How Do Podcasts Make Money: Sponsorships

Dear future/ up and coming podcasters, congratulations on launching your podcast and gaining an audience, you can now start thinking about how you can make money from your podcast. There are many different ways that you can utilize to generate revenue from your podcasts. 

Today, we will be discussing how you can do that via sponsorships. So, how do podcasts make money?

Podcasts generate revenue in many different ways, but being sponsored is one of the most popular ways of doing so. Sponsorships usually pay the podcaster a specific amount of money per thousand downloads or stream; aka, CPM ( cost per mille/ cost per thousand).

To learn more about how podcasts make money vis sponsorships, how much money to expect from sponsorships, and when and how you can get your podcast sponsored, then continue reading this blog post.

How do podcasts make money via sponsorships?

In a nutshell, advertisers pay podcasters to promote their services and products in a single or a couple of podcast episodes.

How Do Podcasts Make Money: Sponsorships - Advertisement

There are two common methods that some podcasters use to insert advertisements into their episodes.

These two common methods are:

  1. The radio-style Ads
  2. The host reads Ads

Method no. one: The radio-style Ads

The radio-style method is exactly what it sounds to be. This method allows third party companies and advertisers to create Ads and send the audio clip to podcasters.

This means that the Ads are not recorded by the podcaster themselves, but by the company whose product is being advertised. All the podcaster has to do is add the audio clip somewhere in their podcast’s episode or episodes.

Although this might seem like it is making the podcaster’s life easier, it is not the best way to sponsor a podcast.

Why?

Because the podcaster does not record the advertisement, the ad is not as effective as the host reads Ads method ( which I will discuss in a minute). 

You see, people download or stream a podcast because they are interested in listening to the podcaster’s content and opinions.

So, when a stranger’s voice-over abruptly interrupts the podcaster’s content to advertise a product or a service, the sales pitch ends up being a bit annoying and jarring.

Many listeners end up skipping the sponsorships and continue listening to the podcast once they realize that a stranger is talking to them and not the podcaster.

If the podcaster is getting a percentage of each sale that occurs from their podcast, then this means that they won’t be making much money from the sponsorship.

So, what should a podcaster do? They should sponsor their podcast using the host reads Ads method!

Method no. two: The host read Ads

The host reads Ads method is considered to be the most effective method of sponsoring a podcast.

How Do Podcasts Make Money: Sponsorships - host reads ad method

Why?

In this method, the podcaster themselves will be talking about a product or a service. If you are doubting why that is more effective than the company offering the sponsorship talking about their products, then I want you to look around and observe the world of marketing.

Why do companies pay influencers to talk about their products? Why do huge companies collaborate with artists to promote their products?

That is because of something that is known as the psychology of influence. If people follow or trust an influencer, then they can be persuaded to copy that influencer’s style or even listen to them and purchase whatever the influencer is telling them to buy.

So, when the podcaster talks about and recommends a service or a product themselves, people are more likely to listen to the entire advertisement and even go purchase that product or service.

Also, the podcasters might have personal experience using that service or product, so they will be able to explain how others could benefit from it and answer why people should get this.

One last thing to mention is how more organic this type of advertisement is going to sound! Why? That is because there are no sudden interruptions and voice-overs of strangers being inserted into the podcast.

Unlike the radio-style Ads method, the host reads Ads method will feel like just another segment of the podcast episode.

Types of sponsorships

We have just talked about two different methods that a podcaster can use to deliver advertisements to their audience. Now, I am going to discuss two sponsorship models that showcase how the podcaster earns money.

The two types that I am going to discuss today are:

  1. Affiliate sponsorships
  2. Dynamic Ads

Affiliate Sponsorship

This type of podcast sponsorship falls under the affiliate commission world. In this type, you get paid a percentage of the converted sales.

How Do Podcasts Make Money: Sponsorships - Affiliate sponsors

For example, if fifty (50) people end up using your affiliate link to purchase something that costs one hundred dollars (100 dollars), and you were promised a fifteen percent ( 15%) commission rate, then you can expect to make about seven hundred and fifty dollars ( 750 dollars).

This type of sponsorships is what most new podcasters choose to do because it is challenging for them to get good deals because their audience is not that big.

With affiliate sponsorships, they could be earning more money than what companies offer them for sponsorships. But, there is a downside to everything.

You see, since the podcaster is getting paid per converted sale, there is a probability that they earn little to no money at all.

