What is podcast monetization and how do podcasts make money? You’ve probably realized by now that almost everyone and their brother are podcasting. From Michelle Obama to Oprah Winfrey, to the Real Housewives of Beverly Hills, it seems like podcasting is the new craze. And it’s paying off.
It’s true that the space is growing in popularity, and getting more packed each day. But it’s not too late to start a show and make money from it. While reaching profitability will take work and time, it is definitely possible. In fact, you don’t need to be the next Joe Rogan to earn a full-time income with your podcast. You just need the right strategy, community, and monetization know-how.
The most common way podcasts are currently generating revenues are via ads, sponsorships, listener donations, membership, and subscription models. However, most monetization strategies fail because podcasters don’t have a clear plan or a solid understanding of what goes into making a show that will generate a revenue stream. Yes, you need to talk about your passion, but you should also be strategic. As a result, there are a couple of things you need to consider before you can even think about monetization.
Before You Monetize
Although it may not sound like an important step, knowing your audience, according to Josh Hallmark, the host/producer of True Crime Bullsh**, is the most critical step to monetizing your show.
Podcasting is a powerful medium because it cultivates feelings of intimacy between a podcast host and their audience. When people listen to a podcast, they feel like they know the host and are in the room with them. Listeners enjoy podcasts because there is a level of accessibility and trust with the hosts and if you can use that in an authentic way, then you can grow your show and monetize regardless of the size of your audience.
For podcaster and So You Want to Start a Podcast author, Kristen Meinzer, an engaged audience is key to a podcast’s financial success. “My advice is generally to work on your audience size and loyalty first,” she says. “Get people coming back week after week through your outstanding content and smart listener engagement strategies. Then, learn all you can about them.” This knowledge helps with ad targeting. “The more you know about your listeners and the more loyal they are, the more likely you’ll be to get advertisers,” she says.
Josh Hallmark recently echoed this statement when presenting his personal monetization journey at the Podcast Movement Virtual, 2020. “Knowing your audience is not just a metric,” he says “it is engagement and community building — and then using that to build a customer profile which is how you are going to make the most money off of a small audience.”
To be engaging, you have to be engaged. Make sure you are creating content that is newsworthy, shareworthy, provocative and compels people to find other listeners to chat about your podcast. Engagement, participation, and authenticity are going to be the best ways for a host to make money off their show.
“Always remember it’s not about you (the creator), it’s about them (the audience). How well do you know your audience? When was the last time you hung out with them?”
– Guillaume Wolf, You Are a Message.
But remember, do not use your listeners to make money. Instead, develop authentic relationships with your listeners and use those relationships to make money. There is a distinction there. People know when you are being inauthentic. Don’t alienate your listeners ability to feel like they are participating in the podcast experience by not respecting them. It needs to be a symbiotic relationship and can not work if it is one-sided.
Highly engaged listeners who have an emotional connection to your podcast, listen more, promote more, buy more, demonstrate more loyalty and become brand ambassadors.
When Should You Start Considering Monetizing?
Now. There is no better time to start considering podcast monetization than at this exact moment. But let’s be clear. You can start monetizing from the beginning, but this doesn’t mean that you can monetize your show from day one. See the difference? Let’s break it down.
As soon as you can, you should lay the foundations for monetization which is a strong community of listeners and the right hosting platform. Then you will begin to see the benefits as your audience grows. You can create a Patreon account for your podcast before you launch your first episode, but don’t go into it thinking that from day one you will get fifty Patreon subscribers each episode. In fact, you may only get two. A good way to start building your community is to cross-promote your community groups in order to connect your listeners. For example, when a listener joins your Patreon account, you should drive them to your Facebook group where they can talk with other listeners about their experiences, thoughts, and opinions regarding your podcast, therefore strengthening your community.
There are many hosting platforms available on the market, however, not many of them allow hosts to use programmatic ads from the beginning like Spreaker does. This is a huge benefit to any podcaster looking to make money from their content, so be mindful of this when selecting your podcast hosting platform. Being able to use programmatic ads also means that if you are considering migrating your podcast to Spreaker, and have a full catalog of shows, you can start making money almost immediately by placing ads in your entire back catalog. We’ll touch upon programmatic ads later on in this article.
It is important to understand that if you are just starting out, it isn’t going to happen overnight. Start now, but have patience.
The trick is to think of it as a long game. Start monetizing now, but develop a long-term business plan. It will be hard, and you’ll have to hustle, but if you stick with it in a smart and authentic way, then you will eventually get there. At Spreaker, for example, we have many hosts who have been able to work with us and have turned podcasting into a full-time career. So, to recap, you can start monetizing your podcast from the very beginning by building a strong community of listeners, and by selecting a hosting platform that allows you to use programmatic advertising.
