There’s much industry talk about third-party monetization. But that’s not the secret to the economics of podcasting. Podcasters selling their own products and services is the true driver of the podcast economy. It’s how podcasters make real money.
For the average indie podcaster, CPMs and sponsorships offer a little return on a lot of investment. Somehow securing an advertising deal wound up the Holy Grail of podcasting. There are oodles of research that show how lucrative podcasting is for brands who buy ads on podcasts and the benefits of ads for creators, consumers, and businesses. Well, oodles compared to everything else that needs studying in the industry. It’s a success benchmark, but it’s also kind of a myth.
Enter The Tilt’s 2022 Creator Economy Benchmark Research. While the research isn’t specifically about podcasters, we can learn from it. What The Tilt found echoes my own experiences as a podcaster and a consultant.
What Is The Podcast Economy?
It’s monetized audio content. It’s part of the Creator Economy, which Wikipedia tells us is…
A software-facilitated economy that allows creators to earn revenue from their creations. Examples of creator economy software platforms include YouTube, TikTok, Instagram, Facebook, Twitch, Spotify, Substack, OnlyFans, Tiki, and Patreon.
Yeah. Wikipedia left podcasts out. Jerks.
Is Your Goal to Make Money Podcasting?
When people ask ‘how do I get sponsors?’ they’re always surprised at my response.
‘Why do you want sponsors?’
It dumbfounds those who often aim to quit their day jobs to podcast full-time. The hard truth is few will make enough money to reach their goals if they put all their hopes on a big sponsorship deal.
We Have the Data
What 2022 Creator Economy Benchmark Research confirms is that creators earning revenue aren’t banking on third-party sponsors. They’re selling themselves.
Because Most Creators Can’t Earn a Living Wage from Sponsors
Cost Per Mille, Better known as CPMs, is the fee an advertiser pays a show per ad per thousand downloads (per 30 days, usually). According to Libsyn’s The Feed, the median number of downloads for a podcast is one-hundred-sixty-five downloads in a forty-five-day period.
What are advertisers looking for? On the Feed’s latest episode (September 6, 2022), Rob Walch reports advertisers’ magic number for an ad spend is about eight thousand downloads for that same period.
Most creators have an uphill battle to get to that number. If you do secure a deal, expect to make $18-$25 for every thousand downloads. You don’t need to be great at math to recognize the gap. But if you are near that eight-thousand mark, we at The Podcast Host are here to help with a handy guide to sponsorships.
Do The Math
My two-year-old show, Podcast Editors Mastermind, has 387 downloads in the past thirty days and 9,422 downloads total (all time). With the CPM model at the $25 rate, our total take before taxes would be $225. Divide that by three to pay each host/producer then subtract the monthly payment for our editor. Add in the time it takes to create and manage ads and the administration cost.
Negative dollars. Okay, no.
What We Learn From Successful Creators Is Not Surprising
The Tilt surveyed more than a thousand revenue-generating creators One in five of those creators reported earning a substantial income, and more than half made their living from creating content.
About 2022 Creator Economy Benchmark Research: The Creator Next Door
The Creator Next Door is published by The Tilt, in partnership with Ann Handley and Further.
The survey was fielded from February to April 2022. In total, 1,058 people completed the survey; of those, 803 are currently content entrepreneurs, and 255 hope to become content entrepreneurs. Survey results are not weighted.
How do content creators earn income?
- 62% Consulting & coaching
- 39% Online courses/workshops
- 27% Books
- 23% Affiliate marketing/links
- 21% Speaking fees
- 17% Memberships
- 15% Advertising
- 15% Events
- 14% Sponsored content
- 14% Online Events
- 11% Paid content subscriptions
- 10% Barters
- 9% Donations
- 8% Merchandising
- 2% Social tokens
- 1% NFTs
Out of all the income streams in the podcast economy, advertising ranks number six on the list and is tied with events.
