There is a difference between sponsorship and advertising. With a sponsorship, the sponsor is usually mentioned around the beginning or end of the show (maybe both, depending on how much the company is offering), and it is usually a very brief mention by the host. Many times, this might just be a trade of its product for a sponsorship of a show. Other times, the company may pay the podcaster a set amount regardless of downloads.
With advertising, a commercial of 10 to 30 seconds in length is placed in the show or read by the host. A commercial provides a hard sell of a specific product or service. Many of the advertising networks are going to offer just commercials for your podcast rather than sponsor it.
Here are examples of the type of content commonly found in a sponsorship plug and in a paid advertisement:
As you can probably tell, sponsorships are what you would hear on NPR at the beginning or end of a show. Advertisements are what you see during every commercial break of your favorite primetime network TV shows. Besides content, the other difference is with how the price of the deal is calculated. With a sponsorship, your show and website are often sponsored for a period of time. An example would be your show being sponsored by Acme Crowbars for 1 month, during which time you will have an Acme Crowbars banner ad on your site. Regardless of traffic to your site or the number of downloads to your show, you are paid a flat fee for the month.
With advertising, it is usually a per-download deal with no additional expectations for advertising on your website or in your show notes. So if you have a CPM rate of $40 agreed to, and your show is downloaded 2,000 times, you would be paid $80.
How Advertising Networks Work
Advertising networks are created to aggregate talent and bring a more attractive group of vehicles upon which potential advertisers can use to get their message out to their target customers. The advertising network works as the go-between for many podcasters and the advertiser, thus making the life of potential advertisers easier because they only have to deal with one entity rather than 100. The advertising networks are able to create a relationship with large advertisers (such as Podshow with Earthlink) that would not be possible for the small independent podcasters.
Two different types of advertising networks appear in podcasting: the open network, where anyone is free to join, and the private network, which usually only adds members by invite or by a vote of the current members. We are going to look at some examples of both groups in this section. This is by no means a complete list, but we think the information given here should provide you with the basis of what is a good deal for you, the podcaster.
In the following lists, we look at each network, the splits, and the commitment lock-in by those networks, plus other information we think is important when making a decision on whom to go with when picking an advertising network.
One of the key advantages podcasters have in joining an open network is that the network has to compete to get you, the talent, signed up (see Figure 18.7). This means it has to offer you a better split if it wants to sign anyone with any type of following. It also means the network has to offer other services to keep you long term. Additionally, the network likely has shorter lock-in periods so as to encourage more podcasters to sign up. These open networks require lots of talent to get their business model to work.
Figure 18.7. Kiptronic Podcasters FAQ page.
The following list, which is sorted alphabetically, consists of nine open podcast networks and their stated terms of service or information obtained from current members as of March 2006. Be sure to check over any contract they offer you to see what their current terms of service are before signing.
With many of the open networks, when advertisers come to the network to look for a show, they have a large list to choose from. This means you may become a number rather than a name. One of the areas of podcasting advertising that is very likely to boom is small, personal invite-only networks. Many of these networks will be started by companies that already have established relationships with advertisers, but now want to offer podcast advertising as another medium to their customers. Backbeat Media is one such company that had a long-time relationship with advertisers looking to advertise on Mac-centric websites (see Figure 18.8).
Figure 18.8. Backbeat Media podcasters network.
These smaller invite-only networks usually go after like-minded podcasts, thus making the pitch to advertisers simpler and offering the advertisers they know best the target audience they most desire. Because the networks are more focused and have fewer podcasts than a larger network, they should be able to negotiate a higher CPM for the podcasts.
The downside to the smaller networks is that they are not likely to have the same ability to bring more listeners to the shows that larger networks would (that is, if those larger networks choose to promote podcasting outside of their existing communities). Another downside is that smaller networks often have fewer advertisers looking to spend money when compared to the larger networks.
