It's really hard to sell something when you aren't sure what it should cost. 🤷🏻♀️
Pricing podcast ads is one of the biggest hurdles that keeps podcasters from making money from sponsorships on their podcast. We want to monetize our podcast and sell advertisements, but how much should we sell them for? What is an advertisement on our podcast really worth?
In this episode: (1:15) The industry standard for podcast ad pricing and how CPM works. (3:24) Understanding podcast ad terminology and different ad types. (7:29) How to calculate podcast ad pricing based on your podcast's expenses. (12:28) Creating a rate card and media kit to send prospective sponsors. (13:18) The two things every podcast sponsor wants to close the deal.
Note: If you've recently listened to Ep. #014: How to Get Your First Podcast Sponsor, there are a few overlapping topics between episodes including the breakdown of expense based pricing strategies and the explination of some ad types. The current episode provides more details to both, and other context that's necessary to pricing podcast ads. 🫶🏼
It's really hard to sell something when you aren't sure what it should cost. 🤷🏻♀️
Pricing podcast ads is one of the biggest hurdles that keeps podcasters from making money from sponsorships on their podcast. We want to monetize our podcast and sell advertisements, but how much should we sell them for? What is an advertisement on our podcast really worth?
In this episode: (1:15) The industry standard for podcast ad pricing and how CPM works. (3:24) Understanding podcast ad terminology and different ad types. (7:29) How to calculate podcast ad pricing based on your podcast's expenses. (12:28) Creating a rate card and media kit to send prospective sponsors. (13:18) The two things every podcast sponsor wants to close the deal.
Note: If you've recently listened to Ep. #014: How to Get Your First Podcast Sponsor, there are a few overlapping topics between episodes including the breakdown of expense based pricing strategies and the explination of some ad types. The current episode provides more details to both, and other context that's necessary to pricing podcast ads. 🫶🏼
It's almost impossible to sell something when you don't know how to price it. This is a problem I see over and over with podcasters who want to start monetizing their podcast, especially with partnerships and add sponsors. Either the sponsor is offering a very cold and formulated pricing structure that offers pennies to smaller creators are eager potential partners are coming to the table, and podcasters have no idea what to tell them. In this episode, I'll walk you through what the industry standard for ad pricing is, how to calculate what your ad structure should look like, and how to confidently pitch a future sponsor, knowing you're providing an equal value to what they'll be paying you for. Hello, and welcome to Podcasts for Profit. My name is Morgan Franklin. I'm a podcast producer, strategist, and educator. This podcast will help you create and grow a podcast that cuts through the noise of social media and speaks directly to your target audience. If you're ready to create a podcast that will align you with the experts in your industry, position yourself as a trusted leader and create another source of revenue for your business, you're in the right place. Before we get into the episode, let's talk about the industry standard for podcast ad pricing and how most larger companies and agencies qualify the worth of your podcast on basically a download only scale. If you've never heard the term CPM when it comes to podcast ad pricing. That's generally the most common use structure for buying host read or pre recorded podcast ads. CPM means cost per Mili, from the Latin word meaning 1000. So the direct translation would mean cost per 1000. And that's exactly what it is. When you hear someone talking about the CPM as it pertains to podcast downloads and ads, their meaning the cost per 1000 downloads. In my experience, agencies will price a pre recorded meaning it's an ad you get from the company to run 62nd ad at a CPM of roughly 15 to$30. And we'll price a 62nd host read ad meaning you read bad at a CPM of 20 to $40. So just a little bit more. And I think this model is great for large creators who have 1000s of episode downloads. Because for example, if you're a podcaster, that gets 200,000 downloads on a new episode in the first week of airing, and your CPM is $25. That's $5,000 on just that one ad so not too bad. But what about a podcaster that gets an average of 2000 downloads on a new episode in a week. That's only $50. That's not enough to pay for your podcast hosting. And in my opinion, getting an average of 2000 downloads on a new episode with an engaged audience is worth so much more than a $50 ad. Really, that's my biggest problem with CPM pricing. It's a blanket formula for all podcasts. And I understand if agencies don't know how to quantify the value of a podcast for ads, but that's why we're going to do it for them. Because if you've cultivated a base of 2000 loyal listeners that are coming back to your episodes every week, I'm not letting you sell 60 seconds of your show for $50. That is ridiculous. Before we get into pricing and how to create a custom pricing model that works for your podcast, I want to touch on the basics of some terminology a podcast ads so you always know what you're talking