Usually, you do not need to contact anyone to sign up for an affiliate program, which means that you can get your first episode sponsored ( I do not recommend that though!)

Some affiliate programs will give you a unique tracking URL that your audience can use, while others could provide you with coupon codes to share with your audience. It really differs from one affiliate program to another.

Dynamic Ads

I don’t like this type of sponsorships at all, but I am going to discuss it nevertheless.

Some agencies can set up what is known as dynamic ads to run on your podcast. Dynamic means that something is continually changing, which means that radio-style ads will run on all of your podcast episodes. Dynamic ads change and update on their own all of the time.

Since we already discussed why radio-style ad methods are not the best, let us talk about other reasons why dynamic ads suck.

  1. Since the ads are dynamic, they are usually irrelevant to what your audience is interested in.
  2. You do not earn a lot of money. Some people only make a couple of cents per month by running ads on their entire podcast for a whole month.
  3. Although you have dynamic ads playing on episodes that were published a few years ago, you are no longer earning anything from them. This means that you are running irrelevant ads to your audience ( which is a big no-no in my book) and not getting paid for it!

What are the pricing models when it comes to podcast sponsors?

There are three main pricing models when it comes to podcast sponsors. They are:

  1. Cost per acquisition; also know as, CPA
  2. Cost per Mille; also known as, CPM
  3. You negotiate your price with the sponsor.

Pricing model no. one: Cost per Acquisition (CPA)

CPA is the cost per acquisition, which means you get paid per one acquired customer. Affiliate sponsorships can be considered to be a type of cost per acquisition (CPA) model.

Pricing model no. two: Cost per Mille (CPM)

CPM is the cost per mille/ the cost per thousand impressions. This means that the podcaster gets paid a specific amount of money for every one thousand listens.

Pricing model no. three: You negotiate your price with the sponsor.

Negotiating a price with a sponsor is an excellent way for new podcasts that have a specific niche and a highly engaged audience.

Why?

Because they are most probably going to make more money by negotiating with a sponsor than getting paid via the CPM, especially since they are not getting a lot of listens yet.

So, it is a great model for podcasts that don’t get a lot of listens but has passionate audiences and is in a specifc niche.

How much can you expect to earn from your podcast with sponsorships?

A podcaster could be earning between eighteen dollars to twenty-five dollars ( $18-$25) per ad per thousand listens during the first thirty days of the episode’s release. If a podcast has a lot of monthly listeners, then having such a CPM could make them a decent revenue.

How Do Podcasts Make Money: Sponsorships

For example, if the podcast has a CPM of twenty dollars ( 20 dollars), gets one hundred thousand listens per episode per month, and it is a biweekly show, then the podcaster could be making about four thousand dollars ( 4K dollars) per month from one sponsor only!

But as you can see and like what we previously discussed, a podcast that has a small audience won’t be able to make much money with the CPM model. However, having a smaller audience does not have to mean less value for the podcaster and the sponsor!

How? 

Recall how I have previously mentioned that a small podcast that has a specific niche and a passionate audience can negotiate a specific flat fee per episode instead of the CPM model.

They could pitch the sponsor a flat fee of an ad slot for one hundred dollars, even if they only get one thousand listens per episode per month.

That way, they will be making one hundred dollars for a single episode instead of the twenty dollars that they would have received from the CPM model.

Because there are many other variables at play when it comes to how much you can earn with your podcast, there can not be a specific number that is going to represent how much a podcaster is going to make.

For example, a podcaster might have more than one sponsor in a single episode, so two separate companies will pay them for the same episode.

Also, the placement of the ad plays a role in how much a podcaster gets paid via the cost per mille (CPM) method. Letus discuss the three different ad placements and which ones can make you more money.

Ads placement

An advertisement can play at the beginning of the episode, at the end of the episode, or somewhere in the middle.

Thus, the three ad slots that a podcaster can offer to a sponsor are:

  1. Pre-Roll: This is the ad slot that takes place at the beging of the episode.
  2. Post-Roll – This is the ad slot that takes place at the end of the episode.
  3. Mid-Roll – This is the ad slot that takes place sometime during the episode.

The Pre-roll ad slot

This ad slot will be played before the host of the podcast starts talking about the main topics of the episode, The pre-roll ad slot is the most common slot where sponsorships take place, but it is not the only one!

