Navigating the Complexities of Podcast Monetization
The primary focus of this inaugural episode of Practical Podcasting is the exploration of podcast monetization, particularly the prevalent model of utilizing advertisements. While advertisements undoubtedly present a viable avenue for generating revenue, we contend that aspiring podcasters must approach this method with a discerning eye, particularly regarding its limitations and the requisite scale of listener engagement. We delve into the intricacies of the cost-per-mille (CPM) framework, elucidating how it operates and the financial returns it may yield based on audience size. Furthermore, we highlight the importance of realistic expectations, especially for those new to the podcasting landscape, as the actual monetary benefits can often be modest relative to the effort invested. Throughout this discourse, we encourage listeners to consider alternative monetization strategies that may prove more advantageous in the long term. This lecture explores the complexities of podcast monetization, particularly focusing on traditional advertising methods. While many people initially think of ads as the primary means to profit from podcasting, the lecturer emphasizes that this approach comes with significant limitations. The discussion begins with an examination of the CPM model, which stands for cost per mille—essentially the cost per one thousand downloads. This monetization structure allows podcasters to generate revenue based on their audience size, but it also poses challenges regarding both financial returns and the restrictions on how quickly and where advertising can be sold. The lecture outlines that, typically, advertisements are sold under strict guidelines that often limit the effective window for earning revenue to the first 45 days post-release. This means that downloads occurring after this period do not contribute to earnings through CPM, significantly affecting potential income for evergreen content—episodes that continue to receive downloads over time. The speaker shares anecdotes highlighting the discrepancies in ad effectiveness, noting that while some individuals may receive substantial sums for their content, this is not the norm for most podcasters. Often, the actual earnings from each thousand downloads are quite low, especially after accounting for cuts taken by agents and advertising platforms. Delving into the numbers, the lecturer mentions that the average CPM rate is around $20, which can translate to modest earnings unless a podcast has a large and engaged audience. The discussion underscores that the true value of podcast monetization lies not solely in ad revenues but also in the potential for podcasters to connect their audiences with specific products or services that may yield higher profits per individual conversion. For example, referring listeners to high-ticket items, such as real estate, could significantly enhance the financial prospects of a show compared to traditional ad placements. Furthermore, the lecturer emphasizes the challenges of competing in a crowded media landscape. Many podcasters may overestimate their popularity, only to find significant competition not just within podcasting but also across various online platforms such as YouTube. This situation makes relying solely on CPM-based advertising a risky and often unproductive strategy. The insights presented consider the long-term sustainability of ad revenue and suggest that podcasters should carefully assess their realistic download numbers and the nature of their content before committing fully to this monetization method. The talk culminates in the idea that while advertising can be a viable income stream, it requires extraordinary download numbers and audience engagement to be truly profitable. The speaker hints at the next options for monetization, suggesting that podcasters might explore alternative methods or even collaborative approaches that could yield better financial returns in the long run. This balanced view encourages creators to weigh their options critically and remain open to exploring diverse revenue models beyond traditional advertising. Commencing our exploration into the realm of podcast monetization, we address the prevalent notion that advertisements serve as the quintessential revenue stream for podcasters. However, while it is undeniable that ads represent a significant opportunity for monetization, they are not without their drawbacks and intricacies. The conversation intricately dissects the CPM (cost per mille) model, wherein earnings are calculated based on the number of downloads, or more precisely, per thousand listens. This framework, while seemingly straightforward, is laden with restrictions that podcasters must understand to navigate the complex terrain of monetization successfully. A critical aspect of this discussion revolves around the inherent limitations of the CPM model, notably the temporal restrictions that often confine revenue generation to the initial 45 days following an episode's release. This short window poses challenges for podcasters aiming to cultivate evergreen content that resonates with audiences over time. Furthermore, the average CPM rate of approximately $20 translates to modest earnings, as illustrated by the example of generating $100 from 5,000 downloads. Such figures compel podcasters to reevaluate their monetization strategies and consider whether relying solely on ad revenue is a sustainable long-term approach. The dialogue further emphasizes the importance of realistic expectations regarding audience engagement and the competitive landscape of podcasting. Podcasters must recognize the saturation of general topics within the medium and the necessity of differentiating their content to stand out. As we embark on this journey of monetization, it becomes evident that exploring alternative models, potentially involving direct sales or partnerships, may yield greater financial rewards and foster deeper connections with audiences. Thus, as we delve into the intricacies of podcast monetization, we must remain vigilant in our pursuit of strategies that not only generate revenue but also enhance the value proposition of our content.