about. Let's start with ad placement. There are traditionally three different ad placements for podcasts. The first is pre roll pre roll is usually a 32nd to 62nd ad that plays before the episode or after the intro of the podcast. So that podcast ad that you hear at the very beginning and you usually skip through that is your pre roll AD. The second placement is mid roll ads. And it's exactly what it sounds like. It's an ad that will play midway through an episode and is normally anywhere from 60 seconds to two minutes. And often there's more than one because this is the highest value ad placement so you might have 3/62 ads back to back in your mid roll. The last ad placement is post roll ads. And this will be any ad that is in the last 60 to 90 seconds of your podcast normally after the host is finished and before the production credits depending on the podcast. As you can imagine the value of each one of these placements is not the same because like we were talking about earlier, so many listeners skip through the first ad and most won't make it to that last placement making the mid roll the most valuable ad placement for pretty much all podcasts. In order of most to least expensive it's usually most expensive being the mid roll pre roll being the second most expensive and then post roll being the least expensive. What we just talked about our ad placements. Now let's talk about ad formats. There are two different kinds of ad formats baked in or static and dynamic. I remember being so confused about this when I started podcasting and working with advertisers. So let me kind of explain in a more simplified way, what each format will look like for your podcast. baked in, or static ads are ads that will be part of the total episode mix, meaning when the producer is putting together the episode and the music and the intro and the outro, they'll put in these ads to the beginning, middle and end, and they will never leave the episode they are permanent ads. Whereas dynamic ads or non permanent ads are inserted into the episode either for a certain amount of time or for a certain amount of downloads. This will normally be facilitated through your podcast hosting. And that's where you can change the settings on how long the ad will run, where it shows up in the episode. And if it cuts off after a certain number of downloads. So say you sign a contract for this certain ad running for 2000 episodes, you can put that in and it will only play for 2000 episodes. I've used these terms interchangeably throughout the episode. But I see advertiser sponsors and partners all is basically the same thing when it comes to podcast advertising. They're the company, agency brand or person paying to get their ad on your podcast. One less thing is the length and ad unit number, the length of a podcast ad will vary, usually between 3060 or 90 seconds depending on the ad slot. So depending on whether it's a pre roll, mid roll or post roll will kind of play a little bit more into will it be 3060 or 90 seconds. Normally, I like to keep it between 30 and 60 seconds for sponsor value and the consideration of the listeners. I never want to lose listeners from having ads that are too long or too many. So always keep that in mind. Put your listeners first. Because if you don't have listeners, it does not matter how many ads you can get, because you will have no one to listen to them. Podcast ad unit number is the number of ads in a specific placement. So let's say you have one unit and your pre roll, that means that you're gonna have one ad in your pre roll, you have three units in your mid roll. That means you have three ads in the mid roll spot. Wow. Okay, we've learned so much about podcast ads today. But we still haven't learned how to price them for your podcast. The first thing I want you to work on. And if you're a listener of this show, you might have heard me talk about this already. But I want you to know how much your podcast is costing you. How much are the expenses of your podcast, so many podcasters and advertising agencies treat having an ad on a podcast like it's free to produce when it is absolutely not. So the first step is expenses. always figure out what your monthly expenses are. In this example, I'm going to run down exactly what this podcast cost to produce so you can see what I'm talking about. Alright, so podcast hosting is$18 a month, website hosting is$44 a month, domain hosting is$8 a month, Adobe Creative Cloud is $67 a month equipment spend divided by 12 is $166 a month, Otter AI is $20 a month, Riverside is $24 a month chat DBT is $22 a month, and post production editing is $400 a month, if I valued my work at$20 An hour and I put 20 hours in per month, that would be about $400 a month. So paying myself just a small amount would be $400 a month. And I always encourage you to incorporate that in because you spend so much time your time is not free. Even at a minimum if you are paying yourself $20 an hour to produce and record and be the host of your own show. I encourage you to do that. Because I promise you're probably spending way more than 20 hours a month on it all in that's $1,169 per month on this podcast. And really that is the bare minimum that's not video or video production that's doing the recording and pre production for myself. That's me cutting almost every corner possible because I'm just not someone that's going