The Post-roll ad slot

This ad slot will be played at the end of the episode, and it is usually fifteen to thirty seconds ( 15- 30 sec) long. It is considered to be the last call to action that a podcaster can deliver for their audience. 

Call to actions are useful when it comes to converting sales; however, they are the least preferred ad slot for businesses; that is why they’re the cheapest slots.

The Mid-roll ad slot

This is an ad slot that takes place sometime during the episode, which is why it considered to be the most flexible slot because you have enough time to incorporate it into your episode in a way that feels organic and not so forceful.

This is why mid-roll ad slots are considered to be the most effective, so it makes sense why this slot is the most expensive one- because it is the most desired one.

Now, you should always try to get sponsorships that are relevant to what you usually talk about in your episode, but you should at least make sure that this is the case when you are inserting a mid-roll ad into your episode.

What is the industry standard for podcast sponsorships?

Right now, the Industry Standard for podcast sponsorship is a combo that includes the pre-roll ad slot that is fifteen seconds ( 15 sec) long and the mid-roll ad slot that is sixty seconds ( 60 sec) long. 

How Do Podcasts Make Money: Sponsorships - Industry standards

So, here is how that is going to be:

  • The pre-roll ad slot will take place for fifteen seconds, where the podcaster talks about the sponsor’s services for fifteen seconds before they start talking about that episode’s topics.
  • The mid-roll ad slot will take place somewhere between forty, and seventy percent( 40- 70 percent) of the episode and will last for sixty seconds.
  • During these sixty seconds, the podcaster will talk in more detail about the sponsor’s services and products, mention some of its benefits and features, and they might even share their personal experiences.

Some sponsors might want a post-roll ad slot as well, which means that the ad will take place at the end of the show as the final call to action.

What are the payment rates for the Industry Standard for Podcast Sponsorships?

  • On average, a fifteen-second ( 15 sec) pre-roll has a cost per thousand listens (CPM) of eighteen dollars (18 dollars).
  • On average, a thirty-second ( 30 sec) post-roll has a cost per thousand listens (CPM) of ten dollars (10 dollars).
  • On average, a sixty-second mid-roll has a cost per thousand listens (CPM) of twenty-five dollars (25 dollars).

How to estimate how much you are going to make?

Before you approach any sponsor, you have to make sure that all of your episodes are getting a specific minimum of listens per month. To do so, check the download and stream numbers of your podcast’s episodes for the past six weeks.

Are you getting at least a few thousand listens per episode per month? If you are, then you can contact a few sponsors with confidence that you will able to fulfill the sponsor’s needs.

If every episode you’ve uploaded has at least the specified number of listens or downloads by week 6, then you can bravely approach sponsors.

You will be given a specific CPM, but that number can grow as your podcast’s audience grows as well. Some podcasters sign sponsorship contracts for only a couple of months, usually a quarter.

At the end of the quarter, they check to see if their audience has grown and if they now deserve a higher CPM. They can then negotiate a higher CPM with the sponsor and sign another contract for the next quarter.

Let us assume that your podcast gets five thousand ( 5K) listens per episode within the first four weeks of its publication.

This means that you will be making about two hundred and fifteen dollars ( 215 dollars) per episode according to the Industry Standard for podcast sponsorship combo.

Here is the breakdown of this:

18 x 5 (because you are getting five thousand “5K” listens): So, you will get ninety dollars “$90” for the pre-roll ad slot.

25 x 5 (because you are getting five thousand “5K” listens): So, you will get one hundred and twenty-five dollars “$125” for the mid-roll ad slot.

If you manage to get two sponsors for your podcast, then you can easily double your revenue per episode. In that case, you will be making about four hundred and thirty dollars “430 dollars” per episode.

You can double and quadruple your revenue depending on how many episodes you upload every month. Let us assume that you have two sponsors per episode.

  • If you are making two episodes per month, then you will earn a total of eight hundred and sixty dollars (860 dollars)
  • If you are making four episodes per month, then you will receive a total of one thousand seven hundred and twenty dollars. (1720 dollars)

Like I mentioned previously, these CPM numbers are just the Industry Standard for podcast sponsorships. So, some people might have a lower cost per mille (CPMS), while others are going to have a much higher CPM.

Some of the biggest podcasts might have a CPM of one hundred dollars (100 dollars)!.

Again, you can always negotiate for a flat fee if you have a small yet passionate audience because your podcast is in a specific niche. Your revenue does not always have to be generated via the cost per mille (CPM) or the cost per acquisition (CPA) model. 

