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Podcaster Beware: Companies Want to Take Advantage of You!
Episode 9726th October 2022 • Podcast Monetization Secrets • Christy Haussler
00:00:00 00:31:38

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So you're a podcaster looking to monetize, and all of a sudden out of nowhere you get an email offering a sponsorship for your podcast. It seems too good to be true. Is it? We'll talk about it right after this.

Hi there. Welcome to Podcast Monetization Secrets. My name is Christy Haussler and thank you so much for joining me today. I am so glad you're here because that tells me that you are actively looking for ways to monetize your podcast, and I couldn't be happier about that. I feel like podcasters have gotten the short end of the stick and more of

you deserve to be paid for the value that you're providing to the world. And I'm on a mission to help as many of you do that in a way that brings value to your life as possible. You've been giving value, you've been providing content at a pretty high cost to yourself. It's time, it's energy, it's money.

There's plenty of other things that you could be doing with your time, and because you are choosing to serve some community that you've chosen, Then I believe you deserve to get value back, and the more you serve, the more value you should get. So it should be a very natural exchange. And many times as podcasters, we haven't really figured out how to engineer getting that value back out of our podcast.

And that's what I'm here to help you with today. Most of you know if you've been here very long at all. I have a podcast production company called Team Podcast, and that's where I initially started after I started my podcast in 2012. I launched my company end of December, 2013. Really didn't get my first clients till early 2014.

And so I've, during that time worked up with over 360 podcasts and many of them wanted to monetize through various ways and I. Even though I don't tell everyone that's podcast sponsorship is a great way to monetize. Cause it's actually the hardest way to monetize. I do work with podcasters to do sponsorships and I manage ads and relationships and that sort of thing with their sponsors and their ads.

And so I'm pretty well tied into what's going on in the sponsor space. So I wanted to do a. Update for you today, and I'm gonna be naming names because there are some people right now that I feel like are, I'm just gonna call it preying on the ignorance of some podcasters and if you go into this understanding all the facts and you still decide it's the best decision for you, then that is absolutely fine, But what I don't want you to do is get stuck in something that you don't want to do. And so today I'm gonna talk to you about. A situation that's been happening with a certain company where they are targeting podcasters who probably have not yet gotten heavy into the sponsorship space yet. And what's happening is you'll get an email, and I don't know if you're aware, but once you have an RSS feed or you have your podcast on Apple, Apple requires you to have an email, like even a public contact email within your RSS feed.

And so people can use services and software and programs and that sort of thing to pull email addresses in from your RSS feed, and then they can solicit you with cold email. Now, don't get me wrong, you can always. Unsubscribe or block them or whatever. But that's what happens. So it doesn't take long before you, when you're a podcaster, before you start seeing Chartable and other podcast related services begin to send you these emails.

And it's not because they found your podcast and found it interesting, but they've just scraped all of the emails. The api, the directory in Apple, and they're contacting you with the email that you have listed for your RSS feed. So that's what's happening. That's what's going on. And there's a particular company right now, I've had them approach several of my podcast clients and I've watched some of the negotiations go back and forth.

And so I wanted to just clue you into what's going on. There's this number and it's , how much someone's gonna pay per thousand downloads, impressions, views, whatever platform you're on it's whatever it is, 

for podcasts, it's downloads, right? So this number is called cpm. It's Latin, It's cost per mille and it basically means how much you're paying per 1000. . Right now with most of the podcast sponsorships I'm seeing go through and the contracts that I'm seeing be signed for fourth quarter 22 and first quarter 2023.

I am seeing ranges anywhere from $25 CPM to $40 cpm and that basically means for every thousand downloads that their ad gets impressions on, they're willing to pay either 25 or $40. So if you think about it as a podcaster, and the average podcaster might not even get a thousand downloads per month, 

and so what happens is you're working hard to get these thousand downloads and somebody else is saying, Ah, that's worth 25 or $40 to me. and it's worth a whole lot more to you because you've worked hard to get those thousand listeners, so you don't want to just cheapen your relationship with 'em and put anybody in front of them.

But what's happening right now and what I just quoted you, the 25 to $40 range is mainstream through. Podcast official, like agencies and sponsorships and, companies that would hire, and they're the companies that you always hear whether they're Hello Fresh or what is it, the purple Casper mattresses or whatever.

Like these are the CPMs in the range that they would be paying Now many times from. Cpm, that 25 to $40 range. If you have an ad agency, go and get that contract for you. Then you as a podcaster are giving up anywhere from 30 to 40 to 50% of that. 25 to $40 cpm. If you're able to get that contract on your own and, make the right connections with those companies to get them to sign with you, then you would be able to, get all of the 25 to $40 cpm.

So just wanna make sure you understand like the lay of the land and what we're talking about. So back several months ago, I think it's been at least six months ago. I had a podcast client that normally produces podcasts and they've never had sponsors before, and they suddenly said, Hey, we have this sponsorship of Magic Mind.

