Are podcast advertising rates worth what it’s doing to your audience growth? In this episode, Tom Hazzard and Tracy Hazzard weigh in on low-paying podcast rates and how it affects podcasters and brands alike. Nowadays, podcasting is the only thing that’s working anymore. Brands need to see the value of podcast ads, and podcasters should get to set the rates for their show with the value they offer. Tom and Tracy explain the benefits of having niche audiences and the difference between reach and conversion. Tune in to learn all about it.

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Low Paying Podcast Advertising Rates: Is it Worth Selling to Your Audience?

We are going to talk about advertising rates because they are on the decline in terms of rates, which is shocking considering how bad advertising is going everywhere else in the marketplace. Why would podcast ads be going down? Again, it may be because of the source. We are talking about an article that came from AdvertiseCast, which is associated with Libsyn, so keep that in mind.

This is a shocking part for me. They report on all the podcasts that have advertisements in that AdvertiseCast program, which is the program that you have to have between 10,000 and 20,000 downloads per episode to qualify. It is different by category. Some categories allow you at 10,000 and others at 20,000. They only have 2,771 podcasts out of all of Libsyn’s podcasts who want it and who qualify for it.

That is sad. First of all, to put that limitation or a requirement, “If you want to qualify for our ad insertion program, you have to have 10,000 to 20,000 downloads per episode.” I can understand why they want to do that, but in our tech world, it is not necessary to have that many. The reason those rates are so low that they are publishing is that they are trying to feed advertisers into these shows that are general. It is like you are going to advertise Procter & Gamble, Ivory soap or something on all these shows. They are not talking about advertisements that are relevant to each different topic or show’s subject matter.

Here is the real crux of it. The part that drives me crazy because this is not the way podcasting works, so it is not the way advertising dollars should work but they are paying you for every thousand listeners. What is a traditional CPM or Clicks Per Mille? It is a play to play a play. I do not know how else to say that.

This AdvertiseCast owned by Libsyn is looking at it in the way a lot of older school advertisers do on podcasting. It is going to assign a certain market value to 1,000 downloads of your episode. After the fact, they are going to pay you how many downloads you get for the month where that ad was on them. If it is 10,000 downloads, then they are going to pay you $21 per 1,000.

It is for a 60-second spot.

 

 

You are going to make $210 for 10,000 downloads. Is that worth it?

This is the advertising rate. That is not what you make. Typically, you have to split it, the difference between a 60-second and a 30-second where a 30-second is more likely to be happening. I hear a lot more of 30-second spots. The difference is $18 to $25, so $18 for a 30-second spot and $25 for a 60-second. We are talking about a $7 differential there.

If you have 10,000 listeners per episode, you might make $21 per episode or that might be the rate that you command here. It is likely to be closer to $15 if you are doing a 30-second spot. That is low. “Why would I sell my audience for $7.50 for every thousand downloads?” I would not do it. That is the real question and the real issue that we are posing with such low-paying advertising rates. Is it worth selling your audience?

Not for that rate. I would not think.

We have never done it for that low for any of our shows ever.

 

 

We would assign a flat rate per month of advertising on all of our episodes because that is what we would do on Podetize. It has a couple of ads that rotate across all episodes for a period of time, 1 month, 2 months, or whatever it is because there is value in the audience in reaching them rather than accounting after the fact for how many plays. Especially earlier in the life of a podcast, a flat rate is more in alignment with value to you, the podcast, and the client. If you do it right and you also ever have them mentioned on your website, your web traffic comes into the total reach picture of the ad.

It is a bonus in that sense for them. You can command a higher dollar value because it is an unknown entity. You do not know how well the website traffic is going to do but you can track it, share it with them, and tell them what happened. The other thing is they are reporting that advertising rates have gone down about 12% month-over-month or quarter-over-quarter. I am not sure what they were tracking here but whatever it is from the last time they issued it, it just says 2022. It may even be year-over-year that advertising rates are down but I think it is the month. It looks like in January 2022, it was a little high, and then they had a dip when you look at their chart.

They are talking about the differential being month-over-month. You are talking about a downgrade in advertising rates when Facebook advertising is going so badly. I had a big talk with an agency and they are struggling to figure out how to redo all kinds of different things to get their ads to work and convert like they were a year earlier.

You have email open rates and delivery rates being problematic because of the Apple privacy changes. You are having a compounding effect of where nothing is working. In podcasting, how can you even allow advertising rates? To me, AdvertiseCast should be advising their clients and the brands that, “I am sorry. Rates are going up.” They should be setting those rates, not some other factor in the industry setting them. That is also a problem. When it is your show, you can set your own rates. You can say, “I know this is the performance and the value. I know podcast advertising is the only thing that is working now.”

You can and should set your own rates. There are certain contexts if you are part of a network of shows or you are on a different host that allows you to control the ads yourself. That platform can come to you with an advertising opportunity and say, “We have an advertiser willing to pay this amount to advertise on your show for the next month. Are you interested in accepting that?” You have a choice and you could, but that is not this type of program.

