Understanding Podcast CPM Rates: Why You Won't Make Money From Ads and How to Monetize Instead

[00:00:00] It's not impossible to make money via ads, but unless you have a massive show with tens of thousands of downloads

[00:00:07] You're not gonna make a whole lot and

[00:00:09] Advertising is one of the hardest ways to make money with your show. That's what I'm gonna be talking about in this episode

[00:00:15] I'm talking about the reality of making money through ads with your podcast

[00:00:18] And I'm also gonna explore the best way to make money with your podcast, especially if your show's on the smaller side

[00:00:25] What up potty people and welcome back to Clipped as always I'm Eric your host and Clip brings you podcast production tips

[00:00:42] resources

[00:00:43] Education and industry insights all aimed at helping you become a better more efficient

[00:00:48] Podcaster and before we kick off this episode just want to give a shout out to this week's sponsor

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[00:01:22] And so without further delay, let's give it a go

[00:01:38] Okay, so to understand ad-based monetization you have to understand this term called cpm and that's

[00:01:45] how the industry

[00:01:47] It's like the formula for what you get paid for an ad and cpm stands for cost per mil mil le which is stupid

[00:01:57] Mill I guess is a latin word for 1,000

[00:02:00] I don't know why they just don't say cost per 1,000 but it's cost per mil

[00:02:04] And that means the cost per 1,000 downloads for one episode in a 30 day period. Okay, so let's do a little math based on cpm

[00:02:12] Let's say you're working with an advertising agency and they're offering you a cpm of 20 dollars. So 20 dollars per

[00:02:20] 1,000 downloads

[00:02:20] I'm going to head on over to libsyn they have a website and i'm going to put a link to this

[00:02:25] So that's advertising dot libsyn dot com slash podcast

[00:02:30] dash cpm dash

[00:02:32] And we're going to do a little math here. So let's say your show has a thousand downloads per episode

[00:02:38] In this case you would be getting 20 dollars because it's 20 dollars per 1,000 downloads

[00:02:44] So you would be getting 20 dollars for that ad read

[00:02:48] Let's say your show had 2,000 downloads

[00:02:51] Per episode at a cpm of 20 dollars

[00:02:55] You would be getting

[00:02:56] 40 dollars let's say you had two ad reads in an episode that's 80 dollars per episode

[00:03:01] That's some decent money, but now let's drop it down. Let's reset everything. Let's say your show gets 200

[00:03:08] downloads per episode at a cpm of 20 dollars

[00:03:13] You're going to get four dollars for that ad read if you do two ad reads in that episode

[00:03:18] You're going to get eight dollars

[00:03:19] I mean this is up to you, but it's probably not your worth your time to

[00:03:23] Pursue host read ads as part of your monetization strategy

[00:03:26] And now let's talk about programmatic ads. Those are the ads that kind of just get stitched in depending on

[00:03:33] What podcast hosting platform you use you could sign up for programmatic ads

[00:03:37] These typically aren't host read and they could be for like anything could be for like atnt

[00:03:43] Or it could be for like gyco car insurance or it could be for mcdonald's

[00:03:48] They're

[00:03:50] Produced and read by like an outside person or outside company with someone else doing the voiceover

[00:03:57] I mean with these i've seen numbers as like five dollars or six dollars per cpm

[00:04:02] And so you could think i mean you're making pennies on the dollar

[00:04:06] If you have a show that only does a few hundred

[00:04:10] Downloads per episode and yeah, you could add two or three of these in an episode depending how long your episode is

[00:04:16] Uh, you know people get burnt out if there's too many ads in an episode and if there's too many irrelevant ads in an episode

[00:04:24] So that's something to think about and it's just kind of a reality check unless you're getting

[00:04:29] Quite a few downloads. I don't know are you beating a dead horse trying to drop ads into your show and make a few

[00:04:34] Box off of that enough to maybe buy some beers or some coffee

[00:04:38] That's up to you

[00:04:40] But I don't know I personally don't think that that's worth it

[00:04:43] And especially if the ads aren't really that relevant to

[00:04:48] The topic or the

[00:04:50] Niche of your podcast so say this is the case. So what do you do? Well, the best alternative monetization strategy

