Low Paying Podcast Advertising Rates: Is it Worth Selling to Your Audience?

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Hey, everyone. Welcome to Feed you'd brand. I'm Tracy Hazzard, and along with my partner Tom Hazzard, we are going to talk advertising rates today because, wow, they've. They're on the decline in terms of rates, which is kind of shocking right now considering how bad advertising is going everywhere else in the marketplace. Why would podcast ads be going down? But then again, it may be because of the source. So we're talking about an article that came from Advertisecast, which is associated with Libsyn, so keep that in mind. And this is the shocking part to me, Tom, is that they report on all the podcasts that have advertisements in that advertisecast program, which is the program that you have to have between 10 and 20,000 downloads per episode to qualify for. It's different by category. So some categories allow you at 10 and others at 20. And so they only have 2,771 podcasts out of all of Libsyn's podcast who want it and who qualify for it.

That's sad.

That's really sad right there.

First of all, to put that kind of a limitation or a requirement, if you want to qualify for our ad insertion program, you have to have 10 to 20,000 downloads per episode. Okay, I can understand why they want to do that, but in our tech world, not necessary to have that many. But the reason those rates are so low that they're publishing, Tracy, is because they're trying to feed advertisers into these shows that are really general. It's like what you're going to advertise Procter and Gamble, Ivory Soap or something on all these shows. I mean, they're not talking about advertisements that are relevant to. To each different topic or each different show's subject matter.

I don't think I've seen an Ivory Soap commercial in over two decades, Tom.

Okay, Procter Gamble still out there. Come on.

I know, but I just don't see those as advertising.

Well, what do you want to say? Advertise. You want to.

It's usually like Amazon, Kindle or something like that.

I've Heard Google pay per click ads advertised, or I've heard HP Digital Inc. Advertised. Okay, so something, yeah, more, more modern.

But here's the real crux of it, the part that drives me absolutely crazy because this is not the way podcasting works. So it's not the way advertising dollars should work. But they're paying you for every thousand listeners. So what is a traditional CPM or clicks per mil, and that's M I L L E like thousand. It's a play, is a play, is a play. I don't know how else to say that.

Well, they just in the way that this advertised cast owned by Libsyn is looking at it. And the way a lot of older school advertisers on podcasting look at it is they're going to assign a certain market value to a thousand downloads of your episode after the fact. They're going to pay you how many downloads did you get for the month where that ad was on them? And if it's 10,000 downloads and they're going to pay you $21 per thousand.

For a 60 second spot, so you're.

Going to make $210 for that 10,000 downloads, is that worth it?

This is the advertising rate. That's not what you make. Typically you have to split it.

Yeah, yeah, right.

And so the difference between a 60 second and a 30 second, where a 30 second is more likely to be happening, like I hear a lot more of 30 second spots, the difference is 18 to $25. So $18 for a 30 second spot and $25 for a 60 seconds. So you're talking about a $7 differential there. So if you have 10,000 listeners per episode, you might make $21 per episode or well, that might be the rate that you command here. So it's likely to be closer to $15 if you are doing a 30 second spot. So you know that's low. Like why would I sell my audience for $7 and 50 cents for every thousand downloads? I wouldn't do it. That's the real question. And the real issue that we're posing today with such low paying advertising rates, is it worth selling your audience?

Not for that rate, I wouldn't think.

Yeah, I mean we've never done it for that low for any of our shows ever.

No. And we would either have assign a rate, a flat rate per month of advertising on all of our episodes, because that's what we would do on potatoes is have a couple of ads that rotate across all episodes for a period of time, one month, two months, whatever it is, and set a flat rate. And because there's value in the audience and reaching them. And rather than accounting after the fact for how many plays we find, especially in earlier in the life of a podcast, a flat rate is more in alignment with value to you, the podcaster and the client. Because actually, if you do it right and you also have them mentioned on your website, your web traffic comes into the total reach picture of the ad.