 

 

You have to opt in to the program. You do not know the advertisers are going to be, and this is the rate they are going to pay you, and that is it. It is a very bad situation to get into. For comparison, we have some podcasts on Podetize that had about 30,000 plays a month, and they were doing a CPM model as a way to charge for the advertiser but we are getting about $150 per 1,000 because they had an advertiser that was very much in alignment with the kind of audience that they knew they had.

They are making very good money. It ended up being like $4,500 to $6,000 over 1 or 2 months for this advertiser to advertise to their audience because the audience was a perfect match for the products and services the company wanted to advertise. It was working month-after-month for this relationship, so they kept coming back.

That is one example. The point is your podcast is more valuable to an advertiser that is in alignment with your subject matter with your show or your audience profile if that is identifiable. Usually, podcasters that we work with have a specific niche, a specific message they are bringing to a certain profile audience. Even if it is not every listener, the vast majority is of a certain type. The more identifiable that is, the higher the advertising rate you can command.

I hear this from people that they are starting out their show and they are like, “I am going to enroll in these because a few hundred bucks cut my costs,” but I do not think you realize the repercussions of that. In other words, if you are taking in these random ads, typically, most of these companies stream them on the front of your show. It means you have a 60-second ad because that is what they want. They want to make $7 per 1,000. They want to make more.

They are going to sell a 60-second spot if they can. You have 60 seconds of commercial, then you have your intro and most people’s intros are way too long. We both know that. Another 60 seconds of intro, you have got two minutes before your show even starts. This hurts your audience growth. The audience is like, “This is a sellout show. They do not even bother to get into it.”

 

 

They can get frustrated on that front end of the show and be like, “Get on with it already. I want to hear the real content,” but you can frustrate them, and then they would switch off and go to another show before they get to the good stuff.

You finally do start, and then I have heard it from people where they sell their own stuff. Now, you had a 60-second commercial, you’ve got a minute of all about you in the intro, and then another minute of you hawking something that your own program to get them to enroll, and the audience is like, “I am out.”

If you think, “A few hundred dollars here is going to help me grow my audience because I have got some extra money that I am putting aside and I can spend it on more production or promotion.” It is a mistake at the end of the day because you are going to get lower traffic. If we find that shows that have ads, there is a reason that they are not doing as well. Shows that have ads that are not very tightly relevant to their audience, and the ones that do that streaming on the front and back typically have on average, a much lower percentage of audience growth factor.

If we see on average, the industry growing or in a category growing 10% month-over-month, they are usually about 30% to 40% less than that. It is very common. It is not an actual growth strategy or monetization strategy because, at the end of the day, it hurts your long-term monetization to take a couple of hundred bucks here. Most of them do not offer that.

This is the one thing I want to say, when you are doing one of these programs, be absolutely sure it is serving your group. You are a sports podcast and you are joining a sports network with great sports advertisers. It is all going to drive traffic, be relevant, and help you grow. If you can’t get that, you better get a guaranteed amount. If it is not over $1,000, I won’t do it.

 

Podcast advertising is the only thing that's working right now. Click To Tweet

 

It should be significant, worth your while, and worth it to your listener. You believe that it is worth it that there would be value for your listener and not have it be random. We have had several podcasters moved to us from other hosting platforms, especially from a “network” maybe one that is meant for corporate executives. That is about as close as I will get to outing them.

They were very frustrated because they were promised by this network that they would get more listeners and good guests, and it did not happen but they would also help monetize the show. They were putting ads that were 2 and a half and over 3 minutes long of multiple ads on the very beginning before even getting to the intro of the show.

Most people did not know.

I have experienced it. They did not know because that is a shame on us podcast hosts, and I am including myself in this because I do not listen to every episode I put out on my show. I do not have time for that. I want to listen to other shows. How many of us podcasts hosts listen to all of our own shows? It is very few.

I listened to the first five minutes, make sure it is good, and then move on.

 

 

That is even better than most but you are on one of those platforms that do these streaming events at the beginning. This is what happens with some of these people who seek our support and move to us. They were shocked. They listened to the beginning of the episode and heard all this stuff, and they are like, “They are running all those ads for HP and Google on the front of my episodes, and I am making a lousy $75 a month for that. Are you kidding me? Why am I doing that?” They are out and it is not usually in your best interest.

We have some shows that are in a certain niche area of real estate investing and have gotten over 400,000 downloads a month. That company isn’t even running third-party ads. They could and could be making good money doing it but they make even better money selling their own products, services, courses, and programs. They do not want to sell up the audience to the third-party advertiser because it would take attention away from the other things they want to be selling.

You need one call to action. If you are selling something and crying to gather your audience for a purpose, the last thing you want is a few hundred dollars in advertising, distracting the call to action.

That is really it, distraction and frustration. What is that user experience going to be? You also want to think about your bingeability of your show in context with this monetization of third-party ads. We were shocked by the very first show. This goes back years ago. People were finding our show a year after it started and they are bingeing through all our episodes saying, “I am on episode 52.”

We get comments and they said they are bingeing us, “Could you listen to me over and over again?” I am glad they could, but if they are bingeing through you, how do you think they are going to feel bingeing through, and in-between every episode is 2 to 3 minutes’ worth of irrelevant ads? That is annoying. It is not going to bring listener loyalty.