Advertisers Aren’t as Sexy As We Think
The takeaway from the study? The money is in consulting, coaching, courses, workshops, books, and memberships, not advertising.
Those who understand the Podcast Economy is truly driven by those who understand that third-party advertising (running a Casper ad on your show, for example) sounds great in theory. If it were better than selling your own products and services, more content creators would rely on it to generate revenue.
Sidebar: Can someone please do the research to put a dollar figure on what podcasters earn without advertisers? #askingformypodfriends
Quitting the Hunt for Sponsors
Goli Kalkhoran from Lessons from a Quitter didn’t start with the intention of earning money from her podcast. She quit a prestigious, lucrative career because she wasn’t happy. She then explored her career options without a plan. And because she couldn’t find a podcast that mirrored her experience, she decided to make one.
She thought her show was a hobby, but then she saw other shows making money. And sponsorship appeared to be the only option.
“That’s all I was seeing other podcasters pursue.”
So she focused on increasing her download numbers to attract advertisers. Ultimately, she decided it wouldn’t serve her or her listeners.
“It wasn’t going to be something that sustained a business. Hell, I don’t think it would even cover my costs. My listenership was not that big, and I didn’t want to annoy them with tons of ads if I was only going to make like $100 from it. It just didn’t seem worth it.”
For Goli, the math simply didn’t work.
Multiple Strategies That Align with Your Show
Headphones and Crayons creator Nikita Burkes-Hale plans to take a two-pronged approach where she doesn’t have to rely solely on third-party advertising dollars.
“I did set a goal to have it be a pipeline for one of my offers and to gain sponsorships,” she shared. But the “fit and feel” of who those sponsors are matters. Like Goli, she doesn’t want to turn off her listeners with irrelevant ads that don’t honor her show’s mission.
“I think it is vital that podcasters remember that your podcast is yours and to always come back to how you want your podcast to look, operate, and be perceived in the world,” she adds. Advertisers essentially become part of our brand’s story, so you must be discriminating.
You Have Something More Valuable to Monetize Than Meal Kits
What Goli realized is her listeners kept asking the same questions repeatedly. Answering questions for free turned into group calls to save herself time. She still didn’t see the business opportunity until listeners asked if they could pay her for in-depth advice.
“I started transitioning the format of the podcast from interviews to a more teaching style and grew my coaching services.”
Goli shares her advice with us:
“You have something you can teach people. We love to believe that we don’t, and that keeps us from trying. But the reality is that we’ve all had experiences we learned from and can help others avoid the pitfalls we experienced. You just have to start there and figure out how to help them solve their problems. If you can do that, you can create a thriving business.”
When You Don’t Want to Just Sell Subscription Underwear
Nikita, while hoping to secure third-party advertisers that fit her brand, also knows the power of using your podcast as a funnel to your business. She recently launched Creative-based Coaching for podcasters that infuse strategy, mindset work, alignment, and coloring.
If you want to make money with your podcast, ask yourself what your audience wants. Then provide it and advertise it on your podcast.
But, PLEASE, Tell Your Listeners!
With this comes the importance of telling your audience that a) you’re the sponsor of your show and b) tell them what, when, and how of it…often. (aka marketing) Dynamic Ad Insertion, offered by many hosting companies, simplifies the process.
After all, you work hard at building a relationship with your audience. Why should somebody else reap the benefits? What this new study tells us is that people earning a living from creating content are putting themselves first. And, my dear podcaster, you should do that too.
Nikita and Goli both earn money from their podcasts. I do, too. Podcasting is how I earn my living. The Tilt’s research tells us we aren’t unique. We, like the majority of content creators, aren’t waiting around for sponsors to see our value.
No. We’re capitalizing on our own voice, our own efforts, and putting the money in our own pockets. And we’re hoping you’ll join us in building the new podcast economy.
Are you ready? The Podcast host has you covered. Check out our other articles on monetization.