How to find a sponsor?

There are podcast hosting platforms and even some media ad agencies that can work with you to help you get a sponsor for your podcast. If you do that, you will be inserting what is known as “the middleman.”

How Do Podcasts Make Money: Sponsorships - How to find a sponsor

If you need help to start making money off of your podcast, then this is going to make things easier for you. However, as your podcast grows, you should cut the middleman off.

These agencies, of course, have specific requirements that must be met. Usually, a minimum of five thousand episode USlistens per episode per month is a must.

Of course, the majority of podcasts starting up do not get that amount of monthly listens per episode. However, if you recall what we have mentioned earlier, you will know that having a small audience is not the same thing as having content that is not valuable.

In case your niche podcast has three hundred passionate listeners, then you are better off negotiating a flat rate deal with a sponsor yourself.

You can always see what other podcasts that create content that discusses the same topics as yours and see which companies are sponsoring them.

Before you start searching for sponsors to reach out for, think about the services and products that could benefit your audience the best.

For example, if you are running a self-help podcast, you could look for products like books and bullet journals. You could also look for services like to-do apps, calendar apps, services that make life more organized and easier like Hello fresh.

Then, once you have found products that are going to benefit your audience, you could start contacting those sponsors.

Things to know while searching for a sponsor

Number one: Accept contracts that are related to your niche. If you advertise things that are not related to your niche, your audience is going to understand that. They begin seeing you as someone who just wants to money off of them, and they will eventually stop listening to your podcast.

Number two: Try to have a maximum of different ads per episode. Again, you don’t want your audience to feel like you care more about making money off of them than providing them with good content and good advice.

Besides, being bombarded with an ad every ten or fifteen minutes is such a turn-off.

Other questions related to how do podcasts make money via sponsorships

How much are some of the top podcasters making per month?

The top podcasters tend to make between fifty thousand and a couple of hundred thousand dollars (50K – 100K+) per month. The top five podcasters who are on Patreon are currently earning between fifty-two thousand and one hundred and thirty thousand dollars (52K- 130K+) per month. 

If you are interested in learning more about that, then make sure you out my How Much Money Do Podcasters Make blog post.

How can I monetize my podcast?

Although there are many ways one can monetize their podcast with, the most popular one is by getting sponsored. A sponsor can pay you using a few different models, like via the cost per mille (CPM) or the cost per acquisition (CPA) model. Cost per mille means cost per thousand listens.

What does CPM mean?

CPM stands for cost per mille/ per thousand. If your podcast is getting sponsored, then you might be getting paid per thousand listens or downloaded episodes. If your YouTube channel is monetized, then you could get paid per mille/ thousand monetized views.

What’s the average CPM of a podcast vs. a YouTube channel?

The average cost per mille (CPM ) of podcast ranges between eighteen and twenty-five dollars ( $18-$25). The average cost per mille (CPM )of a YouTube channel ranges between twenty-five cents and four dollars ($0.25-$4).

How can I improve my podcast’s CPM?

As the audience grows, and your number of downloaded podcasts becomes even bigger, you will be able to improve your cost per mille/ cost per thousand listens (CPM). The average CPM range for podcasts is eighteen to twenty-five dollars ( $18-$25); however, top podcasters tend to have a CPM range of twenty-five to one hundred dollars. ( $25- $100)

What platforms can I use to diversify my podcast’s revenue?

There are many platforms that you can use to improve and diversify your podcast’s revenue. These platforms include YouTube, Spotify, and Patreon. 

That’s it for today’s post. You should now know how to monetize your podcast via sponsorships and have a good understanding of what this monetization process is going to look like.

If you have any questions related to how you can sponsor your podcast and make a revenue, then feel free to email me at podcastingdiaries@gmail.com.

My Sources

Till next time,

Ayah

Ayah Assem

I am a creator and a consumer of many forms of artistic content. With podcasting leaving its mark and declaring its significance in the current content world, I have decided to learn everything related to how to create a podcast. Who knows, maybe in the near future I will start uploading and sharing my creative work in the audio format. Join me on my journey of understanding the podcasting world, as I will be sharing with you all of the information that I am going to learn. Feel free to share with me your podcasting journey at podcastingdiaries@gmail.com and keep an eye on all of the music, books, podcasts, movies, tv shows, and YouTube channels that I always reference.

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