 

You want to think about the bingeability of your show in context with this monetization of third-party ads. Click To Tweet

 

Not only that, it is usually a good five minutes. That is what you do not realize because you are going from your outro to sometimes streaming ads at the end, which is very common as well, to streaming ads at the beginning of an intro. You have got a good five minutes sometimes with nothing but a commercial piece and nothing of value to your audience.

That is why we keep urging everybody to shorten their intro and outros to not stream ads on the front and back. It is a terrible place to put them. I do not even like them right after the intro unless you need it there for a purpose. I prefer to have a little bit of content or a preamble of some kind and then an ad, even if it is your own stuff because you want to draw the audience.

Remember, we have talked about this before on other episodes. When you are doing a social media video or any content, you want to grab them in the first ten seconds. You do not have that long to grab their interests, especially in a video because video watches are so low compared to podcast listens. People listen for much longer than they view.

For every minute of video, you are losing an audience. That percentage is dropping off continually but with podcasts listening, 70% is your normal throughput average. You can imagine that most people are listening 100% through at that point, so you have a large audience that is doing that. You still have to capture and get them in because if they drop off, they are dropping off in those first few minutes.

You need to hook the listener. You have got to build anticipation and peak curiosity. Pre-recorded intro and an ad right after that are probably not the best places because that pre-recorded intro is the same every time. Come on and welcome your audience to the show. Let them know why they want to hang on and listen to the whole episode. Tease something that is coming within the episode. Build that anticipation and get them like, “I want to hear this.”

 

 

You can then feed them the, “We will be back right after this important message. We will get to that right after this message from our sponsor,” or whatever it is you want it to be. It is letting them know it is coming like, “I want to get the goods. I want that value. I will live with the ad,” but still do not overdo it. Give them the ad that is needed, hopefully relevant, provide some value, and then get on with the content of the show.

I want to close this out and wrap this up by saying this is what we saw in the industry several years ago when we started our first show, get our first sponsor, and realized that this was never going to work if we were going to sell on $1 rate per every 1,000 listeners based on some random algorithm that some advertising company determined was the right thing to do.

We decided that was never going to be the model where it was going to work for us as a host. We looked at that and we said, “That is not going to work.” We then realized what was happening in the binge-listening world and said, “That is not going to work either.” We developed our admixing system to make it so that you could put it anywhere in the show, that you could remove it. It was never irrelevant. It was always relevant to your audience at any given time.

It could be timely as well. You could do a time-based ad or a time-sensitive ad because we all know when we give somebody a fear of missing out, they are more likely to take action. If that ad and promotion are going to be gone tomorrow, they are more likely to do something about it. Being able to do that was essential. It is why Podetize came about for us because we saw this as the industry going wrong and doing a complete disservice to the hosts in the industry. It is not a win-win.

It is not always but often is doing the listeners a disservice.

 

Give your audience the ad that's needed, the ad that's relevant, that provides some value, and then get on with the content of the show. Click To Tweet

 

I also think that no one is talking about it. It does the brands a huge disservice too because they are wasting their ad dollars. They are not getting what they could be getting out. That is why they are paying less because it is not effective. If Amazon Kindle were only advertising and paying a higher dollar amount on shows that were for readers like book review ones and things like that, they would be making more money off of those advertisements and the conversion of those advertisements. The brands are getting badly served in this model but it is convenient for them. They are like, “Here is my campaign and my budget. Just spend it.” That is not good for everyone.

It is disappointing or disheartening because here you have a technology, a medium of podcasting, where people are opting in to listen. It is not like you are broadcasting on the radio. Here is an example, my car is being of service. I am getting some accessories installed on it. I have had a loaner for a couple of days and SiriusXM Radio is what I always listen to where the car plays with my phone attached to it, so I can listen to my podcasts in the car. I am not bothering to do that with a car I am going to have for 2 or 3 days.

What am I listening to? Terrestrial radio. I am so sick of listening to all the commercials in there that are absolutely irrelevant to me. The point of that is it is random. People advertise it. Drivetime Radio is hoping enough people that are interested in their company, product or service, and it is a tiny percentage of people that might be here.

Here, you have podcasting. People are opting in, choosing the content they are listening to. There is a reason they are doing it. That listener has a profile of things they are likely to be interested in. You have the opportunity if you are going to run any ads or promos in them to be completely relevant. These companies are going backward in doing these random run of show ads of generic stuff, taking it back to radio mentality, and it doesn’t work well.

It is not podcasting-centric, and that is what we want here. We want to win for the hosts, the listeners, and the brands because then it is going to work for all of you, and you are going to keep podcasting. The industry is going to keep growing. Year-over-year, we had almost doubled the number of listeners from 2021 to 2022. That is amazing. There are more listeners out there. Brands should be capitalizing. The host should be able to capitalize on this. Let’s not get lazy and use these systems that are archaic and old-school media. This is new school media. Let’s use it like new school media.

 

 

Thanks so much for reading, everybody.

Thanks, everyone.

 

Important Links

• AdvertiseCast
• Libsyn
• Podetize
• https://www.Advertisecast.com/Podcast-Advertising-Rates