How do podcasts make money?
How do podcasts make money? How can you make money from podcasts?
Find out how some creators grow their programmes and make money out of them here.
My elderly next door neighbour does not have the internet at home and is fascinated by my constant headphone habit. He now knows you can listen to podcasts, audiobooks, pretty much anything you like, during your weekly shop. Although I think he's still a way off bothering with a smartphone himself. But last week he asked me how on earth I make a living, doing what I do. In fact, I recently even had older radio producer ask the same question.
If even audio people are struggling to understand the difference between generating cash from podcasts, and using podcasts to grow your business engagement (Podcast Pioneers does the latter, by the way), then It's high time I got round to this blog post!
It's a question many people ask: how do you make money out of podcasts? How do podcasts make money? Or, the fancy version: how do you 'monetise' podcasts?
There seems to be a common assumption that anybody can make a podcast and leverage an enormous following for cash through advertising. Although technically, anybody CAN make a podcast and leverage their following for cash through advertising, this is difficult for many and in reality it is a smaller percentage of super podcasters who enjoy a steady and healthy income from selling partnerships that allow advertisers to access their incredibly engaged, loyal and large listenership.
However, there are plenty of options if you would like to invest the energy and work into creating a product that directly generates revenue.
So now I am going to tell you about some of the ways that people do make money out of podcasts. But I'll also tell you how our business makes money too, in honour of my neighbour and all those curious like him!
1) Podcast Advertising and Sponsorship
Used to buying radio? For the agencies and radio advertisers who have traditionally used radio advertising and sponsorship, the price of each 'impact' or cost per thousand listeners can vary with the radio station's reach (potential total number of listeners based on RAJAR survey statistics) and market share, with the position of the ad in the ad break, and with the time of day. Indeed in radio, sponsorship activity, that is, something aligned a little more closely to the beloved radio station content itself, comes at a higher premium because it suggests or involves editorial integration. This is something that radio programmers protect passionately, ever wary of selling out or appearing to undervalue the listener's trust and attention.
In podcasting, this distinction still seems to exist. Sponsorship activity, rules and definitions can vary by provider, market and campaign. They might not be as stringent as format radio, because the podcast format itself is more flexible. However, the highest premium goes to the content most closely integrated with the show's heartland: its editorial. Often this is purchased in the form of presenter 'reads'. That is, the presenter or a member of the show team is given a script or briefing and asked to make it their own. The idea is that if the presenter passionately engages with the product being advertised, their genuine endorsement will shine through to those listeners that adore them, trust them and value their opinion. In the case of adverts, this isn't so closely aligned, so they tend to be more affordable to people buying them.
Advertising on podcasts is commonly 'bundled' across audiences that share demographic or listening habits with your target audience. This can mean reaching across a wider variety of programmes and peppering impacts across higher and lower value shows to fulfil the campaign goals for the number of people reached.
An aside to advertisers, assumptions made at this stage can lead to variability in just how impactful your campaign is. You have to be targeting the right audience! And obviously you need a great ad or sponsorship delivery to light up your listener, make them remember you or even take action. If you're a podcast creator who wants to advertise your podcast on other people's podcasts, consider approaching them directly. If a third party is serving your ads, interrogate their rationale for what shows they wish to target before committing so you can ensure you are reaching people in the right region, demographic and language for your podcast.
How does taking advertising make money for podcast creators?
In the case of ads or sponsorship, there will be a set rate for each 'impact' or cost per thousand listeners the show reaches. You will then usually receive a payment for this when it goes above a certain threshold of earning.
The platform selling advertising or sponsorship on your show will take a cut for bringing in the bacon, serving ads via appropriate technology across and agreed timeframe and managing their advertiser. This might be agreed as a percentage split, say 70:30 to the podcast creator.
Some platforms give the opportunity for users to manage their own advertising in a self-serve interface. As creators, online platforms like Anchor offer simple all-in-one tools so you can put yourself on the market directly.
