How to Make Money Podcasting: What Are Your Possibilities?
Podcasts are the hot, evolving content format. Everybody seems to want to start a podcast now. In April 2020, Apple published a press release announcing that they now have 1 million shows on the Apple Podcasts app. According to Podcast Insights, there were 500K to 550K shows in mid-2018. That’s close to doubling in 2 years.
But is anyone making money from them? And what are your possibilities for making money from podcasting?
How Do Podcasts Make Money?
There are only three primary ways that podcasts make cash money: advertising, sponsorships and subscriptions. However, smaller and new podcasts have the most difficulty in monetizing through any of these methods. You'll understand why by the time you finish this article.
Ads on podcasts may be read by the podcast host, or a pre-recorded message from the advertiser is inserted somewhere within the podcast recording. Pre-roll (before the show starts), mid-roll (somewhere in the middle of the show), and post-roll (after the show concludes) are the common points where advertising is placed.
What Is Dynamic Ad Insertion?
In the past, podcast advertising was ads that were part of the podcast episode. Podcast hosts would read the ads, or the advertisers and sponsors would provide an audio file for the podcaster to stitch into the episode audio file. The ad became a permanent part of the episode. I think you can imagine that advertising for short-term promotions isn’t an ideal fit for this. Listeners will have to hear ads for promotions that expired a long time ago. Even if the podcast content is evergreen, the inclusion of expired promotions makes the podcast seem old and out of date.
As podcast advertising technology evolved, we now have dynamic ad insertion for podcasts. You can think of it similar to ads that run when you watch YouTube videos. They’re inserted at the beginning or maybe in the middle of a longer video. The ad content also changes continuously over time, and ads may only run for a specific period of days, weeks, or months. This allows for greater customization for a target audience, and more relevant and timely promotions.
There are podcast platforms that let the podcaster insert ads dynamically at custom points in the show episode, such as at a change in the topic of conversation. Podcasters solicit their own advertisers and sponsors. However, the podcast hosting platform—a company that stores and distributes the podcast audio files—can charge the podcaster a fee for this customization, as well as the reporting and payment handling that go with it.
Other podcast monetization programs may dynamically insert advertising at pre-roll, mid-roll, or post-roll, and then share ad revenues with the participating podcaster. Podcasters have less control over these arrangements, and their shows may need to meet certain standards, such as a minimum number of downloads or subscribers. Some of these monetization programs may even charge podcasters to participate. Advertising for irrelevant or inappropriate products and services could turn off listeners. I experienced this on a friend’s podcast that was loaded with long, junky ads. It is important for podcasters to choose carefully when signing up with a podcast monetization program with revenue share.
In many ways, this looks like advertising. Usually, the sponsor for the show is mentioned and thanked at some point in the podcast, often at the beginning. Sometimes an ad for the sponsor may run or be read.
These sponsorship deals can take a variety of forms. Sponsors may pay a set fee per episode or for a specified time period.
Podcast hosts can either make these sponsor mentions part of the permanent podcast episode audio file, or utilize podcast platforms that offer dynamic ad insertion services. Again, there may be a fee for dynamic ad insertion customization.
The Bigger Problem: Getting Sponsors and Advertisers
I’ve just discussed the easy technical aspects of podcast advertising and sponsorships. The hard part is getting sponsors and advertisers. Here’s why.
As reported in podcast hosting platform Libsyn's podcast, The Feed (Episode 145), if a podcast episode gets 136 downloads in the first 30 days after release, it’s in the top 50 percent of podcast shows. What? Only 136 downloads? That should be easy to achieve, right? Not to be discouraging, but I think that most new and niche shows will not make it into that top 50 percent. Getting 136 downloads per episode is highly optimistic for many shows in that bottom 50 percent, based on my experience and observation. That low level of exposure will not get any advertiser or sponsor excited to do business with you.
It’s not just the low download numbers that make getting advertisers and sponsors difficult. You are also fighting the nature of podcasts. People listen to podcasts while they're doing other things: housework, driving, exercising, etc. They’ll likely have forgotten the ad or sponsorship mention almost immediately after the show concludes. Plus, because people are doing other things, and podcasts aren’t clickable (at least not yet), measuring the results of the podcast ads is mostly a guessing game. And advertisers don't like guessing.
Right now, podcast advertising is a good fit for brand awareness advertising. But that's difficult to measure. And when advertiser and sponsor marketing budgets get tight, they’ll lean towards advertising that is more measurable such as Pay Per Click (PPC) internet advertising.
But let's be honest. How many potential advertisers and sponsors do you know right now? I thought so. Speaking from the standpoint of someone who used to sell media advertising space for over 15 years, I will tell you that it's a sales job. And I know what you're thinking, "Ewww, sales."
Podcast Advertising is Growing. But...
