Day 50: Deciding When to Monetize

So today we're going to go over what sponsorships are, the types that you can do, what the industry standards are. And a few questions that you will ask yourself as you get started with sponsorships.

Steps for Skill Mastery:

1. Determine your CPM
2. Decide IF and WHEN to monetize

Step 1: Figure Out Your CPM Rate

When people think about monetizing a podcast, the first thing that comes to mind for most is advertisements from another company at the beginning or middle of their episode. This is one of several methods and the most traditional route of monetizing a podcast.

Typically the companies that run ads with you will have strong ties to your audience and have a product that aligns well with them. Recently this is beginning to change as more and more large companies, such as Intel and HP, start advertising on seemingly random podcasts. This is great for podcasters because it proves that podcasting is indeed becoming a mainstream form of media.

And sponsors love podcasts - the return on their investment is outstanding because sponsors know listeners trust the podcast they listen to and will trust anything you recommend.

The podcasting industry has standards around sponsorships including the types of advertisement spots and how much money ads cost.

There are three main types of ad spots for sponsors in podcasts:

• Preroll: Prior to launching into the main content, the host will talk about the sponsor’s product or service for 15-seconds.
• Midroll: Typically inserted somewhere around the 40 – 70% mark of the podcast episode. During these 60 seconds the host will talk about the sponsor’s product or service, often sharing a personal story if possible and revealing some of the features and benefits.
• Postroll: typically between 15 – 30 seconds. This is the last call to action your listeners will hear.

Now the cost for each of these ad spots is based on industry rates and calculated using a a CPM metric, or cost per thousand listeners.

You can check AdvertiseCast.com which shows the industry rates currently.

As you can see, you really won’t make any “real money” until your listenership gets quite large. When your podcast does take off though you could easily turn the podcast into your primary income source.

Below is an example:

Example Podcast Sponsorship Income

Listeners per episode: 10,000

Type of advertisement: 30-second ad

Advertising Rates: $22 CPM

$22 x 10 (for the 10,000 listens) = $220 per episode

Your monthly income:

• If your show is 4 episodes a month: $880
• If your show is 8 episodes a month: $1,760
• If your show is 30 episodes a month: $6,600

This example is for only running one single 30-second ad roll (say as a midroll or postroll) in each episode. Many podcasts have a pre, mid, and post roll sponsor which can command even more revenue for you each month. A lot of the larger podcast are getting 150,000 downloads per episode, so that means they could be making $33,600 for having (2) 30-second ad rolls in a simple 4 episodes per month podcast!

Now that you understand the industry standards, let’s determine how many average listeners you are getting per episode for your CPM.

To determine this look at the download numbers of your episodes starting at 6 weeks out. You can see these numbers in many podcast media hosts or other download tracking services we covered in the Tracking Your Stats lesson.

Remember, you’re guaranteeing a MINIMUM number of listens, so you need to be confident that you are fulfilling your end of the bargain.

Once you see that EVERY episode is over a certain number of downloads by week 6, that is your CPM.

Once you have the number of downloads you are averaging for each episode, divide that number by 1,000 and that is you CPM Rate.

Example CPM Rate Calculation

Average Listeners Per Episode Over 6 Week Period From Publishing: 752

752 listeners / 1,000 = .752 CPM Rate

Now let’s determine your CPM Rate for your podcast

Activity: Determin Your CPM

Using the formula above or the CPM calculator here, determine your CPM rate.

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Now let’s answer the most important question for yourself and your podcast.

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Step 2: Decide IF and When to Monetize

Do you want to have sponsors and what is the LEAST amount of money it would take for you to dilute your podcast with a sponsorship?

Dilute is not meant as a dirty word here. It is meant as a reality.

When you bring on a sponsor, no matter how relevant, and no matter how awesome, you are on some level diluting the message of your podcast.

You’re going to turn off some listeners, (although very few if you do it right), you’re going to be sending some listeners away on actions that do not involve your platform, and you’ll be distracting some focus from the main content of your podcast.

This is community of people. Your listeners are valuable so don’t sell them out as without a minimum price tag.

Is that $100 per episode, $500, $1000?

Once you know this number you can use the calculations above to set a goal for how much you need to grow your show in listener base before getting sponsors.

Also if you know your number, you will be in a MUCH better position come negotiation time with your sponsors.

Activity: Reflect & Decide

Reflect on the following questions:

• Do I want my show to have sponsored ads?
• If yes, the minimum amount of money I want to make per episode is...
• If order to ask for that amount, the minimum amount of listeners I need per episode are...

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Below are a few videos to help you get started thinking about monetization.

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Skill Lesson Mastered

Demonstrate mastery of the knowledge and skills presented in this lesson by applying it to the above activity. If, and only if, you have a full understanding and have mastered the knowledge and skills presented in this lesson, select the next lesson in the navigation.