Either way, the success you will have from this sort of campaign depends very much upon having a lot of listeners! building a strong listenership takes star quality, time and energy on promotion, deeply engaging content and ultimately a solid solid concept, presentation and marketing strategy. If you'd like to make money from taking ads and sponsorship across your podcast, I'd advise pouring your resource into publicising, sharing and growing an absolutely unmissable show. There are people that do it, and I'm sure they make it look easy, but what they have to trade off is a brilliant existing following, longevity, commitment and genuine appeal to listeners who keep coming back, not to mention a fantastic production ethic. If you can get someone like Megan Markle to appear on your show, your listeners will go through the roof simply because people are fascinated. Celebby presenters and guests may bring you a short cut to listener growth, but it is their appeal and following you are trading off there, not necessarily that of your podcast. Furthermore, talent who bring this sort of value can expect to see something for its do consider their investment in your revenue plotting!
When can you give up the day job?
The whizzes at Podbean have very helpfully put together this podcast advertising calculator if it's numbers you're after! Check it out here:
This even offers you the chance to see the value of your pre, mid and post-roll positions with them. That means the value of your advertising spots front of podcast, middle of podcast and end of podcast. Obviously the value of these spots declines through the episode as listeners drop off through the episode duration and not all will listen to the end. Platforms like this offer a lot of 'why not' flexibility to creators as it gives them the option to opt-in or out of a campaign when they're selected by advertisers.
As an example, if you make a weekly podcast that gets 10K downloads each time and takes two ads per show, this calculator suggests you can make around $72,000, about £52 grand. Where do I sign up?
10K downloads every week of the year is quite the achievement by the way. If you have that kind of work ethic and star quality I reckon you deserve every penny. Some podcasts do indeed achieve these download figures too. They might be radio spin-offs or podcasts of linear broadcast shows which cross-pollinate. They might have been born of newspapers, websites, influencers or other media followings. But some of them, like the oft cited Joe Rogan, are just consistently beloved podcasts, and that is pretty cool.
If you're interested in finding out what the big hitters make, check out this post from Limelink who have done some detective work on the big boys like Joe Rogan and Tim Ferris:
So what about the nichey heartland of podcasters? What if you made a 6 episode series and each episode gathered 1000 downloads throughout the campaign period? I stuck this in Podbean's calculator and got $840 a year. That's about £100 per episode. I'll take that over nothing, thanks.
Now, these numbers are only estimations based on me very much enjoying that calculator tool, which I presume needs you to be taking ads consistently through the annual period. This is also just one platform's estimations so results may vary. But I hope it gives you a little clearer an illustration of what third party advertisers are suggesting you can make through taking ads on your programmes.
I hope this does not discourage people from growing and advertising on their programmes, but rather gives a clearer insight into how important it is to produce and market a programme excellently, using every media resource and platform available.
A strong and loyal, happy and engaged audience is key if you want to have something really valuable to leverage with advertising.
If you want to learn more, just speak to the many companies popping up here and there to understand their different or shared approaches. Some ad platforms are also very supportive of creators in doing this and will often offer advice and opinions which may help you grow. They are also aware that listeners are people! To that end, a listener's loyalty must be earned and kept by providing the show they love to return to and feel truly close to.
You can learn how to plan, make and market a great show in our book Step-byStep Podcasting for Business.
2) Crowd-funding, donations, communities and auxiliary products
And the listener feeling a personal investment in your programme is something quite unique to this media. As with radio, the intimate nature of the human voice and its amenability to integrate with other personal activities - daily life - such as cooking, cleaning, doing the school run or commute etc. is a big selling point. Successful long-running podcasts have a unique connection with their long-term listeners who feel they have been there from the start, grown with the show and shared in its success and kudos for their loyalty.
A massive percentage of podcast listeners still listen on headphones too, making it even more intimate and personal, with the majority using mobile phones to listen. You can check out the periodic surveys conducted by RAJAR MIDAs here:
So what does this mean for podcast creators who want to make money off all that hard work and connection? Engagement. A thousand glances at a social media post does not compare to a thousand clicks there. Nor do a thousand glances at your social media post compare to a thousand listens. The time, trust and investment placed in podcasts is phenomenal. Users in this space may be fewer than on social media, but the engagement and processing they commit to listen to an episode once chosen creates a remarkable opportunity for advertisers to speak to audiences where they have their guard down and their minds open. That's why the best podcasts place a high emphasis upon their audience experience and consult with them.
I'm labouring the engagement point here, but once you have the trust and passion of a listener, if you as a podcaster ask them to support your production through a donation or to purchase a spin-off product, be that a T-shirt or a ticket to your live event or seminar, a speaker booking or interest in your other business ventures or a book you wrote, you too can enjoy the generosity of your fans.
