an anticipated $20 million decline in such sponsorships, the community took the drastic transfer of reducing its summer season 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 could possibly be tenuous.
“There’s nowhere to cover in a harder financial atmosphere. From an promoting standpoint, every part will get hit.”
Then there are the information media shops which have invested in podcasting in recent times. Publications which might be depending on digital show promoting and subscriptions are experiencing deep cuts, together with Gannett, Vice, and, quickly, The Washington Publish. Many audio employees are embedded at such corporations and could possibly be vulnerable to dropping their jobs, however what number of will likely be let go relies on the corporate’s priorities. On one hand, audio promoting is faring higher than digital show promoting, so these jobs could possibly be seen as extra precious. Alternatively, they aren’t essentially thought-about a part of the core enterprise and could possibly be among the many first to go.
Media trade analyst Craig Huber doesn’t count on that publications are going to drag again from audio altogether. But when the financial system does get considerably worse, any job could possibly be in danger. “There’s nowhere to cover in a harder financial atmosphere,” Huber mentioned. “From an promoting advertising and marketing standpoint, every part will get hit.”
On that gentle be aware, I want you a really completely satisfied vacation. And don’t despair! Issues go in cycles. As my private lord and savior Bruce Springsteen wrote, “All the pieces that dies sometime comes again.”
