A Podcaster's Guide to Podcast Sponsorship Rates

 
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You're reading a post from Backyard Media's Podcasting 101, a series of guides meant to explain podcasting and podcast advertising to new and current podcast creators. To see our other guides, click here

So you've started a podcast, and maybe it's going pretty well so far. You have a number of episodes under your belt, and you're seeing your audience grow. Listeners are recommending the show to their friends and new people are finding you on your social media channels. But there's one problem: your podcast still isn't generating revenue, and you would like it to become self-sustaining. The obvious answer is podcast sponsorship. But where do you even begin?

There's a lot of confusion around podcast advertising, including how to reach potential sponsors and how you should price your podcast sponsorship rates. This confusion is partly because because many players in the industry - podcast studios, media companies, and advertising agencies - keep data about their sponsorship deals private. But we at Backyard Media think transparency about the advertising process can benefit all creators. So we're here to de-mystify different parts of the podcast advertising process. We want to give creators the knowledge and tools they need to close sponsorship deals and make their work financially sustainable.

So let's first get into podcast sponsorship rates. What do podcasters need to know, and what prices can they expect to sell their ads at?

 

The Building Block of Podcast Sponsorship: CPM

The first concept we need to understand is CPM, which is a marketing term that means "cost per mille," or "cost per thousand impressions." CPM is a dollar amount that advertisers and content creators agree on as the basic unit of their ad buys.

In podcasting, an "impression" is effectively a podcast episode download. There's been a lot of debate in the industry over the exact definition of a "download", which we'll discuss in a later blog. For now, though, a download of an episode of your podcast equals one impression.

One questions that comes up often is what will count as an impression - especially when it comes to what period of time is valid to count applicable impressions. The industry standard is typically 4-6 weeks. At Backyard Media, we think one month is a good benchmark. In other words, however many downloads a podcast episode has within 30 days of publication is the CPM the advertiser pays for.

For instance, let's say your show's most recent episode had one ad spot for an online mail-order shaving kit, and it was a pretty popular episode. In its first week it gets around 12,000 downloads, and by the end of the 4-6 week period it shows 40,000 downloads in your podcast metrics data. You then have 40,000 eligible impressions, and you would multiply your CPM cost (in dollars) by 40 (because advertisers pay per one thousand impressions) to get the total amount the advertiser would pay.

 

What Your CPM Should Be, and How to Get a Higher Rate

Okay, but we still haven't discussed what your CPM price will be. Actual podcast sponsorship rates are the point in this conversation where many podcasts or advertising agencies begin to hem and haw. So here are the facts:

In 2018, the median CPM rate for medium-sized podcasts sits around $20 to $27, with podcast CPMs ranging from $15 on the lower end up to $35 or even higher for the biggest podcasts.

Let's take a common CPM rate of $25. In our last example, we had 40,000 eligible impressions during the agreed upon 4-week period. We divide that number by 1,000 and get 40. We multiply our CPM rate of $25 by 40 and come to $1000. So the advertiser had one ad on a podcast that reached 40,000 people in four weeks, and in the end they pay $1000 for that ad.

Of course, this process gets more complicated as we add in multiple factors, like the type of ad placed or the number of ads purchased. In the next section, we'll do some examples of ad buys to show this process in action.

As a creator, you're probably thinking to yourself, "If I'm going ahead with podcast ads, how can I make sure I get a CPM that values my work and my audience?" So, here are a few things we at Backyard Media have found can help creators increase their podcast's CPM when negotiating with potential advertisers.