On the upside, eMarketer reports that podcast advertising is growing rapidly, and is projected to hit $1 billion by 2021. But compare that to the overall global advertising market which, according to Statista, was projected to be $563 billion in 2019. It’s a minuscule share of the advertising market. On top of that, at this point in time, I find podcast advertising measurement to be very poor, both in terms of available metrics and standardization across platforms.
With these small numbers, there's not enough advertising money in the system to make it a significant income stream for most podcasts, especially smaller new and niche shows.
Paid Podcast Subscriptions
If the prospect of selling podcast advertising and sponsorships is too daunting, you may want to offer some or all of your show’s episodes to listeners for a fee. Typically, these are monthly subscriptions. The subscription payments may be collected by the site that hosts the podcast (e.g., Podbean, Libsyn). Some podcasters host their shows on sites like Patreon where subscribers pay to hear the show and may be given access to additional perks for higher subscription levels.
The Apple Podcasts Problem
Here’s the problem with getting paid subscriptions. There are too many excellent free podcasts available.
In order to have their show served up to listeners by Apple Podcasts—the dominant podcast listening app—podcasters have had to offer their shows for free to subscribers. Same for almost every other podcast listening app that came after such as Spotify, Google Podcasts, Overcast, and Stitcher. By the way, Spotify is the currently the second most popular podcast listening app, and is gaining some ground on Apple's dominant position.
Essentially, these apps are podcast directories or aggregators. They don't make money from serving up the shows, but make money from other products or services. So they don't pay podcasters to include their shows in the listings. While it's a privilege to be included on Apple Podcasts or these other apps, podcasters won't make any money there.
Therefore, with so much excellent podcast content available for free on Apple Podcasts or similar apps, soliciting paid subscriptions from listeners is a tough sell. Your show better be something so spectacular that it’s worth paying for.
Also, because listeners may have to listen to a paid subscription on a website or podcast other than what they normally use, it might be an inconvenience in addition to an expense. Again, it better be really, really good for listeners to invest in your show.
Indirect Podcast Monetization Opportunities
Here are other ways to make money with podcasts that aren’t advertising, sponsorships, or subscriptions. However, they might be even less lucrative than cash money income streams.
Affiliate and Influencer Marketing
Affiliate and influencer marketing is getting commissions for sales you drive to an advertiser’s website or e-commerce site. The biggest issue with this is that when people listen to podcasts, they’re doing other things. With podcasts, even if you have a memorable URL, listeners have to intentionally go to your site to click those links after the episode is over... that’s if they remember the URLs.
Maybe podcast technology will advance to the point where listeners have an easy way to interact with the show in real time, but not now.
Products, Services, Coaching, Consulting, and Online Courses
Selling your own offerings presents the same problem as affiliate and influencer marketing. Even if listeners are interested in doing business with you, they have to intentionally connect with you or your website after they’re done listening.
I’ve estimated only 1 percent of your author fan base actually buys your book. For your podcast, that would be your number of podcast subscribers, not downloads. These are the people that have agreed to have your show’s episodes downloaded to their device, or have paid to subscribe to your show.
Now do the math. Even if you have 1,000 subscribers to your show, which is respectable, you might realistically sell only 10 books in a year from this single channel.
Speaking and Events
Podcasting showcases your ability to relate to your audience with your speaking skills. So event hosts who hire speakers can sample your skills through your podcast. And if you host your own events, potential attendees can get a taste of what your live event might be like.
But getting public speaking gigs is not easy. It's another serious sales effort. Full-time professional public speakers often spend more time getting gigs than speaking at them. Just having a podcast won't get event hosts clamoring to hire you, or attendees lining up for an event you host yourself.
Swag or Branded Merchandise
I’ve ranted on this topic before as it relates to promoting books with swag, branded merchandise, or promotional products. Same issues apply for podcasts, if not more so because chances are your podcast won’t make money now or ever. If your swag is a print on demand affair where you don’t have to purchase inventory, and handle fulfillment and shipping yourself, then it makes sense. But otherwise it will cost you plenty.
The biggest problem with making money with podcasts is that you have to market the podcast to make money with the podcast.— Heidi Thorne
Serving Two Podcast Monetization Masters
The biggest problem with making money with podcasts is that you have to market the podcast to make money with the podcast. This means you have the double whammy investment of building and serving two markets: advertisers and sponsors on one side, subscribers on the other.
Plus, in order to become worthy of advertiser investment, you have to have a lot of subscribers, whether paid or free. So you’ll have to build your subscriber base first. That could take spending money on advertising, not to mention your time and effort for any non-advertising promotion on social media. You could be trading advertising spending for advertising revenue, essentially creating zero profit.
So do a podcast because it serves your fans, it helps build your brand online, and you love doing it.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2020 Heidi Thorne