Now let’s talk about podcast monetization, specifically how you can make money from your podcast.
Podcast Monetization: Live Reads, Programmatic and More
There’s a lot of terminology in podcast advertising that’s thrown around, mostly because there are so many different ways that podcasters can make money from podcasting. Even if you’re not brand new to podcasting, the terminology can be confusing, so let’s look at some of the most popular ways podcasts are currently being monetized.
Host-read advertisements have long been a favorite advertising approach on the radio, so this particular advertising method is not new. A live host read is an advertisement/endorsement communicated conversationally by the host or hosts within a podcast episode. It can happen naturally at the beginning (pre-roll) or in the middle of the show (mid-roll). Although most advertisers want an authentic testimonial of the product, hosts more often than not, receive copy and/or talking points from the advertiser with instructions for the live read.
Most advertisers do what they call a “test” buy of a podcast. This means they will book a couple of reads to gauge audience engagement with the product and the host. If the show does well the advertiser will renew/extend and book additional reads. If it doesn’t convert, then the campaign will end and the advertiser will probably not request any future reads. Conversions are measured using unique URLs and/or coupon codes, we will go into this in more detail further on in the article when talking about how live reads generate revenue.
Have you ever listened to a podcast before where the host begins an episode by stating “…this episode is sponsored by …..” followed with a brief personal experience with that particular brand? Well, that’s a live host ad. Want to hear a real-life example? Click below to listen to a live read sample.
Podcast hosts often have a specific audience who share similar interests, lifestyles, careers, or hobbies. Similar to radio hosts, podcasters are creating communities around their shows and developing authentic relationships with their listeners. As mentioned previously, podcast audiences are becoming loyal listeners. This means that if a host endorses a specific product, listeners will, more often than not, trust that endorsement. And that is what makes live reads powerful.
In fact, Nielsen research has already demonstrated that host read ads tend to drive more brand recall than non-host-read ads. In a study conducted by Morning Consult more than half (52 percent) of podcast listeners said they’re more likely to try a product or service if it’s recommended by the host of their favorite podcast, up 17 percentage points from the share who said they’re more likely to take a recommendation from a pre-recorded ad not read by the host.
A live read can be either baked in or dynamically inserted.
A baked-in live read is a read that stays within a podcast indefinitely (also called embedded) because it is recorded at the same time that the host records an episode. These advertisements are woven into the content of the show offering a unique, organic, and authentic description and endorsement of a product and/or service. They only exist within that specific episode forever.
On the other hand, a dynamically inserted host read is recorded at a separate time by the host and it’s inserted into the episode post-production via cue points from an ad server.
Dynamic live reads need prior approval from the advertiser before an ad can go live in the podcaster’s catalog. Dynamic live reads target the entire catalog of a podcaster, not just one episode. The MP3 recording of the live read is sent to Spreaker and we use our advertising tool to insert it dynamically into the podcast catalog (all available episodes). The ad runs until it delivers in full.
There are various benefits to both baked-in and dynamic host read ads. As a result, the use of either or both of these formats is up to the podcaster. Using dynamic ads is scalable as it is an audio file that is inserted into a podcasters entire catalog. Therefore monetizing across all of your content, not just in one episode like a baked-in live read.
Dynamic also allows you to continuously work on different live read campaigns with brands as the live read is inserted into your ad cue points. Baked-in reads can sound more natural within your audio as they are recorded with your content. The good news is, there’s no need to definitively decide between the two; they can work in tandem depending on the desires of your advertising partners.
Remember that if your hosting platform offers advertising technology like Spreaker does then you don’t have to go to another platform to run your ads. So it is best to find a platform that can host and look after your ads.
How do live reads generate revenue?
There’s certainly no one-size-fits-all answer here, and there are lots of variables to consider. However, revenue generated by live host reads is usually based upon the number of downloads per episode calculated using a flat rate. This is known as the “CPM model” (or cost per thousand impressions). This is a method of measuring advertising based on audience numbers.
So how does this work exactly? As mentioned above, podcasts are usually booked on a per-episode/impression basis for a flat fee. There is often a threshold of downloads for a podcast to qualify for live host reads. At Spreaker that threshold is 5,000 downloads/impressions or more per episode within 30 days of posting on a consistent basis (at least two months).
The main revenue difference between baked and dynamic reads is that a baked read is a flat guaranteed rate that is paid as long as you don’t under-deliver by more than 10%. For dynamic reads you secure all the revenue by delivering on the goal. Under-delivery will always garner less revenue unless the client is willing to extend the end date of the campaign so that it can deliver in full.