Ways to Increase your Podcast's CPM

  1. Know who your audience is. Use data collection techniques like an annual listener survey to understand who's listening to your podcast. Demographic data about age, gender, income, professional background, location and consumer interests are very helpful for advertisers.
  2. Reach a valuable audience. Does that survey you just got back say your median listener makes $75,000? That's great - make sure you put that front and center in your conversation with sponsors. Podcasts on average draw listeners who are wealthier and better-educated than the average US adult. Advertisers want to reach listeners with disposable income who have interests that align with their products.
  3. Give great ad reads. Sponsors always tell us that they look for charismatic podcasters who can speak personally about their brands and make their ads sound unique. Every ad read should sound fresh and stand out to your listeners.
  4. Have a back catalog of high-quality, well-produced episodes. Your podcast should have dozens of published episodes. The sound quality should be clear, and the host's voice should have background noise. Any music or transition sounds are easy to listen to and don't distract from the content.
  5. Release on a regular schedule. Advertisers love consistency when looking at podcasts to sponsor. They want to know when episodes featuring their ads will come out. Creators should aim to publish episodes at least twice a month.

  6. Have podcast metrics to demonstrate actual download numbers for your episodes. Advertisers want to see data that shows your podcast can actually draw in 20, 50, or 75,000 downloads per episode.

  7. Have content that is substantive and nuanced. Your podcast should bring something to the conversation that listeners aren't hearing anywhere else. Podcast content shouldn't represent a political extreme, or include hate speech or lots of dirty language.

  8. Have demonstrated expertise in your field. Perhaps you or your podcast host has years of career experience in the topic at hand. You're able to draw upon interesting anecdotes that relate to your topics, or you can leverage industry connections to have valuable guests on your show.

  9. Cover a niche topic. Similarly, podcasts that focus their show on very specific topics, like machine learning in Silicon Valley or analyzing the Supreme Court, are more valuable for sponsors than general interest shows.

If your podcast can achieve some or all of these things, then engaging with potential sponsors and securing ad buys with higher CPM rates will become much easier.

 

Examples of Podcast Sponsorship Rates in Action

Finally, let's go through a few examples of ad buys, using what we've learned about podcast sponsorship rates and CPMs.

EXAMPLE 1 - An entrepreneurship podcast, average of 18,000 downloads per episode, CPM of $20. Three episode test with mid-roll ads.

In this example, the sponsor agrees to buy a test run of three mid-roll ads across the podcast's next three episodes, one per episode. Our math then looks like this:

Downloads in thousands (18) x CPM ($20) x number of ads (3) = $1,080

Total paid by sponsor: $1,080

EXAMPLE 2 - A podcast about health care technology, average of 30,000 downloads per episode, CPM of $15 (pre-roll) and $25 (mid-roll). Five episode run of pre-roll and mid-roll ads.

Here we see the difference between the types of ads. Pre-rolls come before the episode's content and are shorter in duration than mid-rolls, which come in the middle of the episode as a break in the show's content. Pre-rolls typically have lower CPMs than mid-rolls. Again, the sponsor will have one pre-roll ad and one mid-roll ad in each of the five episodes. Our equation will be:

PRE-ROLL: Downloads in thousands (30) x Pre-roll CPM ($15) x number of ads (5) = $2,250

MID-ROLL: Downloads in thousands (30) x Pre-roll CPM ($25) x number of ads (5) = $3,750

Total paid by sponsor: $2,250 + $3,750 = $6,000

 

EXAMPLE 3 - An interview podcast with famous venture capitalists, average of 75,000 downloads per episode, CPM of $30. Half season ad buy of mid-roll ads.

This illustrates that sponsors and podcasters who have built a working relationship can get creative with the types of sponsorship they do. Sponsors like to plan far in advance when they can, so they've decided to buy a mid-roll ad for the rest this show's current season (let's say six episodes). Notice that the CPM is higher because the podcast has exclusive content (interviews with venture capitalists), represents a niche topic, and has demonstrated a higher number of average downloads. 

Downloads in thousands (75) x Mid-roll CPM ($30) x number of ads (6) = $13,500

Total paid by sponsor: $13,500

 

Conclusion

Those are the basics of CPM and the sponsorship rates that podcasters can expect when they start with podcast advertising. If you're a podcast creator and you want to find great sponsors the easy way, consider partnering with Backyard Media. We connect independent podcast creators with great sponsors that fit their brand. We make the process seamless for you, so you can focus on creating the best podcast you can! To get started, get in touch with us by clicking here.

 

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