Advertising basics for podcasters
Today, only the top 5% of podcasts qualify for monetization.
That's because the process of selling ads for podcasts is still completely manual and involves sales reps pitching individual shows to agencies and advertisers. As a result, only podcasts that consistently get about 10,000 listens (or more often 25,000 listens) per episode are ever considered for monetization by sales-rep companies.
What's in it for the remaining 95% of podcasts?
We believe that the economic benefits of podcasting must flow beyond elite podcasters for this ecosystem to grow. This is why we've started our ad revenue sharing monetization program, which aims to provide podcasters with an easy way to instantaneously start generating revenue with their content.
But it's best to have reasonable expectations by understanding how digital advertising works.
In media lingo, opportunities for selling ads are called "inventory". As a publisher, your inventory is the amount of potential impressions (i.e. ad listens) that you can generate with your content.
Packages are made up of inventory from each layer in the pyramid.
Opportunities at the top pay more, and the yield gets lower as you move towards the bottom.
At the top of the pyramid are Sponsorships. Sponsorships are sold at a flat-rate for the duration of a campaign. You basically agree to promote an advertiser's product/service/brand during your podcast for a specific amount (usually from a week to a full season). The revenue you get is a result of your audience size and profile; the more interesting your audience is to an advertiser, the more you can get.
One step below are Direct sales host reads. In this case, you have a few allocated spots within your episodes to sell directly to advertisers who are interested. They're usually sold according to a CPM (Cost per Mille, i.e. cost per thousand impressions) model. For example, if you agree to a $10 CPM, the advertiser will pay $10 for every 1,000 ad listens.
Host reads are usually placed in "pre-roll" and early "mid-roll" positions.
Early "mid-roll" positions tend to have more CPM value then short "pre-roll" placements as the "pre-roll" spots are usually shorter and more brand-name focused. Mid-roll positions are longer and designed as detailed sales pitches to the listener/customer.
Spots that are unable to be sold directly can be sold through a sales rep or agency. The model is the same as above, but the sales and agency commission will come out of your pocket. So if the sales commission is 25% and the customer agency commission is 15%, you'll receive $10 - 15% - 25% as your payout.
Usually, not all host reads will be sold by the end of this process, and you'll be left with remnant inventory. In order to maximize your earnings, you can sell these slots in two ways:
Ad exchanges you can list your media property for programmatic buying through ad exchanges. This system gives less control to the advertiser on the placement and targeting of the ads, resulting in you getting lower CPMs. Plus, there's a commission to be paid on the ad-exchange.
Ad networks the lowest level of remnant inventory is usually sold through ad networks. These provide fill-in, low paying ads.
Even with all these layers, it's likely that some of your host reads will remain unsold.
The remaining inventory is usually used for self-promotion or given away to charities.
It's important to understand that the bulk of revenue that publishers make (about 80%) comes from sponsorships and selling host reads. As a publisher, you are responsible for organizing this, however, you can only be successful if your audience is particularly big or if its demographics are very interesting to a specific advertiser.
We want to help you monetize your content at least a little bit. Starting from the bottom of the pyramid, we can offer your available inventory to ad networks and for automatic fill-in ad-exchanges, and we'll give you the largest share of the revenue.
As the market matures, we will enable more and more technological integrations in order to create a marketplace for buying and selling host reads on our platform
Host read sales of 5% of podcasts today sell between $15 and $40 CPM (this is Gross Revenue, to which you need to subtract agency fees, usually 15%, and sales rep fees, which vary between 30% and 50%).
When it comes down to ad exchanges and ad networks, the average figures show that this CPM has gone down to lower CPMs - 3$ for some show topics, higher up to 12$-15$ for some others.
Another factor to consider is that, due to the early stages of the market, there aren't many brand advertisers willing to invest in this young media. Therefore the fill-rate for your podcast can vary between 40% to 80% depending on factors like your audience demographics, the season, etc.
However, this will grow as the market matures.
You'll receive your share of revenues for ad-requests that we're able to sell (i.e. fill).
If you're starting out and still have a small show (i.e. <5,000 listens per episode), the best strategy is to find a sponsor interested in your niche audience.
We plan on unlocking this potential in a more automatic way in the future.