Podcast pricing – the number one question we get when companies are starting out in podcast advertising. We’ve mentioned in previous articles what kinds of ads advertisers expect – now let’s discuss how podcasters sell ads on their show. There are two different ways to price advertising: one is placement and one is time.
Pre-roll is at the beginning of the show. Mid-roll is meant to be the middle of the show. Post roll is the end of the show. Increments of time are sold in 15 seconds intervals, usually reserved for pre and post roll.
A word about Mid-roll: even though it says MID and implies MIDDLE, it doesn’t mean the ad has to be smack dab at the halfway point. Mid-rolls should be expected to be read after the introduction of the show, about 5 minutes in to about 15 minutes before the show ends. So a podcaster with a thirty minute show could do a mid-roll at the 10 and 20 minute mark, if they wanted. The middle ads are longer, usually 30, 45 and 60 seconds.
Usually, ads end up to be longer than that period of time – especially if the advertiser has supplied bullet points that they want the podcaster to cover. It's very hard to cover everything that advertisers want, in even in 60 seconds. But it is very common that the podcaster goes over the time that the advertisers paid for, without asking for additional compensation. If hosts don't want to do that, they can certainly try to keep it into the amount of time that the advertiser has paid for, but most commonly the ads just run a bit longer than the purchased time.
Sometimes, advertisers say they want to purchase the next four episodes. Other advertisers may say they want to purchase the next 100,000 downloads, and however long it takes for the podcast to deliver that is fine.
What's Expected of the Advertiser
The advertiser should supply the talking points. They also supply the landing page and the coupon code that the podcaster needs, if needed. Do not supply a script. A script usually ends up sounding like a script. They sound very rehearsed, and the whole point of podcast advertising is the influence over the audience. Script reading isn’t going to have very much influence, because it’s not going to sound sincere. It's not going to be authentic and then the selling power of that ad is going to go into the toilet. So. No scripts.
Also: no guarantees of sales. Podcasters have absolutely no ability to guarantee or even forecast sales. They can certainly gauge how however many downloads per episode their show is going to get. But they cannot control what the listeners do once they've listened to the ad – so never ask for a guaranteed amount of sales.
Podcast Pricing: Industry Standards
Let's talk about costs and ad prices. CPM means cost per thousand downloads per episode, which is normally 25 to 50 dollars per thousand downloads per episode. So if you have 2000 downloads per episode, that's a minimum of $50. How do you know how many downloads a show gets per episode? Well, we like to look at an episode that the podcast did 30 days prior, so that we know we can promise an advertiser at least that amount of downloads. And that’s assuming the podcast is growing, and not shrinking. So if the date is December 1st, we look at the episodes from the week of November 1st. If that number is 3000. And then we look at the week prior and it says 2500 and then we look at the week after, and it says three 3200. We would say, okay, this show costs $25 per thousand dollars per episode and it has 3,000 downloads for episode which would be a $75.
Each player in the industry will price differently. Smaller agencies normally sell at 25 to 30 CPM, and larger agencies sell at around 45 CPM and then split it with the host. It just depends. Companies who have done it a long time have a formula that really works for them, but as a new podcast advertiser it may take time to know the formula for your specific ROI or cost per customer.
Another type of ad purchase is CPA. If you've heard that term, that means cost per acquisition and what that means is customer acquisition. It’s an affiliate situation where the host reads the ad, and for every person that purchases the product, they get a percentage or you get a flat rate. FreshBooks, for example, when they are doing CPA partnership will pay $100 for every new sign up -one time fee.
There's not really a standard for CPA. It's really about what the advertiser feels is fair to give a percentage of and isn't going to inhibit their bottom line. Most podcasters do not want to do CPA. If they are willing to try CPA, we do recommend it – especially if they've never had a sponsor before and they just want to see how it goes.
If you're new to the podcast advertising space, there's one last thing you should know. Since we know that podcasters have a significant number of community members all across the digital world, why not include some of that in your ad packages? They will be happy to include tweets, mentions on FB and Instagram, unboxings, or even just thank you messages. Not every audience member listens to every episode, so social reinforcements are always a good idea.
What's your experience with CPM and CPA so far?