And Magic Mind is a. Productivity drink. I've never tried it. They say it's for focus and clarity and that sort of thing, and I'm not knocking the product. this is not a judgment of the product, cuz I don't know, I haven't tried it. Probably could use some focus and could use some, attention, productivity type, enhancing things.

But the product is it's not the issue. Okay? So I'm not throwing off on them as a product, but what's happening is they're going. And targeting a specific type of podcaster and they're offering sponsorships. And many of you might get solicited by Magic Mind for the first sponsorship that you ever get.

And what I don't want you to do is I don't want you to think this is normal. I want you to understand what everyone else is doing and then how far out of bounds magic mind is whenever their. Soliciting podcasters. And so what Magic Mind is doing is they're approaching people that they know probably do not have the use of dynamic ad insertion technology through their host and through the companies that are creating their host.

And how can they know that? Because when your RSS feed is created through your host, you know what's in the RSS feed url. The host name, right? So whenever they go to a certain host and they see the host doesn't have. dynamic ad insertion, they can easily go, ah, this is probably someone that we could easily get a, let's call it baked in ad.

And what a baked in ad is when you as a host, you do what we called a host red baked in ad. And that means that ad is edited into your audio file. And so there, it's inserted as a mid roll ad and it's edited in. And when you have a baked in ad it will stay on that audio file forever unless you physically went in and pulled that audio file and re-edited out that advertisement and then re-uploaded that to your podcast host.

That's a lot of work, right? To change ads every time. So whenever they're asking for host Red baked in ads, they know what they're asking for. They know that host Red Ads are the highest converting ads. Why? Because you, as a host built your podcast audience. You as a host went out and built the relationship with the people that are listening to your podcast.

They. Trust what you're saying. They like what you're doing and they take your instruction and apply it in their lives. So if they can get you to leverage your relationship with your audience, they know host red ads are the best, right? They're the highest converting. They also know that a baked in ad means they are going to pay once for that ad and it is going to stay in your feed.

In perpetuity, and they are continuously month after month, getting free advertising that they are no longer paying for. Now, here's the thing, can you think of any other advertising campaign or advertising method where you could pay for something once and that ad runs forever? Can you do that with radio?

No. Can you do that with Televis? ? No. Can you do that with, let's just call it the streaming services, Netflix or Peacock or Paramount. Can you do that with any of those? No, you can't. Can you do, Could you do it on the internet? On Google banner ads or other types of things? No. You pay for every impression that you get, and once you stop paying, your ad is no longer shown to people.

So the only reason. That people are able to do this and companies are able to do this, is because we as podcasters fall for it and allow it to happen. Okay? And that's one of the reasons I'm doing this show today, because I'm not trying to say Magic Mind is a terrible company. I'm not trying to say that.

But what I am saying is for you as a podcaster, this is a terrible. Okay. What Magic Mind is offering is $10 CPM for a host red baked in ad. So let's do the math and let's just say you are one of the very small percentage of podcasters who get. , 10,000 downloads per month on your podcast. So 10,000 downloads per month.

Again, that puts you in the upper 5% of podcasters. Okay? So you are in rarefied air right there with that amount of downloads. So What you have to look at is go, okay, $10 CPM means $10 per thousand. That means that for one month, Of putting a host Red Baked in ad into your podcast for 10,000 downloads.

Magic Mind is saying, We will pay you $100. Let me just say this. . If you have 10,000 downloads a month, you should be offering them something that you are doing. Pod product services, other things like that, because you can make a lot more than $100 a. From your own products and services. If you had a $97 product, I believe you could sell more than two of them during the month where you're getting 10,000 listens, and that way you would just have doubled the amount that Magic Mind would pay you, and you can make much more money with your own, right?

So what you have to understand is magic Mind is saying, Okay, for this one month, we're paying you a hundred dollars. But that a hundred dollars is not just low balling, current CPM rates for dynamically inserted ads, which would only run during the month and then would turn off and not run any after that, 

so that $10 CPM would pay you for the 10,000 downloads they got this month, but $10 CPM is low balling. The current CPM rates for dynamic ad insertion. But here's the thing, as a podcaster, because you've now committed to a baked in ad, that ad needs to sit there in your audio file forever, in perpetuity.

So you have just given away all the future value of your episode. For $100 up front one time, and because you have done that, you probably feel like you might be on the verge of getting more sponsorships. In actuality, companies like this come along very often where they realize there's a whole sub segment and they're not going for top tier podcasters.

You're not gonna hear magic mind. On Joe Rogan or Oprah's SuperSoul Sunday, or any of the other top podcasts that are out there, because they don't wanna pay those CPMs because they, those people know how advertising is done. What Magic Mind is doing is they're going to the independent podcasters, they're going out to people that have probably not been well versed in podcast sponsorship.

So when they offer. Anything, and you'll hear people, I see it in groups all the time on Facebook, and people are like, What should a sponsor's contacted me, What should I tell them my prices are? And people are like, Man, just tell 'em 20 bucks. Just take something. As long as you're getting your first dollar from your podcast.

