As a rule, most widely consumed podcasts still have less than 50,000 downloaders, and most have far fewer, but podcast distribution and viewing mechanisms are proliferating and podcast advertising has marketers buzzing.

No wonder.

Even though podcast advertising spending was a mere $3.1 million in 2005, it rose to $80 million in 2006, and eMarketer forecasts that it will grow fivefold in the next five years.

"Despite an incessant buzz about the medium, regular podcast users are still rare. As such, podcasting is a niche marketing channel; it may be the right niche for some marketers, but it’s still a niche," says James Belcher, eMarketer senior analyst and the author of the new Podcast Advertising report. "The fact that podcasts are supplemental ad channels for most marketers is not for lack of choice, however. Downloadable serialized short content format is increasingly available, and iPod sales are seemingly unstoppable."

In fact, it is the sheer number of podcasts — nearly 90,000, according to podcast search engine PodNova — that makes it difficult even for interested marketers to choose the right programs to showcase their brands.

"Podcast sponsorship uses the medium’s strengths: self-selected subscribers, host endorsements and low-waste ad impressions," says Mr. Belcher. "Yet the time and effort required to develop an effective sponsorship will keep podcasting from cannibalizing ad dollars in other channels anytime soon."

As of now, only a minority of US Internet users listen to podcasts, but according to the "Podcast Downloading" report from the Pew Internet & American Life Project, roughly 12% of Internet users say they have downloaded a podcast to listen to or view at a later time.

The audience of people who have been exposed to podcasts is growing. That number compares to 7% of Internet users who reported downloading a podcast in Pew’s February-April 2006 survey.

Mary Madden of Pew, the author of the report, estimated in a podcast interview that 17 million people had downloaded podcasts for use on their computers or iPods.

"The bad news is that in surveys only 1% of respondents reported downloading a podcast on a typical day," says Mr. Belcher. "In other words, the frequency level remains very low."

The question for podcasters is: Can they deliver the right, well-targeted niche audiences at comparative — or at least competitive — ad rates?

"In spite of efforts by podcast networks and measurement firms to give it mass marketing appeal," says Mr. Belcher, "podcasting will remain a niche medium for the foreseeable future."

Via eMarketer