But sort of bonus in that sense for them, you know, and it gives them. And you can command a higher dollar value because it's an unknown. It's an unknown entity. You don't know how well the website traffic is going to do, but you can track it and share it with them and tell them what happened. So, you know, here's the thing, Tom. Like, I look at this and I think, and this is the other thing is they're reporting that it's advertising rates have gone down about 12%. So they're down 12% month over month or quarter over quarter. I'm not sure what they were tracking here, but whatever it is from the time they issued it, it just says 2022. So it may even be year over year that advertising rates are down. But I think it's just month because it looks like if you look here, January was a little high and then they had a dip in when you look at their chart. So I think they're really talking about the differential being month over month. So you're talking about a downgrade in advertising rates when Facebook advertising is going so badly. I just had a big talk with an agency today and they are struggling to figure out how to redo all kinds of different things to get their ads to work and convert like they were a year earlier. And then you have email open rates and delivery rates being problematic because of the Apple privacy changes. So you're having a compounding effect of where nothing's working but podcasting. How can you even allow advertising rates? Like to me, advertise cast should be advising their clients and the brands that, no, I'm sorry, rates are going up. And so they should be setting those rates, not some other factor in the industry setting them. That's also, I think, a problem. When it's your show, you can set your own rates. You can say, I know this is the performance, I know this is the value, and I know podcast advertising is about the only thing that's working right now.

Yes, I agree with you, Tracy. You can and should set your own rates. Now, there are certain contexts if you're part of a network of shows or you're on a different host that allows you to control the ads yourself. That platform can come to you with an advertising opportunity and say, hey, we have an advertiser willing to pay this amount to advertise on your show for the next month. Are you interested in accepting that? And you have a choice, and you could, but that's not this type of program. You have to like opt into the program. You don't know the advertiser is going to be and this is the rate they're going to pay you. And that's it. Very bad situation to get into. For comparison, we have some podcasts on Potatoes that had about 30,000 plays a month and they were doing a CPM model as a way to charge for the advertiser. But we're getting about $150 per thousand because they had an advertiser that was very much in alignment with the audience, the kind of audience that they knew they had, and they're making very good money. It ended up being like 4,500 to $6,000 over one or two months. I forget for this advertiser to advertise to their audience because the audience was a perfect match for the products and services the company wanted to advertise. And it was working month after month, this relationship. So they kept coming back. So that's just one example. But the point is, your podcast is more valuable to a advertiser that is in alignment with your subject matter, with your show or your audience profile, if that's identifiable. And usually podcasters that we work with, they have a specific niche, a specific kind of message they're bringing to a certain profile audience that they maybe even if it's not every listener, the vast majority is of a certain type. The more identifiable that is, the higher advertising rate you can command.

Well, you know, and I hear this, Tom, from people that they're starting out their show and they just are like, yeah, I'm just going to enroll in these because a few hundred bucks cuts my cost. But I don't think you really realize the repercussions of that. So in other words, if you are taking in these random ads and typically most of these companies stream them on the front of your show. So it means you have a 60 second ad because that's what they want. Because they want to make seven more dollars per click, you know, per thousand. Right. They want to make more. So they're going to sell a 60 second spot if they can. And so you have 60 seconds of commercial. Then you have your intro. And most people's intros are way too long. You and I both know that, Tom. Right. And so you may be another 60 seconds of intro. So you got two minutes before your show even starts. This actually hurts your audience growth. That audience is like, oh, you know, this is a sellout show. They don't even bother to get into it.

They could get frustrated on that front end of the show and be like, oh, get on with it already. I want to hear the real content. But you can frustrate them and then they switch off and go to another show before they get to the good stuff.

Right. Or you finally do start and then I have heard it from people where then they sell their own stuff. So now you had a 60 second commercial, you got a minute of all about you and the intro and then another minute of you hawking something that's your own program to get them to enroll. And the audience is like, I'm out. And so that's really where if you think a few hundred dollars here is really going to help me grow my audience because I've got some extra money that I'm putting aside and I can spend it on more production or I can spend it on promotion. You know, it's a mistake at the end of the day because you're going to get lower traffic. We find that shows that have ads, there's a reason that they're not doing as well. Shows that have ads that are not relevant, not very tightly relevant to their audience and the ones that do that streaming on the front and back typically have on average a much lower percentage of audience growth factors. If we see on average the industry growing at 10% month over month, or in a category growing 10% month over month, they're usually about 30 to 40% less than that. And it's just very common. So it's not an actual growth strategy, it's not a monetization strategy. Because at the end of the day it hurts your long term monetization to take a couple hundred bucks here and most of them don't offer that. So this is the one thing I want to say before I throw over back to you, Tom, but is that when you're doing one of these programs, be absolutely sure it's serving your group. Are they going to, you're a sports podcast and you're joining a sports network with great sports advertisers and it's all going to drive traffic and it's all going to be relevant and it's all going to help you grow. And if you can't get that, you better get a guaranteed amount. And if it's not over $1,000, I wouldn't do it.