[00:04:57] Is honestly selling your own products and services and this could be maybe you have a coaching business centered around

[00:05:04] The genre of your podcast

[00:05:07] You can record an ad for your coaching services and drop that into your episode

[00:05:12] Maybe you have an online course. You could promote that on the podcast

[00:05:16] That way you're getting like direct sell direct sales directly to you and you get to keep all the money

[00:05:22] That's another thing that I forgot to mention. Let me mention that real quick is that

[00:05:26] When you're in the advertising agency, they might be offering you like a 20 cpm, but

[00:05:31] you have to split it with them and

[00:05:34] All advertising agencies are different and in my experience because I have produced it still produced

[00:05:39] A top breaking probably like a top 5% show

[00:05:43] I've seen ad splits at 60 40 seen ad splits at 50 50

[00:05:48] And I've seen ad splits at 70 30 70 30 being the most common and said show is part of

[00:05:54] Megaphone, which is their hosting company within megaphone. Um, there's an option for programmatic ads within

[00:06:01] This particular deal with those programmatic ads that they're getting 50 50

[00:06:06] With the advertising agency for the host red ads they get 70 30 going back to selling your products and services

[00:06:12] That's really the best way because it's direct traffic. It's directly to you

[00:06:16] You're positioning yourself as the expert and you're in total control. You could also do like bonus content

[00:06:22] Do like a patreon or a paid subscription thing you can do q and a's meet and greets

[00:06:27] Uh, you could start like an online community that meets every week group coaching whatever it may be

[00:06:34] That really is the best way to monetize your podcast unless it's huge and you can garner

[00:06:39] A decent cpm and you're getting

[00:06:42] 10,000 20,000 50,000 downloads per episode

[00:06:46] Then you're going to be making enough money to replace your nine to five

[00:06:50] Especially if you couple that with also selling your products and services

[00:06:55] Which is what a lot of the top podcasters and business people are doing

[00:06:58] So I just encourage you to kind of plug your numbers into

[00:07:04] podcast advertising calculator put that cpm in calculate

[00:07:08] Based on your number of downloads and a cpm an average one

[00:07:13] You know 25 on the high end 15 on the low end. That's why I went with 20 and see where you stand and then see if it's worth it for you

[00:07:20] And i'm not trying to like be a buzzkill. I'm just trying to talk about the reality of

[00:07:25] advertising in podcasting

[00:07:27] And it's really only like the top players that are making a lot of money

[00:07:31] Now lastly before I forget you can sell your own advertising on your own behalf without an advertising agency

[00:07:38] Say you have a podcast about playing chess

[00:07:41] Maybe you reach out to several chess come chess

[00:07:44] Maybe you reach out to several chess companies and try to garner a sponsorship deal

[00:07:49] and if you go this route you can actually

[00:07:52] Set your own price for what you think your show is worth

[00:07:55] Especially if they're not really too savvy with podcast advertising

[00:07:59] You might be able to negotiate a hundred dollars per ad every per episode

[00:08:03] If you do four of those a month, that's 400 bucks a month

[00:08:07] so that's an option too is to

[00:08:11] Determine what you're worth and then go out and hustle and sell those ads on your own behalf

[00:08:16] um priced in that's something that's reasonable but something that also

[00:08:20] Isn't like a 20 cpm for

[00:08:23] 150 downloads where you're making chump change

[00:08:26] Hopefully that gave you just more information about like the advertising industry with podcasting

[00:08:32] What you can make what other people are making where you fit in with that?

[00:08:35] Hey, maybe you want to do it even if you're only making a dollar or two an episode

[00:08:39] Uh or less

[00:08:40] Maybe you don't and if you don't try to focus on coming up with your own product or service to sell

[00:08:45] To sell if you already have one perfect start integrating it with your podcast if you don't

[00:08:51] start thinking about

[00:08:53] What you might be able to create an offer?

[00:08:55] What's an offer that you could create for your listeners that will add value and that they'll pay you a little bit of money for

[00:09:00] Thank you for listening guys

[00:09:03] Hope you're digging the show if you are leave a rating or review

[00:09:05] I would greatly appreciate that want to get some feedback want to know

[00:09:09] What you want to hear and until next time keep listening keep engaging keep creating. I'm out

[00:09:29] You