There’s a new online ad format that doesn’t annoy people

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A new online ad format is proving less annoying to people, and it's one that allows advertisers to reach a more relevant audience: digital audio.

Online advertising is currently under much scrutiny, with around 30 percent of Americans set to use ad blockers on their smartphones and other devices this year, up from 27.5 percent in 2017. The industry has responded by tackling poor online advertising with new Better Ad Standards guidelines, with Google starting to block "bad" ads in its Chrome browser from February.

But sponsorship of digital audio products and podcasts are a particularly good way to reach people, according to a new report by research body WARC. This includes services like Spotify, as well as digital radio formats.

"In the U.S., advertisers are investing more in digital audio, lured by the format's targeting capabilities on platforms such as Spotify," said WARC's Data Editor James McDonald in an emailed statement. "Podcast sponsorship also presents an opportunity, as consumers seem willing to tolerate advertising in exchange for supporting the content they love."

Amazon has big plans for Alexa ads in 2018
Amazon has big plans for Alexa ads in 2018

Seventy-eight percent of 7,000 U.S. consumers surveyed by Nielsen (and quoted in WARC's report) said they do not mind ads or sponsorship messages because they know they fund the podcast. And liking these ads might mean people go on to buy: 62 percent said hearing ads on podcasts would make them consider new products or services.

Spotify is also likely to continue to be popular with advertisers, as 49 percent of its ad impressions (the number of times ads are shown or played) used people's data for targeting.

WARC estimates that U.S. advertisers will spend $1.6 billion on digital audio advertising this year, most of which (81.3 percent) will be heard via mobile devices. Although the ad spend on traditional broadcast radio in the U.S. was much higher than on digital audio —$13.6 billion in 2017 — spend is down 4 percentage points over the past decade.

Smart speakers such as Amazon's Echo and Google's Home devices are also driving the trend, with 39 million Americans now owning one. Thirty-nine percent said they are using a smart speaker instead of a traditional radio, and 71 percent said they are listening to more audio since buying such speakers, according to WARC.

Amazon is said to be in talks with advertisers such as Clorox and Procter & Gamble about whether they would pay for higher placement in paid searches via Echo devices — in practice that might mean when someone asks Alexa for advice on how to clean up a household spill it could suggest a particular brand.