I agree. It should be significant and worth your while. Worth it to your listener. You believe that it's worth it, that there would be value for your listener and not have it be random. Right. And we've had several podcasters come to us, move to us from other hosting platforms and especially from. I'm going to use air quotes here for those of you listening. You can't see me on the video, but from a network, maybe one that's meant for corporate executives, that's about as close as I'll get to outing them. But where they were very frustrated because they were promised by this network they'd get more listens. Didn't happen. Promised they would help get them. Good guess. Didn't happen. But they would also help monetize the show. And yeah, they were putting ads that were two and a half and over three minutes long of multiple ads on the very beginning before even getting to the intro of the show.

And most people didn't know.

I've experienced it. They didn't know because guess what, that sort of shame on us podcast hosts. And I'm including myself in this because I don't listen to every episode I put out on my show. I don't have necessarily time for that. I want to listen to other shows. Right. How many of us podcast listeners actually listen to all of our own shows? Very few. So you can imagine. Fine, Tracy, raise your hand.

No, but I'm going to say I listen to the first five minutes. That's kind of something. I listen to the first five minutes, make sure it's good, and then I move on.

Well, and that is even better than most. But if you did listen, if you're on one of those platforms that does this sort of streaming events at the beginning, and this is what happens. Some of these people seek our support and move to us. They've just been shocked that day. They listened to the beginning of the episode and they heard all this stuff. Like they're running all those ads for HP and Google and things like that on the front of my episodes. And I'm making a lousy 75 bucks a month for that. Are you kidding me? And it's like, why am I doing that? And so they're out. And really, it's not usually in your best interest. Now, if we have some shows that in a certain niche area of real estate investing that literally the last few months have gotten over 400,000 downloads a month. And guess what? That company isn't even running third party ads now. They could and could be making really good money doing it, but guess what? They make even better money just selling their own products, services, courses and programs. They don't want to sell out the audience for a third party advertiser when because it would take attention away from the other things they really want to be selling.

So you need one call to action, right? So if you're selling something, if you're trying to gather your audience for a purpose, the last thing you want is a few hundred dollars if that in advertising, distracting the call to action, that's really it.

Distraction, frustration, what's that user experience going to be? And you also want to think about your binge ability of your show in context with this monetization of third party ads. Tracy and I were shocked with our very first podcast that we learned and this is going back at least years ago. People were finding our podcast a year after it started and are binging through all our episodes saying, hey, I'm on episode 52. And we get comments back for people and they said they're binging through us. Could you listen to me over and over again? Wow. Well, great. I'm glad they could. But if they're binging through you, how do you think they're going to feel binging through and in between Every episode is two to three minutes worth of irrelevant ads. That's annoying. It's not going to breed listener loyalty.

Well, not just that, it's usually like it's a good five minutes. That's what you don't realize because you've got thinking about you're going from your outro to sometimes streaming ads on the end, which is very common as well, to streaming ads on the beginning to an intro. So you've got a good five minutes sometimes with nothing but commercial basically and nothing of value to your audience. That's why we keep urging everybody to shorten your intro outros to not stream ads on the front and back. It's just terrible place to put them. I don't even like them right after the intro, unless you really need it there for a purpose. I prefer to have a little bit of content or a preamble of some kind and then an ad just because, even if it's your own stuff, just because of this effect of you want to draw the audience. And remember, Tom, we've talked about this before on other episodes. It's like when you're doing a Social media video. When you're doing any kind of content, you want to grab them in the first 10 seconds. Like you really don't have that long to grab their interest, especially in a video. Because video watches are so low compared to podcast listens. People listen for much, much longer than they view. For every minute of video, you're losing audience. That percentages are dropping off continually. But with podcasts listening, it's 70% is your normal throughput average. So you can imagine most people are listening 100% through at that point. And so you have a large audience that's doing that. But you still gotta capture em and gotta get em in because if they drop off, they're dropping off in those first few minutes.