It's like the road to the next dollar and bottom line is, You are giving away your value. So let me tell you what generally happens whenever this goes on and what happens is you as a podcaster might put these low ball ads into your podcast and bake them in years later. Maybe two years from now, you've continued to grow your podcast and now you're getting 40.

50, 60,000 downloads a month because you've been at it for a while. You've worked hard. You've given years of your life to grow in your podcast. Now you are seriously qualified for regular mainstream sponsorships. The ones I was talking about in the beginning that pay 25 to $40 CPM for. podcast, right to advertise on your podcast.

But here's the thing, when you get to that level, you're not gonna be baking in ads. And if you are, I would implore you to stop. I am finding right now, so many people have done this forever, this way, where they've baked in ads, and now as they understand what dynamic ad insertion is, that it's just them reading an ad.

That is then using technology to dynamically insert that ad as a designated timestamp within their audio file. And each time they have a new ad campaign, nothing changes about that file except the audio technology for dynamic ad insertion inserts the new ad for the new campaign. Campaigns can always stay up to date.

When you start using dynamic ad insertion, you can, instead of just releasing podcasts and say, This ad goes for this episode, or this ad goes, for the next three episodes you can get a sponsorship and you can turn on ads across your entire back catalog. We are making, as a company a decent amount of money, because we have podcasters that have two and three and four and 500, even 600 episodes in their catalog where they've done nothing but baked in ads. And you know what we're having to. We're having to go back into their catalog and we're having to download their file from their host, edit out the baked in ad mark their new ad spots, and re-upload those episodes to the host with timestamps marked in it for their new dynamic ad insertion.

And what happens is you stop giving away all your current and future value. To a sponsor for baked in ads that are gonna stay in there for free and perpetuity because we as podcasters are allowing it to happen. And instead, you're going to start acting like every other. Sponsorship or advertising mechanism out there, whatever channel it is, where you want the impressions, you're going to pay me for the impressions.

And once you stop paying, you no longer get impressions. And until we start doing that and until we start saying no to companies like Magic Mind. And how do I know? I've got an email right now in front of me where Magic Mind comes back and says, We had essentially. Offered them it, it would've worked out to about $40 cpm, so it would've worked out to around $400 per episode that they would've needed to pay to get in front of this particular podcast's audience and, , they've offered this multiple times to multiple podcasters that I work with, and they're always like, What's up with Magic Mind doing $10 cpm?

And they come back and they give you this SOB story. Oh, we're a relatively new startup. We're just two years old, blah, blah, blah, blah, blah. And we just don't have the budget for this right now. So that's what we're looking at. And if. Test this out and it does really well at $10 cpm, then we'll take it before the higher ups and see if we can pay more for your ads.

Why did they need to? They've already got high performing ads that you've baked in and you've given away for the rest of your podcast feeds life for $10 cpm. And that's what I don't want you to do. So the reality is in. Stuff because I was just wondering I wanted to see the press releases from Magic Mind and who the investors were, cuz they call themselves a startup that's just barely two years old.

And it looks like originally they came out in 2014. and they have gone through a couple different website changes, and I'm sure they've got investment funds and all these kind of things that they're working with. But here's the thing, Most podcasters that they're approaching are similar independent startups to two years old or less as well.

And so what they're doing is simply. Trying to get the best deal they can for their advertising. They're tr they're, and they're doing well at it because podcasters that don't have sponsors are taking it and they're advertising magic mind. And I even actually had those clients that. That didn't have sponsorship, that they took it.

Cause they were like, Hey, this is something, they're paying us something. They started recording the ad and when they had to send it to Magic Mind to get approved, like Magic Mind wanted them to say so many more things and they didn't like the way they were doing it. So we were going back and forth with trying to get the wording right on it and it was like a lot of work.

For the little piddly $10 CPM that they were gonna get. Cuz that's the thing. It's like a hundred dollars a month that you would get if you had 10,000 downloads a month. Those 10,000 hard fought downloads that you got, that works out to $25 per episode that they're willing to pay to get in front of your audience.

You need to think better of your audience than that you really do because you should have a higher threshold. I think when john Lee Dumas started. He had a threshold where unless it was gonna make him $500 and net him $500 for a sponsorship, it wasn't worthwhile for him to put somebody in front of his audience.

And he held to that because he protected his audience. So you don't want low ballers like this coming in and ruining your relationship with your audience because they offered you a dollar. All money is not good money. This is worth. To you to do to save that ad space for your own products and services, or even something that you have an affiliate for.

Most of the products and services that you could get affiliate partnerships for and promote on your podcast would pay you more. In a month than a hundred dollars. If you had to sale most of 'em, if you get one sale, you would have a hundred dollars. So that's the whole thing. It's like you, when you look at the value that you as a podcast host are bringing, and the amount that Magic Mind is willing to pay right now they need to step it up.

Now I saw this a couple of years ago. There was a headphone company, and I say headphone, but it was more of an earbud company. That came along. And what they were doing is they were contacting a bunch of podcasters and saying things like, We...