Ready for an example of dynamic live reads? Let’s say that your podcast is booked at a flat guaranteed CPM rate of $25 USD. For the sake of this example let’s say the campaign is set to run for 30 days. This means that if your podcast had 10,000 impressions within that period of 30 days, you would earn a percentage of $250 USD. The percentage earned by the podcaster depends on the agreement between the podcaster and the advertising technology provider.
Remember that just because a host is willing and able to do a live read, does not mean he or she will convert for an advertiser. This is why it is very important to work with brands that are aligned with your audience’s values and needs. For this reason, it is also very important that the host has tried and genuinely likes the brand they are advertising. The more suitable the brand is for your audience the more likely they are to engage and convert (purchase). This is key as future potential live read partners will want to book a podcast that converts well. Like all advertising, the host needs to sell the product to their audience. It’s a matter of connecting with the audience and the right brand. Without it, the message is weakened, and credibility is lost.
As you might have guessed, getting approached by a sponsor usually means you already have some sort of an influencer status in the podcasting world. However, if you don’t have sponsors reaching out to you then you can either choose to reach out yourself or have a third party help you find the right sponsors.
Option #1: Go at it yourself
If you decide to find your own sponsors then the first thing you need to do is identify who is listening to your podcast. The more you know, the better. Most podcasting platforms can only provide you with the basics: age, geolocation, sources and/or gender. But ideally, you need to know more.
In addition to the information, you have from your podcast hosting platform having your own podcast website can really come in handy. Not only is a podcast website a great way to increase listenership and bolster your content, but Google Analytics can enable you to understand your website visitors (i.e listeners) in a more detailed manner. Google Analytics won’t replace your podcast analytics provider, but it can provide supplementary information. It can answer questions like what are the keywords that people are using to find your content; where are people discovering your podcast and/or what are the interests or affinity categories of these visitors. Websites can also help you grow your email list, which allows you to send out podcast audience surveys as a way to learn more about who is listening to your podcast.
Facebook groups are also a great way to understand your audience. Engaging with your listeners regularly within a Facebook group allows you to not only understand who your listeners are but more importantly, how they behave. It can also give you some valuable insights into how your content is perceived.
Although you do need the basics, such as age, gender, and location; you can’t stop there. When creating customer profiles, hosts should try their best to understand things like:
- Household: marital status, children, pets, careers and household income (host-read ads)
- Outside Engagement: what other shows are they listening to? (feed drops/promo swaps)
- Consumerism: how/where do they spend their money (host-read ads/Patreon)
- Conversion: how likely are they to join Patreon and/or buy with you advertisers (host-read ads/Patreon)
The reasoning behind this is that once you get to a place where you can start booking host read ads, you can use this information to help you match with advertisers who are suitable for your podcast and your audience, therefore, increasing the likelihood of conversions. Advertisers are looking for conversions, which are listeners who turn into buyers. Conversions are measured in a simple but effective way; the advertiser provides the host with a unique URL or promo code that the host verbally shares to their listeners within the live read. When a listener buys the product or signs up for the service, the advertiser can see that it was done using that specific URL or promo code and therefore knows it came from that partnership.
A great example of this comes from one of our Spreaker podcasters Josh Hallmark, he knows that he has a lot of listeners with cats, so he partnered with an advertiser called PrettyLitter. This partnership garnered many conversions because he knew that it was the right advertiser for his audience.
So who is listening to your show and what are they interested in buying?
If you’d like to get a sponsor for your show, choose someone that fits with your audience and approach them with real stories of the engagement you’ve generated. Explain how well this can turn into conversions for their sponsorship. If you’re just starting out, try smaller or local companies, and talk to them about the ways they can benefit by supporting your podcast.
It is important to note here that in terms of monetization, if you plan on going at it alone, then your only option will be baked-in live reads. Why? Well, anything that requires dynamic ad insertion needs to be done through an ad hosting platform that offers advertising technology.
In the end, baked-in live reads are just the tip of the monetization iceberg. So although you can definitely make some money by finding your own sponsors, it is always better to work with an established platform that has a team of monetization experts that can help you reach all of your financial podcasting goals.
Option #2: Work with Spreaker
If you didn’t know already, Spreaker works with various podcasters with our Live Reads Program.
Advertisers tend to look for podcasts with a minimum of 5K monthly downloads when purchasing podcast advertising. When it comes to live reads, one of the major benefits of hosting your podcast on Spreaker is that our live reads team is constantly looking for opportunities for our hosts. If your podcast is suitable our team will reach out to you directly with the opportunity. On occasion, a podcast host might be interested in doing live reads and ask to be put in touch with a sales agent which we can also do. Our initial conversation with the podcast host determines whether the person is interested in or familiar with the live reads process. We then work with the podcast host and pitch a CPM rate range to them based on industry standards and the brand partner for the live read.