Many podcasters use platforms such as Patreon to make some money and ask for donations whilst building a community that extends your value to them beyond that weekly show.
You might want to create an online community that gives extra related content and interaction to your most passionate subscribers, which you can promote via the free gateway product of your podcast. This really is a great way to turn podcast listeners into cash without feeling like you've devalued or traded off them, and your audience will feel that too. I love the quote "important people make people feel important". It's so true and it's stuck on the door to remind me this before I leave the house, but really it should be in our podcast studios, plastered on the mic.
You can create value simply by giving value, and that value might take the form of money, footfall, awareness, followers or engagement. Any number of opportunities. Money follows value in this case.
3) Product Placement and Afilliate Content
Well, this is a bit like the Coke can your protagonist is holding in the Hollywood blockbuster. Creators might directly strike up their own partnerships with brands to promote a product, maybe doing special content around it, sharing links and calls to action, or selling advertising space on the website or social channels that accompany their hit podcast. If you don't want to use ad-serving tech to deliver this you may even 'bake-in' the activity. This means it will exist as part of the episode listening experience as long as the episode does. If your episode descriptions are SEO-optimised, they may also be useful if you wanted to include affiliate marketing links. This works by you using your podcast as a lead generation tool for certain people and featuring a link to relevant products or content in your notes. You then get paid for each click. Easy to do if you are comfortable with the content your podcast is promoting, but worth a disclaimer if you are directing people away from channels you control the content on.
Making money this way does bring with it a duty of care to your audience. Digital media has rules for how you can advertise which must be adhered to, and they're different to those in broadcast radio. What they have in common is that you need to be responsible for your audience and you need to follow best practise to make sure your commercial arrangement causes no harm, so make sure you approach this with your audience's best interest in mind and take inspiration from these resources to do right by your followers:
4) Commissioning and Branded Content
You know how Sky, Amazon, Netflix and the lot all have their "original", "exclusive" content? So do podcast and audio platforms. From the BBC to Spotify and Audible through to creator-champions like Acast, there are fascinating opportunities to be explored.
This is so obvious it seems silly to mention, but this is a traditional way for audio programmes to get made - a platform pays for you to make content that they can trade off, promote with your (or on you behalf). You agree rights and terms for the content and IP, produce the thing to the agreed terms and they either give you a cut of the money they make off it or simply send you on your way with your show production fee. In the commercial world, every programme has a unique budget, and each commissioner its own structure. Some work in bands of costs, others work by getting granular with day rates, others pay a basic rate and a percentage of whatever commercial revenue they generate.
In addition to this many businesses want to work directly with podcast creators to make something bespoke, so there are traditional branded content opportunities to make programmes for money too. It goes without saying that these will be a collaboration between yourself as an audio expert and your client as an expert in whatever it is they do.
5) And the rest?
Now you're better informed on the some of the ways podcasters and podcast creators make money. But those aren't the only ways! There are many creative solutions you could explore, from joining a big network that pays you a fee for exclusivity, even sitting behind their paywall, to creating spinoff series and additional content for commercial partners who want a piece of what you do and are prepared to pay for it.
6) How does Podcast Pioneers make money?
Simply put, we help our customers engage with their audiences so they have a platform that gives value. Through this our customers are able to sell stuff, but more likely, they are interested in raising awareness about their company or organisation, marketing their brand, changing perceptions with audiences and building conversation in new places.
If that sounds like quite a broad set of responsibilities, it's because each of our customers has a different idea of value, and so every campaign we make is bespoke. We take time to understand our customer's goals and where they have existing followings they would like to speak to. We look at how audio can slot in with and complement, rather than replicate that. Then we design the best show we can and make it for them. What we do emphasise is creating a quality show that's deeply focussed on audiences, analysing and responding to the data and feedback we can gather from those audiences, and we evolve just as our customer's needs evolve too.
We don't sell advertising and we don't tell our customers they can build a hit podcast overnight and make money from advertising. Sometimes we do use advertising to promote our shows, so if you're a creator reading this, I hope a little of that money comes your way! The bottom line is, we use audio as part of a holistic marketing mix and build this journey into every customer's strategy. We are passionate about our customers and they really value us.
So that's my way. But who knows what the next big thing will be! Technology, society and innovation is moving so quickly and we are living in a truly exciting, if turbulent time. I am sure the new ideas and opportunities that come out of this will be those that offer the most good to our world.