Audio and retail are getting in tune with one another

In September, eMarketer projected that digital audio would account for a fifth of time spent with digital media in the U.S. this year. For advertisers, that should be music to their ears.

But while connected TV (CTV), for instance, has become a fast-growing digital channel for advertisers, there is still plenty of untapped potential for audio. Audio may capture 20% of digital media consumption this year, but the Interactive Advertising Bureau projects that the channel would account for just 7.4 % of ad spend.

Industry experts The Current spoke with suggest that retail media networks can help propel programmatic audio as the next essential advertising channel, and that retail media networks (RMNs) and audio platforms are already starting to strike up a harmonious relationship to take advantage of the opportunities there.

As retail media evolves beyond retail networks, some retailers are capitalizing on their troves of first-party shopper data across other channels. Yes, CTV has emerged as a “rising star” for some retailers, as Ami Lathia, director of off-platform ad products at Target’s Roundel, said during a panel at Advertising Week New York last year. But the experts made their case that audio and retail media are a natural fit, as retailers can leverage the scale of audio platforms, and audio platforms can leverage the recency and accuracy of first-party shopper data from retail media networks.

“There’s a pretty big gap [between audio consumption and ad spend], and we’re trying to educate the marketplace,” says Steven Kritzman, SVP of sales at SiriusXM Media, which boasts an 87% addressable audience.

“As we think about it specifically related to the retail media network space, there’s a big opportunity,” Kritzman says. “As people shop, they tend to consume audio. Our retail media partners look at that and think that’s a great way to engage with folks.”

Retail and audio are harmonizing

CTV has been riding what seems like a retail media wave. CTV players like Disney and Peacock have struck partnerships with RMNs and GroupM projects that global retail media revenue will exceed all TV ad revenue by 2028.

Now it’s audio’s turn, according to Paul Kelly, global chief revenue officer of A Million Ads (AMA), an audio-focused dynamic creative company that works with retailers such as Target, Walmart and more.

“Audio maybe isn’t as high-priority for retail media networks as, for example, CTV, but I think audio will be next,” Kelly says. “Audio will enable retailers to deliver an advertising proposition that is across publishers and across channels and that is completely audience-centric; not just based on who the audience is but also based on where they are in the life cycle of purchase. And because of the data that retail media sits on, that is now technically possible.”

Modern Retail reported last year that some retailers were experimenting with in-store audio ads. But as retail media networks increasingly look for off-site opportunities, it’s hard to ignore the addressability and authentication of programmatic audio’s audience.

Retail media networks, with their shopper first-party data, “require a high degree of precision, which lends itself to a programmatic environment,” says Justin Nesci, EVP of advanced audio and data revenue at iHeartMedia. “You also want to be able to close a loop to see if an impression impacted a sale, which only a programmatic environment can support.”

One example of this in effect: SiriusXM Media paired its first-party data sets with a retail media partner’s measurement capabilities, deployed through The Trade Desk, a demand-side platform. The campaign achieved ROAS through this closed-loop measurement that exceeded the retailer’s benchmark, according to SiriusXM Media.

IHeartMedia takes its partnerships with retailers to the next level with branded podcasts that Nesci says the company develops and helps distribute, but that the retailers own. Nesci says they can capture more customer data and also retarget loyal customers in this way.

“We believe that audio is one of the few channels that can not only support a digital environment but also transcend the in-store environment,” Nesci says. “The audio experience as a media format can reach a consumer at work, in the car, online and in the store.”

The future can be audio

Kelly, from AMA, sees the future of audio advertising as part of an omnichannel strategy: “The next iteration of growth for audio is for it to be integrated into a cross-channel solution,” he says.

For retail media, some industry experts see its dollars and brand budgets blending in the future.

“The big trend that you’re going to see is a convergence of retail media dollars and brand dollars because of the targeting and ad effectiveness RMNs are able to prove,” SiriusXM’s Kritzman says.

Andrew Lipsman, an independent analyst and retail expert, told RetailWire last year, “As RMNs get serious about using first-party data for targeting display, video and streaming TV ads — often by partnering with third-party publishers and media companies — brand dollars are migrating into these formats.”

Kritzman sees that as a big opportunity for the audio space.

“Audio has often taken a back seat because it takes a little more work to do creative that is theatre of the mind so to speak, but I think it will be an opportunity for audio to really take a prominent place,” he says. “Audio allows for really great storytelling — and a creative 30-second audio spot resonates more than say, a banner ad, when you’re on the go or walking around a store.”

He adds, “The digital players that have really good data and really good logged-in users are going to benefit tremendously because there’s only so much supply in the walls of these networks themselves.”

The Current is owned and operated by The Trade Desk Inc.