Exclusivity agreements are becoming more desired from the advertiser’s point of view. This usually means that the podcaster can only work with one brand partner within the same category, for example, food delivery or mental health for the duration of the live read campaign. This is why it is so important to understand the terms of your live read agreement and you can be sure your Spreaker live reads sales agent will ensure you get a fair agreement that you fully understand.
Live Reads can be a great source of revenue for podcasters once the brand partner is selected carefully giving the campaign the best chance to convert. This will encourage a strong relationship between the advertiser and podcast host which will bring more live read opportunities in the future.
Using the most simple explanation, Programmatic advertising refers to the marketplace where the automatic buying and selling of podcast advertisements occur. To get into a little more detail Programmatic is a digital, data-driven way to sell ads that involves different entities. One entity that offers an ad spot (audio content) and several others that bid for that ad spot (advertisers). Programmatic involves an electronic auction, where there are requests for bids and bid offers just like a traditional auction but without the person in a suit shouting out prices at the speed of light!
Instead of seeking out your own sponsors or advertisers, when you monetize your podcast with Spreaker, you are able to use our built-in programmatic marketplace. Our marketplace is full of advertisers who are ready and willing to automatically deliver targeted ads on your podcast. With the flip of a switch, you can start delivering relevant ads to your listeners… simple as that.
Programmatic ads can help podcasters sell 100% of their inventory, not only to domestic but also to international markets. So, for example, if 30% of podcast listeners are from France, then Spreaker can serve them specific ads for that specific region.
Programmatic Myth #1: Lower CPMs.
This is not true, in fact, lately, Spreaker has seen CPMs in the $30+ USD range and not for small buys, these are campaigns of tens or even hundreds of thousands of total buys. We cannot talk about CPMs without referring to ad-fill which is the percentage of ad requests we are able to fulfill within a specific market. Our ad-fill in the USA, for example, is currently at over 95% which drives up the CPM value, great news for podcasters.
It is important to note here as well, that programmatic is able to sell a share of the impressions at the same level of CPM that a “per podcast” direct sale/sponsorship/host read sales team is capable of, since typically these type of sales are capable of selling a portion of the impressions (~20%).
And in addition to that programmatic has 2 main advantages:
- programmatic (at least in the US) is able to sell a large chunk of the 80% of remaining impressions
- per podcast direct sales/sponsorship/host reads require the podcast to have a minimum critical volume of downloads/listens to be able to sell the show. Programmatic doesn’t!
Programmatic Myth #2: They are disruptive and at times obnoxious.
However, we have found in our experience this is only the case when they are not managed correctly. In reality, programmatic ads can be seamlessly stitched into strategic breaks in your content. Advertisers are becoming increasingly better at producing ads that are delivered in a tone of voice that creates a pleasant and engaging listening experience.
Dynamic Ad Insertion
Dynamic ad insertion refers to the technology that allows us to take an mp3 file (an advertisement, and insert it into your podcast, after production, wherever you want. Dynamic ad injection technology is used in programmatic, but not only in programmatic, it can also be used to power other types of advertising like dynamic live reads and dynamic direct sales. Because these ads aren’t baked into your podcast, your entire catalog of episodes can be monetized continuously.
Dynamic ad insertion gives podcasters the ability to determine the placement of ads in their audio files on demand. What does this mean? Podcasters can choose specific spots in their episode’s in which they want an ad to be inserted, and the system will automatically insert a campaign when available. This means you can stitch a brand new ad into an episode you recorded five years ago.
Dynamic ad insertion for podcasts allows you to insert the ad anywhere in a podcast episode – pre-roll (beginning), mid-roll (middle), or post-roll (end). You just have to define the point in the episode where you want ads to play.
|Spreaker Pro Tip: Where your podcast listeners are located matters in terms of your revenue making potential. Why? Advertising revenue comes from, well, advertisers. A region-based company that only sells within a specific market territory is only looking to advertise to people within that territory.
In other words, advertisers have specific target audiences in mind when they invest in podcasts. In countries where podcasting advertising is booming, like the United States, there are more companies using podcasts as an advertising medium meaning the ad possibilities are much larger than in smaller markets where podcast advertising isn’t as common. This sometimes means that a podcaster can have hundreds of thousands of downloads, but because most of those impressions are located outside of regions where advertisers are investing in they aren’t earning the same as if their listeners were from the US.