Takeaways:
- Monetization of podcasts often centers around advertisements, which can provide financial returns based on audience engagement.
- Cost per thousand downloads, commonly referred to as CPM, is a prevalent metric used for determining ad revenue in podcasts.
- The effectiveness of CPM is limited to a 45-day window following the episode's release, imposing constraints on revenue generation.
- While advertisements are a common monetization method, they require substantial audience numbers to yield significant income for podcasters.
Transcript
The majority of people, when they think about podcast monetization, they think about ads.
Speaker A:And ads are definitely a podcast monetization option.
Speaker A:They're not my favorite, but I think the important thing should be that anyone considering podcast monetization should look at this model of ads.
Speaker A:Ads and podcasts are Simply sold or 99% of the time.
Speaker A:There are some other options.
Speaker A:Those kind of go into the category two that we'll talk about later, but they're sold in cpm.
Speaker A:And CPM stands for cost per milliliter, which is cost per thousand.
Speaker A:So basically you get X amount of money for every thousand downloads.
Speaker A:So if it's a 20 cpm and you get 5,000 downloads, you're going to make 100 bucks.
Speaker A:If you get 10,000 downloads and it's 10 cpm, you're going to make a hundred bucks.
Speaker A:You know, you know, that kind of thing, it's not that complicated to figure out.
Speaker A:And this seems great, and this seems awesome because, you know, wow, you get money just for them downloading your show.
Speaker A:Nobody has to do anything.
Speaker A:They just have to listen to the ad.
Speaker A:And that's fine and dandy.
Speaker A:But first of all, let's talk the restrictions.
Speaker A:The restrictions on CPM are pretty serious.
Speaker A:Many times they are only the first 45 days.
Speaker A:So if you release your episode on January 1st, it's only the thousand downloads between that and February 15th.
Speaker A:There are a number of reasons for that.
Speaker A:One of the big reasons is simply that, you know, at some point the account has to close.
Speaker A:At some point the delivery has to be made.
Speaker A:And I think the idea is that the, the 45 days is good to be the majority of your play.
Speaker A:Now I am a big fan of podcast content that is evergreen podcast content that can go a long time.
Speaker A:I've got clients with 10 year old episodes that get downloaded, you know, on a regular basis.
Speaker A:You know, we're talking a dozen or so a day.
Speaker A:And I've been doing so for 10 years.
Speaker A:And of course a dozen times 365, you know, there's a couple more thousand in there and they do that over 10 years, there's a lot more in there.
Speaker A:And so.
Speaker A:But cpm, that's how it's sol so or that's how just traditional ads are sold.
Speaker A:Now if you put a couple ads in there, you get money per ad and that's certainly reasonable, especially if you do long form content.
Speaker A:But of course you and I have both heard and watch podcasts with way too many ads.
Speaker A:You know, it's funny, podcast, this medium that Makes it possible for us to not be like old media.
Speaker A:You know, some shows are actually putting more ads in the show, more time for ads in the show than we're getting with, quote, unquote, old media.
Speaker A:But X per thousand downloads, 45 days.
Speaker A:Usually the deal is North America only.
Speaker A:That's for a number of reasons.
Speaker A:A lot of times the people who sell are only selling North America.
Speaker A:A lot of the times, you know, your other countries are.
Speaker A:You know, it's easy to do fraud in North America, but I hadn't heard.
Speaker A:It's relevant.
Speaker A:And maybe it's.
Speaker A:This is just perception, but fraud outside the US is even more relevant, or more prescient, if you will.
Speaker A:So, thousand downloads.
Speaker A:X multiply that by how many ads you put on the show.
Speaker A:Interesting place.
Speaker A:Average.
Speaker A:Well, first of all, let's talk numbers now.
Speaker A:First of all, podcasting is the wild, wild west.
Speaker A:And I love podcasting because it is the wild, wild west.
Speaker A:It's one of the fun things.
Speaker A:You might get someone who is really focused on your audience, or you might get someone who really, really wants to be associated with your top.
Speaker A:And you might get numbers outside of the norm.
Speaker A:I think this model, again, is better for the next models that we're going to talk.
Speaker A:But there have been people who have, you know, overpassed the CPM model just for an ad.
Speaker A:I've known people who are like, hey, I'll just give you a thousand bucks an episode.
Speaker A:These are rare.
Speaker A:These are rare.
