Man, it’s a great time to be in podcasting! Whether you are a host or an advertiser, the explosive growth of the channel is opening up a litany of partnership opportunities. The podcast advertising industry surpassed $1B in 2021 for the first time ever. This represents a 74% YOY increase in revenue; which is more than twice the 35% YOY increase the entire internet media industry experienced during what was heralded as a banner year. Equally astounding are the future projections. It is estimated that podcast revenue will reach $2B by 2022 and $4.29B by 2024. So, it’s worth repeating, it’s a great time to be in podcasting.
How Does Podcast Advertising Work?
Brands that want to advertise their message to podcast audiences have a number of different options - including various ad types and buying methods. Here we breakdown some of the basics:
There are 3 ad unit placements:
- Preroll (“pre”) –These units are in the first ~30-60 seconds of content and are generally a very short 10-20 second brand mention. These are often used for branding or “sponsored by” ads.
- Midroll (“mid”) – These units can run anywhere from 2 minutes into the show to 2 minutes from the end of the content. They are a preferred ad unit. They are usually 60 seconds in length and often 2-4 units run per show.
- Post-roll (“post”) – These units are in the last ~60-90 seconds of the show and are usually 10-30 seconds in length. These units are generally not preferred as listeners will sometimes stop listening to the show before this placement runs.
There are 2 different ad formats:
- Baked In – These are ads that live in the show in perpetuity and are included in every download - regardless of how much time has elapsed since the show has run. They are definitely our preferred ad unit. This format allows for ads to be in more downloads than what was originally purchased.
- Dynamic Ad Insertion (DAI) – These are ads that are placed into each download dynamically and, as a result, may be different for each individual download. Each advertisement is inserted until it reaches the contracted number of downloads. Generally speaking, these ads are often pre-produced and can sound more “ad-like”.
How Are Podcast Ads Priced?
Podcast ads are often priced on a CPM basis:
- When evaluating a proposal, CPM provides a good common denominator to compare across shows or networks. CPM is the Cost Per Thousand people reached. The CPM is the cost you'll pay per 1,000 impressions or downloads. To calculate a CPM on your own, you would use the following formula: Cost/(Downloads/1000).
Average Podcast Advertising CPMs in 2023
There are a number of factors that influence the cost of podcast ads, but based upon our experience buying across all categories and ad types, we have found the following average CPMs to be a good benchmark. Please note that these rates typically apply to :30 and :60 second ad spots.
- Pre-roll: ~$20 CPM
- Mid-roll: ~$25 CPM
- Post-roll: ~$1-$5 CPM
How to Estimate the Cost of a Podcast Ad
Now that you know the average CPM, let's use an example to show how much one :60 second mid-roll baked-in ad spot might cost.
- CPM: $25 CPM
- Downloads per Episode (Impressions): 100,000
- Total :60 Second Ad Spot Cost: $2,500
Note that CPM means price per 1,000 impressions. Thus, (100,000 / 1,000) = 100. Then multiply 100 x $25 = $2,500. Please note that this does not consider gross vs. net rates.
Variables that Influence Podcast Advertising Rates
While those are considered average CPMs, it’s important to understand the various factors that can impact the pricing of podcast ads.
Podcast Reach & Popularity
The larger the listenership, the more expensive the spots tend to be. With so many celebrities and well-known hosts joining the podcast space in recent years, we have definitely seen CPMs and costs of these shows continue to rise. Similarly, many podcast hosts who started as virtual unknowns but have now built a large audience have also increased their prices. With a larger listenership and premium deals at major networks, the cost of spots in these shows will increase.
Podcast Ad Length
A typical mid-roll podcast ad is 60 seconds and we typically only purchase a 60-second spot or higher. We often see spots go longer than the planned duration as the relationship between the host and the brand deepens. Hosts love talking about brands and products that they genuinely use and like. Great hosts will be able to weave their ad read into the fabric of the show and seamlessly start their read in a way that makes sense to the content of the show. When you are looking for a host to not only explain the product but also endorse it and give their own personal story, you need at least 60. These longer ads can be pricier but are worth the investment.
Who’s Reading the Ad?
The most expensive types of ads are the ones that are host-read endorsements. For these spots, we provide the host with an advertiser’s product and relevant copy points to include in their ad. They are able to provide their listeners with a real-life personal experience with the brand or product. These ad types not only inform the listener on how and where to buy it but also give them a recommendation from someone that they trust!
From the Experts: How to Maximize Podcast Ad Spend
Nicole Giovia, Media Director at Ad Results Media on how to pick the best shows for your brand:
“In order to best leverage podcast spend, our team prides itself on doing the research to find the right show for the right advertiser. By looking at the show’s audience, show content, and historical performance - we can determine if it will deliver on the advertiser’s goals and objectives. By speaking directly with the show’s hosts or producers, it is considered ideal to find hosts that are already brand fans of an advertiser. Podcast listeners are very loyal, and form very strong connections with their favorite hosts. Because many hosts get personal on their podcasts, their recommendations are really taken to heart.”
Gretchen Smith, VP of Media at Ad Results Media on programmatic podcast buying:
“Securing actual contextual relevance through digital programmatic ads can be challenging. While some of the challenges can be addressed using dynamic creative optimization (DCO), I believe that it still falls short of the contextual alignment we can achieve through programmatic podcast ads. The organic nature of the conversations that occur on podcasts are the perfect environments to authentically insert topical ads or products.”
Sam Cosby, Senior Director of Creator Content at Ad Results Media on how to create high performing creative:
- Don’t write scripts unless there is very specific legal language that needs to be included verbatim.
- Provide a broad range of talking points that the host or creator can make their own
- Be open to the creator’s suggestions.
- The promotional read should be seamless, don’t restrict the time that they spend discussing your brand. The more the better!
Wrapping it Up
Ad Results Media is the preeminent podcast advertising, broadcast and digital audio, and creator-based video media agency. We exist to forge more intimate and powerful connections between brands, listeners, and their favorite show hosts through skilled media planning, media buying, and ad campaign execution. For more information on how your brand can maximize the advertising opportunities in podcasts, please reach out to our team.