Feed Drops are often used by brands, organizations and/or publishers, to promote new podcasts in another podcaster’s feeds. In simple terms, a feed drop is usually a 5-10 minute pre-recorded advertisement of a different show. It appears in the promoters catalog like a free standing episode. The host doing the feed drop usually stitches an intro to the feed drop and then publishes it in their RSS feed so that their listeners can hear it.
Done right, a feed drop is a gift to your audience: a genuine recommendation of a quality show that’s aligned with your listeners’ tastes. Done poorly, it can backfire and come across as spammy, irritating, and a waste of time. A poorly executed feed drop betrays trust and spoils the goodwill podcasters work so hard to foster with their listeners.
Subscription-Based Monetization Strategies
Many podcasters have also begun charging people for content by implementing subscription-based models. Slate, an online magazine that covers current affairs, politics, and culture in the United States, for example, created a membership product, Slate Plus, which has over 50,000 subscribers. According to Digiday, over 70 percent of members joined because of the publisher’s podcasts, and the fact that State Plus offers an ad-free listening experience, extended versions of particular podcasts as well as exclusive episodes.
Slate, however, has decided to offer a hybrid approach. Their top-performing podcast, “Slow Burn,” for example, had a mixture of eight free [ad-supported] episodes together with bonus episodes offered in the membership model. Other subscriber benefits include a member-exclusive weekly newsletter, a private Facebook group, and 30% off tickets to most live events.
Other examples include The Daily Wire, which for $10/month, grants subscribers access to video versions of their podcast episodes and Now Playing, which offers a bonus episode that’s only available to paying customers.
Subscription-based tools allow podcasters to provide premium content to their most loyal listeners for a recurring monthly fee. These platforms, like Supporting Case, Patreon, Glow and Steady, also allow for a free listening tier that helps funnel more listeners into the premium content.
What is the benefit? Well, subscription-based tools allow podcasters to earn a reliable income — podcasters know exactly how many people pay for each episode before you actually create it.
Let’s take a quick look at one of the most popular subscription-based tools out there, Patreon.
Patreon allows you, as a podcaster, to get to know your most loyal listeners and give them a place to connect, build community, and engage more deeply with your show. The tool delivers exclusive episodes or bonus content, and establishes a reliable revenue stream beyond ads. Many podcasters use Patreon to set up multiple membership tiers, granting subscribers increasing levels of content and other rewards.
Many podcasters on Patreon also offer private audio RSS feeds as a benefit. This means that patrons can listen to podcast episodes in their favourite app.
If you are just starting out then make it as easy as possible. The Chapo Trap House, for example, offers only one tier — for 5 euros a month patrons get access to a weekly premium episode. And it works. Chapo Trap House has over 36K patrons and makes almost $140,000 a month.
Here’s a list of the top earners amongst podcasters on Patreon.
What Can You Offer?
Since you know your audience likes to listen to your podcast, there’s a good chance some of them will pay for premium versions of your content. All you have to do is create some special recordings that are only available for purchase.
As mentioned above, El Chapo Trap House only offers one free premium weekly episode to their patrons, but that’s enough. An easy way to create premium content is to record it while you record. Let’s say you invite a guest on your show. Record a 30 minute discussion, then an additional 10 minutes to sell as a bonus. Make sure that extra 10 minutes includes something juicy people will want to buy.
Other things that you can offer, include:
- Early access to episodes
- Ad-free episodes
- Live-streamed episodes
- Q&As with special guests
The possibilities are endless. The Sibling Rivalry Podcast, hosted by famous drag queens Bob The Drag Queen & Monet X Change, for example, have a $1 tier — it is called the “Stranger” tier. By joining “you’ve gained the knowledge that you have supported us” as Bob eloquently states in her Patreon About video. That’s it.
Selling Merchandise, Products & Services
There are many other ways that you can monetize your podcast by selling merchandise, products and/or services. You can create memberships, offer coaching or consulting services, host masterminds or mentoring groups, participate in workshops or webinars, create an ebook or even launch an online course.
It is important to note that a lot of the content that you will be using will be repurposed content from your podcast. Don’t reinvent the wheel. For example, if you transcribe your podcasts that you already have the foundations to create an ebook. All you need to do is to edit the transcripts, do some extra research if needed and design it either in Canva (for free) or by hiring a designer.
Are you ready to monetize your podcast? Have 5,000 monthly downloads? See if your podcast qualifies for Spreaker Prime here. Want to migrate your podcast to Spreaker? Email us at [email protected]. And if you want to try out Spreaker for 3 months FOR FREE, click here.
So there you have it, Podcast Monetization 101. Any more questions? Let us know in the comments below and we would be happy to answer them 👇👇👇