to get a subscription that I don't have to pay for every month. And also being in the industry. Podcasting is expensive. So what does this tell us? That for me, if I'm using myself as an example, I'd want to make at least $1,169 per month on ads to break even. But also I know myself and I know I'm not pouring my blood sweat and tears into a project just to break even. And I don't want you to either. So this is what we're going to do to figure out what the baseline of your podcast ads should cost. Figure out all of your monthly expenses do exactly like we did earlier going through all of your monthly expenses include equipment divided up over a year. So divide everything you spend on equipment and divide it by 12. And find that number. From there at the least multiply that number that you have by two, or three or four. If you want a really easy formula for pricing your podcast ads using the margins of your own budget, there it is. So for example, I have my expenses at $1,169. I'll multiply that by three, and it gives me $3,507. From there, since I have four episodes per month, I'll break that into fours. And that's 877 per episode, you still with me? Sorry, I know this is a lot of math. I'll take that number, and figure out what each ad if I have three ads, what each ad would be worth in that episode. So you see how I did that I took the total monthly expenses, I multiplied it by my profit margin. From there, I divided it by how many episodes I had per month. Now I am going to figure out how much each add is worth. So since I know pre roll is the second most valuable, I'll say that's 35% of the total episode cost, that will be $307. mid roll is the most valuable. So I'm gonna say it's 45% of the total add cost. And I'll price that at 395. So that would mean that 20% of the total episode cost the last 20% I have is the post roll at $175. All of that equaling 877 that each episode is worth, in my opinion, taking expenses and building in your profit margin is the best way to price your podcast ads. If you're someone that has an existing social media following or you've done ads or user generated content before, definitely use that information. Use those case studies look over your pricing from those ads in the past as podcasters I think it's really easy for us to forget how new that podcasting as an advertising platform is to the majority of people even to marketers. So if you've had experience doing partnerships in the past, especially if it's for the same brand as your current podcast, look at those partnership deals and pricing models. And especially if you're working with the same advertisers make sure that it is competitive with the pricing that you've had before. Another thing I need you to do is create a media kit with a rate card. There is no reason in 2024. If you have a podcast that you are trying to get advertisements on that you don't have a media kit to send out an a price list for your podcast. I truly believe this is the reason all the podcasters I work with are so successful in booking brand deals and getting much higher sponsorships than other podcasts. Educate your future sponsors and ask them for the price you want. If you want to buy the media kit I use for all my podcasts, it's linked in the episode description. It's taken me about four years to create. But I'm so proud of it because it provides sponsors what they need to buy into a podcast. And that is evidence and competence. Give your future sponsor the evidence and competence to buy ads with you, whether that's from knowing exactly what kind of listeners listen to your podcast, whether it's from being able to show past launches or products you've sold from your podcast, whether it's your follower, count across all your social medias, or where you've been featured. There are endless ways to accomplish this. But you need to guarantee without a shadow of a doubt that when you're pitching a sponsor, you are delivering the value of the price you're asking for. Because that's all they want. That's why so many agencies and businesses are still drawn to that CPM pricing structure, because it's easy, because it gives them the competence and evidence to know what they're spending, they'll get a return value on. Have you ever heard there are 100 ways to skin a cat? Well, there are 100 ways to skin a cat. And that's pricing podcast ads. I can't tell you specifically what to price your podcast ads. But I can tell you that if you take the time to look at your podcast, financial needs, your expenses, the requests of your sponsors, and the expectations of your audience, there is an intersection there are those three points that will give you the exact number that you're looking for. The best way is to just go for it. Make a media kit, make a rate card and start pitching sponsors. If no one's talking to you, that's a great sign that you need to reevaluate your prices and how you're pitching the podcast. You never know until you try. And as always, I can't wait to listen to your podcast. Hey, thank you so much for joining me on this episode. If you enjoyed the podcast and you'd like to hear more episodes like this one, go ahead and subscribe to the show new episodes air every Monday morning and if you found this episode valuable and you want to help other business owners and podcasters will you leave me a five star review? 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