Podcasting is a form of media that has taken the world by storm, offering instant, free access to a number of subjects and themes – with the only real requirements being an internet connection, and the will to look.
As such, many aspects of the industry have worked their way into the modern lexicon, with various jargon terms being used in day-to-day life that might be a mystery to those not in the loop.
One such phrase is CPM, a business term used to refer to the advertising side of podcasting. But what exactly is CPM, and how is it used within the industry?
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What Is CPM?
CPM stands for ‘cost per mile’, which is a term used in podcast advertising to describe the set rate per one thousand downloads. This price determines how much sponsors will pay a podcaster for every 1000 people who download their podcast.
It can also refer to the amount paid by any attributed podcast advertiser for every 1000 hits they get to their website as a result of the podcast ads delivered by a podcast episode (also see, ‘How to Get Podcast Sponsors‘).
How Does CPM Work?
Podcast sponsorship is one of the best (and most successful) ways for podcasters to make money, and depending on the number of viewers the particular podcast has, it can become a very lucrative arrangement for everyone involved.
This generally requires the podcast host to take time out of each episode to advertise a specific product, based on a preset script given to them by the company.
As mentioned, CPM refers to charging per every 1000 downloads of the podcast.
This directly refers to the number of their podcast audience, or the number of people who actively download the podcast – depending on which podcasting host site they operate out of.
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Each download represents a new potential customer, which means that podcasters can negotiate deals with companies, with their payment being based on the potential customers they can reel in.
For example, if you charge 10CPM, that is $10 per every 1000 downloads.
That doesn’t sound like a lot as is, but if you have a podcast that regularly draws in 10,000 downloads every episode, then you could be looking at $100 podcast advertising rates per ad.
When you think that most podcasters often have ad spots for several products each week, this amount can soon multiply in no time – and in the case of the most successful of podcasts, this can amount to substantial podcast ad revenue.
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What Are Dynamic Podcast Ads?
Dynamic ads are a feature that podcast hosts have been using for some time, and they’re particularly beneficial for brands looking to get the most out of their advertising.
Where traditional CPM works by having podcasters advertise set products in each episode, dynamic ads change this up with automated advertisements instead.
In essence, these ads serve content that is tailored to the podcast audience, based on their past downloads and listening habits.
By using dynamic podcast ads, podcasters can maximize their CPM rates by offering more relevant ads to their target audience.
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Since it’s a form of automated advertising, this type of dynamic ad insertion can be both highly efficient to manage and cost-effective for podcasters, allowing them to make more money with less effort.
At the same time, they can still offer a personal touch that resonates with listeners, resulting in higher conversion rates and more successful campaigns.
Overall, dynamic ads are an excellent way to maximize your CPM rates and ensure that you’re getting the most out of every episode.
What Is a Baked In Ad?
Baked in ads, also known as “baked” or “static” ads, are the most common form of podcast sponsorships.
They work by having podcasters directly incorporate a product ad into their regular content – usually in the form of a short introduction or mention at the start or end of an episode.
Unlike dynamic ads, baked in ads tend to remain the same for each episode of the podcast.
This makes it ideal for brands who want more consistent product mentions throughout their campaign.
Because these types of ads are already integrated into the content, they don’t require any additional effort from podcasters and can be easily managed by the podcasting host’s system.
At the same time, they can be highly effective in driving conversions, brand awareness, and ongoing ad revenue.
Overall, baked-in ads are an excellent way for podcasters to quickly and efficiently increase their podcast ad revenue with minimal effort.
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Does CPM Podcast Advertising As A Newbie?
However, you might be wondering how this helps you as a new, up-and-coming podcaster.
This is a fair question, and CPM can often seem like an option that isn’t open to you, however, there are various things you need to consider.
Know Your Worth
While CPM might not be best suited for new podcasters – because they will likely have a limited audience – new podcasters still shouldn’t sell themselves short.
If your podcast receives an offer for a sponsorship deal, then know your worth, and do not accept podcast ad rates that are less than you feel your podcast deserves, particularly if you have a good few thousand downloads each episode.
CPM Vs. CPA
There is also the option for CPA – which stands for ‘cost per acquisition’. This is more suited to smaller podcasters who have only recently started out, and is designed for podcasts where the audience base is more limited.
This still means you are valuable, as even 100 followers are still 100 potential customers.
This might not get you megabucks when it comes to making a deal, but you can still develop a stream of revenue based on this meager, yet dedicated, podcast listeners.
This tends to work better if you have a niche podcast – such as one focused on a specific skill or industry, like tech (also see, ‘Types of Podcasts‘).
General entertainment podcasts are less likely to be offered these deals, but those with small audiences of talented, informed viewers could prove valuable to corresponding companies who are looking for customers that know what they want.
Are There Set Rates?
Unless you are the Joe Rogans (Joe Rogan Experience) or the Russell Brands (Under The Skin) of the world, it is unlikely that you will get an alarmingly high CPM offered to you (also see, ‘Podcasts Like Joe Rogan‘).
In fact, the rates at which podcasters can charge, and that companies are willing to pay, depends entirely on the entities involved, and can vary greatly.
That being said, if you can draw in a substantial audience each episode, then you will become attractive to companies.
You will also have more pull and negotiating power, and the higher your audience base, the more leverage you will have when making deals regarding money and ad placements.
After all, these companies want the custom your podcast can bring, and the majority of them can afford to pay you what you’re worth.
Things To Remember
One thing worth remembering is you do NOT have to make a deal with any podcast advertising agency you are not sure about – or ones that you feel are not paying you what you’re worth.
It is a wide and varied marketplace, and there are plenty of businesses out there (of all levels of success) that are looking to jump on the podcast trend.
This means that for the first time, the content creator and the business owner are on the same footing.
Final Thoughts
And there you have it, everything you need to know about CPM in podcasting, and the ways that it can determine the business relationships and podcast advertising costs therein.
There are many ways to make money in podcasting, and you don’t necessarily have to align yourself with big companies, especially if they are demanding and controlling.
But if you have a successful show, and you feel it could be for you, then make your case, state your worth, and put your best negotiation cap on.