Speaker A:And they're often.
Speaker A:Not only are they rare, but they're just not going to last for a long time because, you know, I just spent a thousand bucks.
Speaker A:What did I get for that?
Speaker A:I know someone who sold his season for $1,000, which sounds, you know, interesting.
Speaker A:But the fact of the matter is he admits that he gets, you know, sometimes 20 downloads per episode, so that positioning is there.
Speaker A:But all things said and done, the average show, and I know you feel that you're not the average show, but if you go into this play, it's a numbers game.
Speaker A:You know, the average CPM is about 20 bucks.
Speaker A:When all said and done, after the agent gets in and after the vendor gets in and everything, your take home is 20 bucks.
Speaker A:So how does this translate?
Speaker A:Well, to get 5,000 downloads of a show, and it's 20 cpm, you've made 100 bucks.
Speaker A:And 100 bucks is not anything to laugh at.
Speaker A:But if 5,000 people, think about how many 5,000 people is.
Speaker A:If 5,000 people all said, I want what it is that you have to offer, are There models in their vehicles for that to be would be worth more than a thousand bucks.
Speaker A:Now, if you're just telling jokes, yeah, about 500 bucks.
Speaker A:Is it, you know, if you're reporting on the news, yeah, you know, that's it.
Speaker A:But if you are, if you are sending people towards real estate purchases that are, and I'm just making this up, there's thousands of options and you need to work this out for yourself.
Speaker A:But, you know, if I'm sending people to a person who sells a home and makes a $5,000 commission, makes a $10,000 commission, and I made, you know, a couple hundred bucks, does that seem fair?
Speaker A:Is that what we want to do?
Speaker A:And that's the game.
Speaker A:It's easy.
Speaker A:Some of the things you got to deal with and some of the things you got to realize is that a lot of people think that they are a lot more popular, they're a lot more interesting, they a lot more in demand than they really are.
Speaker A:And you put up a general show about a general topic, there are a lot of people competing for that, I'm gonna be honest, a lot more competing for that on YouTube, a lot more competing for that for websites.
Speaker A:And so podcasting might be the good place to do that.
Speaker A:But this game of putting ads on your show, you're someone else's product is a game of scale.
Speaker A:And it might not be the easiest game because, you know, as I kind of hinted to the whole real estate thing, you know, one person buys and that person makes a $10,000 commission.
Speaker A:And you know, that could be one ad, that could be one episode.
Speaker A:But of course, in this just paying straight out for ads, it all evens out that way.
Speaker A:So it's model number one.
Speaker A:It's viable, but it's a lot of work, in my opinion.
Speaker A:So what you need to do is you need to simply.
Speaker A:How many downloads am I going to get?
Speaker A:Be realistic.
Speaker A: he grand scheme of things for: Speaker A:In the monetization model, there is a world of dynamic ad insertion, which is something you might want to explore.
Speaker A:Or basically you click a button and your show gets updated with the ads, new ads.
Speaker A:And so basically, you know, you run that 45 days I talked about.
Speaker A:Now you can do back catalog ads, that kind of thing.
Speaker A:That's interesting and something to play with and something to possibly explore.
Speaker A:But down when it comes down to it, every hundred downloads is going to make you.
Speaker A:I'm sorry, every thousand downloads is going to make you very little.
Speaker A:And it's got to play really, really, really with a lot of downloads.
Speaker A:And of course, if you're in a situation where you really, really, really have a lot of downloads, then you know you've got an audience that loves you and you've got an audience that likes you, and you've got an audience that wants what it is that you have to offer.
Speaker A:If you have those things.
Speaker A:Think about it.
Speaker A:If you have those things, this is sort of foreshadowing to the next option.
Speaker A:Maybe you could sell something of your own, or maybe you can partner with the person who's selling to move from more of a traditional ads to a piece of the action thing.
Speaker A:So summon all up in podcasting, one of the monetization models is to sell someone else's stuff.
Speaker A:If you do it kind of blindly, if you do it kind of with that ad insertion model, if you do it, you know, let's be honest, in the simplest way possible, the pay is not going to be a lot, and you're going to have to run a lot of downloads, a lot of downloads for this to be a really, really viable thing.
Speaker A:It's there.
Speaker A:Some people do really well with it.
Speaker A:You got to figure out if it's for you and then listen to the other two options.
Speaker A:Take a look at the other two options, because I think they might be better for you.
Speaker A:All right, that's it for this one.
Speaker A:Let's talk option two next.
