Is Podcast Advertising Grossly Undervalued?

May 11, 2017

Brandon Matthews

From 2008 to 2015, the number of Americans tuning into podcasts more than doubled!

To the point where there are almost 70M people listening each month. And that staggering number is on the rise...

According to an Edison Research study, 60% of Americans over the age of 12 know what a podcast is. More than 40% have listened to one within the last month.

People around the country are ditching commercial-heavy, traditional radio for ad-light shows that target specific interests. I'm a huge fan of podcasts. I haven't tuned into an AM or FM dial in years!

The average listener has a median income of $75,000. Meaning you can put your product in front of people with disposable income.

As a marketer, there is a golden opportunity to get your product in front of a massive, engaged audience... at a very low cost.

How Do Podcasting Ads Work?

If you haven't heard of a podcast, it's a great way to pass time while learning something of value. You can find a solid podcast on anything. Topics range from sports to film to cooking to comedy to James Bond geeks.

If you have a laptop and a voice, you can be the next Joe Rogan.

Not every podcast if a flush revenue-producing machine.

Typically, a host won't be able to command the use of ads until around 20,000 monthly downloads. That may seem like a lot, until you remember there are almost 70M monthly downloads.

There are three main types of podcast ads:

Pre-roll: a 15 second ad at the beginning of a podcast.
Mid-roll: a 45 second (more expensive) ad in the middle of the podcast.
Outro-roll: a 10-15 second ad at the end of the podcast.

Outro-rolls are the least popular because the listener can tune out. They do offer a chance a good value if budget is a concern.

Pre-roll are the most common. A show's host will read them. Or the business supplies a taped version. That's an important factor to consider making the plunge.

Mid-roll are the priciest because they are in the meat of the show, when the audience and conversation is the most engaged.

The high-level podcasts have between 2-4 ads per show. There are a lot of chances to get your brands name out there.

Advertising Pricing Method

Advertisers have 3 main methods to pay for play:

Cost Per Mille (CPM): Digital marketers will recognize this term. The price is determined by "per thousand" listens. According to Entrepreneur On Fire, the average CPM for a 15-second pre-roll is $18. A 60-second mid-roll is $25 per CPM. Example: it would cost $180 for a 15-second spot on a show with 10,000 listeners. Not bad!
Cost Per Acquisition (CPA): The price to acquire one customer. You pay the host when a listener from the podcast buys directly from your business. The price on this method ranges on the cost of your products or services.
Freely Negotiated Price: The most common for newer, smaller podcasts. It usually doesn't make sense for an advertiser to spend money on a show with less than 20,000 downloads per episode, but hey, it's not an exact science. It could make sense to "grow" your business with the show.

Conclusion

Starting with a smaller, but promising, podcast can allow the business and the host to benefit. Remember to target a specific audience that would buy your product.

If you are selling surf trunks, go find an action sports podcast to spread the good word about your awesome company.

Another beauty of podcasts, is that people will go back to listen to older shows. You will get your ad to more ears than you paid for. Nothing is better than "free" advertising.

Take advantage of the low barriers of entry. Prices will only rise. If you have a few marketing bucks laying around, test it out.