Yeah, you need to hook the listener. You've gotta build anticipation, peak curiosity. That's why I agree with you, Tracy. Prerecorded intro ad right after that, probably not the best place. Because that prerecorded intro, it's the same every time. Come on, welcome your audience to the show. Let them know why they're gonna really want to hang on and listen to the whole episode. Tease to something that's coming within the episode. Build that anticipation. Get them like, all right, yeah, I want to hear this. Then you can feed them the we'll be back right after this important message or we'll get to that right after this message from our sponsor. Whatever it is you want it to be, letting them know, okay, it's coming. All right, so now I want to get the goods, I want that value. So, yep, all right, I'll live with the ad, but still, don't overdo it. Give them the ad that's needed, the ad, hopefully that's relevant, that provides them some value and then get on with the content of the show.

I just want to, I want to close this out and wrap this up with saying, this is what you and I saw. You and I saw this in the industry seven years ago. When we started our first show and we started to get our first sponsor and we realized that this was never going to work. If we were going to sell on a dollar rate per every thousand listeners based on some random algorithm that some advertising company determined was the right thing to do, we decided that was never going to be the model where it was going to work for us as a host. So we looked at that and we said, okay, that's not going to work. Then we realized what was happening in the binge listening world and said, that's not going to work either. So we developed our ad mixing system to make it so that you could put it anywhere in the show so that you could remove it. So it was never irrelevant. It was always relevant to your audience at any given time and that it could be timely as well. So you could do a time based ad or a time sensitive ad, because we all know when we give somebody a fear of missing out, they're more likely to take action. So if that ad is going to be gone tomorrow and that promotion is going to be gone tomorrow, they're more likely to do something about it. So being able to do that was essential. It was why Potitize came about for us, because we saw this as the industry really going wrong and doing a complete disservice to the host in the industry.

Well, and really the listeners too.

Yeah.

You know, it's not a win win. Not always, but often is doing the listeners a disservice.

But you know what I also think, Tom, that no one's really talking about is I think it does the brands this huge disservice too, because they're wasting their ad dollars. They're not getting what they could be getting out. They're paying less. Yes. And that's why they're paying less, because it's not effective. So if they were on much more relevant shows, if Amazon Kindle were only advertising and paying a higher dollar amount on shows that were for readers, like book review ones, things like that, they would be making more money off of those advertisements, off of the conversion of those advertisements. And so I think the brands are getting badly served in this model, but it's convenient for them. They're like, oh, here's my campaign and here's my budget and just spend it. That's just not good for everyone.

Yeah, it's really disappointing or disheartening because here you have a technology, a medium of podcasting where people are opting in to listen. It's not like you're broadcasting on radio. And here's an example. My car is being serviced. I'm getting some accessories installed on it. So I've had a loaner for a couple days and guess what? The Sirius XM radio I always listen to or the CarPlay with my phone phone attached to it so I can listen to my podcasts in the car. It's not connected and I'm not bothering to do that with a car I'm going to have for two or three days. So what am I listening to? Terrestrial radio. Oh my gosh, I'm so sick of listening to all the commercials in there. That are absolutely irrelevant to me. And the point of that is it's random. Right? People advertise at Drive time Radio hoping enough people that are interested in their company, their product, their service are going to be listening. And it's a really tiny, tiny percentage of people that might be. Here you have podcasting. People are opting in choosing the content they're listening to. There's a reason they're doing it. That kind of listener has a profile of things they're likely to be interested in. You have the opportunity, if you're going to run any ads or promos in them to be completely relevant. And here these companies are going backwards and doing these random run of show ads of generic stuff, taking it back. It's a radio mentality and it just doesn't work well.

No, it's just not podcasting centric. Right? And that's what we want here and we want to win for the hosts, the listeners and the brands. Because then it's going to work for all of you. And you're going to keep podcasting, right? Everything. The industry is going to keep growing and year over year, we had almost double the number of listeners year over year from 2021 to 2022. Start like, that's amazing. So there's more listeners out there. Brands should be capitalizing. This host should be able to capitalize this. Let's not get lazy and use these systems that are archaic and old school media. This is new school media. Let's use it like new school media.

All right, Tracy, I think that's a great place to drop the mic on this episode. Thanks so much for listening, everybody. Remember, you can check out the blog post@podletize.com for this episode where we'll have a link to that article that we were referring to about industry advertising rates, if you're interested in checking that out. And of course, where you can search and find any of the topics that we have published here on feed you'd brand.

So thanks everyone for listening. This is Tracy and Tom Hazard on feed.

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