Curious how CPM works? Want to know what this means for you, and how you could benefit? What about if CPM isn’t right for you? I want to answer each of those questions, so let’s explore what this news means for you as an indie podcaster.
CPM stands for Cost Per Millie, and it’s a common standard for sponsorship pricing. CPM means charging a set rate per thousand downloads, and the average rate podcasters are getting has recently increased.
CPM Has Increased for Podcasters
According to Libsyn’s AdvertiseCast, CPM for podcasts is up, averaging $24.01 CPM in April 2022. Even better, certain categories, like Business, and Kids and Family, could garner $28 CPM.
AdvertiseCast, one of the premier podcast advertising networks, boasts nearly 3,000 shows for which they sell ads through both a DIY ads manager and an internal agency. Libsyn acquired them in 2021.
They release updated reports monthly and have a dashboard where they chart changes and averages across podcast categories and sizes. For example, podcasts getting 1,000 – 9,999 downloads earn a higher CPM than 10,000+. Using this data, you can use the on-page calculator to figure out how much you can make per episode.
All of the data on this dashboard comes from AdvertiseCast’s own sales numbers. For context, they have a 150 million listener reach and have over 4,000 spots available for sale.
How CPM Works
One of the most well-known ways for podcasters to make money is through sponsorship; a brand or company pays you to advertise on your show.
Pricing of these ads can vary based on the length, placement, and duration of the campaign if the podcast is using Dynamic Ad Insertion vs. having a baked-in ad.
As noted earlier, CPM is charging per 1,000 downloads. So if you charge $10 CPM — that’s $10 per thousand downloads — and have 10,000 downloads, you could charge $100 per ad.
The increase in CPM, especially for shows in the 1,000-9,999 download range, can likely be attributed to the continued growth in podcast listenership as reported in Edison Research’s Infinite Dial. More listeners mean a bigger addressable audience, making podcast advertising a good fit for more brands.
And while this is good for the podcast industry overall, what if you’re not pulling in thousands of downloads per episode?
10,000 downloads per episode allow you to make $240-280 per ad. That’s a good chunk of change. But 10,000 downloads is a lot. In fact, 4,000-5,000 places you in the top 1% of all podcasts. But what if you, like most podcasters, are pulling in less than 150 downloads per episode? Then, you’re looking at around $5 per sponsor spot, which is definitely not worth it.
So is all hope lost until you can crack your way into the top 10%, 5%, or 1%? Not necessarily.
What to Consider as a Small Podcaster
CPM might not be your best metric in the beginning, but that doesn’t mean you can’t charge good money for ad spots.
One alternative to consider is CPA, or Cost Per Acquisition. This is generally the idea that you have a smaller, much more dedicated audience. So even if you have 150 downloads per episode, it’s 150 very qualified listeners.
This works especially well if you have a niche podcast that solves a specific problem. Founder stories won’t do it — it’s too broad and the competition stiff. But if you focus on helping creators build businesses in the online education space, you have a clear audience.
That audience may not know which tool to use to put their course online…or even how to put it online. So that LMS company, recording software, or webcam maker might sponsor you because you’re generating more qualified leads. They know your listeners have a need for them now, unlike mattress and underwear companies that are playing the long game on shows with a broader audience.
You can also use this method to create more opportunities for the sponsor. Instead of just including download numbers, you can promote the brand on social media, in your newsletter, and get them in front of any other audience you have.
Then your audience of 150 might turn into 150 from downloads + 500 newsletter subscribers + 1500 Twitter followers.
If this approach sounds good to you, make a list of every place you have an audience: downloads, Twitter, Facebook, newsletter, etc. Take the number of followers/subscribers/fans from each platform and add them up. That’s your overall reach. In our above example, the overall reach is 2,150. Then, create an offer that incorporates that entire audience (ad read + tweets promoting brand + dedicated section in the newsletter, for example). That’s the sponsorship offer you should be sending to brands.
No Real Standard…Yet
The CPM numbers that AdvertiseCast shared are promising, but they dictate that you sell on their marketplace. Using their software makes everything much more trackable and verifiable for the advertisers. But it also makes the sales process easier for you.
As an individual podcaster, perhaps you’re doing direct ad sales. Some sponsors will be perfectly happy with the number you give them, and won’t necessarily ask for proof of downloads, or even care about CPM (just don’t guarantee downloads). Some will require proof of downloads at 7, 30, and 45 days and ask for make-good episodes if you don’t fall within 10% of a certain number.
The truth is, when it comes to podcast advertising, there’s no real standard yet. That gives you the flexibility to work with advertisers the way that works for both you, and them.