Here are two examples of notable invitation-only networks:
Choosing a Network
Regardless of what type of network you think is best for you, we highly recommend talking to at least three different advertising networks before signing any contract. We also recommend getting a lawyer to review any contract, especially those that have any sort of time commitment with them. Additionally, talk to current members of those networks to see what they think.
One additional question you should ask the networks you are looking at is, What are you going to do to help promote my show outside of the podcasting community? If the answer is, "Well, we put you in our directory," then you need to realize that the responsibility for promoting your show will continue to rest entirely on your shoulders. An advertiser network listing you in a directory on its site is not show promotion. The networks that wind up making the most money for podcasters (and for the network) are the ones that bring in the most new listeners from outside the podcasting community to their podcasts. Networks that shuffle current listeners of podcasts from one show to another inside their network are of limited value. The key point to remember is that the networks you talk with should be able to clearly explain their strategy for bringing in new listeners from the outside world.
Automatic Ad Insertion Versus Podcaster-Inserted Ads
There are three basic ways for getting an advertisement on your show, and each method has it advantages and disadvantages:
When looking at an ad network, think about what method of ad insertion will be acceptable, not only for yourself but also for your listeners. Be upfront with your listeners; let them know you are looking at bringing in advertisers and ask them their thoughts on this subject. Six months is a really long time to lock into a method that alienates your listeners, especially considering how much time and effort it takes to build up that listener base.
Determining a Fair Price
What is a good CPM? This is the toughest question in podcasting, because several variables must be considered. If you have a very generic show (tech, comedy, music), you are going to be at the bottom of the CPM barrel. However, if you have a podcast that addresses a very specific niche (WhiteRoof RadioMINI Cooper owners, SwineCast Professional Swine Producers), you should expect the CPM to increase greatly. Imagine what someone would pay for a podcast whose audience is CEOs of Fortune 500 companies. You could easily have a bidding war between PING Golf Clubs, ExecuJet, and a major law firm that specializes in tax evasion.
On Feb 9th of 2006, Rocketboom concluded an eBay auction in which bidders competed for just 1 week of advertising on Rocketboom's Video Podcast (see Figure 18.9). The winning bid was $40,000. Based on the numbers Rocketboom was giving for estimated downloads for that week, the CPM worked out to $40. However, it should be pointed out that the $40,000 did include production time from Rocketboom to produce the commercials. That said, Rocketboom still feels the $40 CPM is what it expects the show to pull in on an on-going basis.
Figure 18.9. Rocketboom auction on eBay.
Jonathan Cobb at Kiptronic suggests you start by asking for $50 CPM when you are negotiating with potential advertisers. Again, depending on the type of show and your target audience, you may need to adjust that number up or down.
If you have a regional show, you should look at your local market to see what radio advertising is going for. If your potential advertiser is the local used-car lot, then take some time and go and meet with them. Bring in your media kit and your MP3 player to let them hear your show. If you have a regional show, it does put you at an advantage over global shows in that you can meet face to face with potential advertisers. However, what might be a good CPM in LA or New York City will probably be much tougher to command in Boise or Dayton.
The last factor in calculating a fair rate is, What is it worth to you? At what price are you willing to sell your listeners to a stranger? Make no mistake, that is what advertising is all aboutaggregating your listeners so you can sell a piece of their life to a stranger holding a bag of money. So the question you need to ask is, how big a bag does it need to be?
At this point in time there is no real data on what a good or bad CPM is or will be. We talked to all the major advertising networks trying to get that information. They all said the same thing: It depends quite a bit on the focus of the show and the demographics of the listener base. Even within genres there will be large differences in CPM. Take the food genre, a podcast about the best barbeque will have a much lower CPM than a podcast about fine wines. Finally, don't be afraid to ask other podcasters in your same subniche what they are getting for a CPM.
We are not trying to talk you out of putting in advertisements; we just want to make sure you ask yourself why it is you are going to put in advertisements. Is it because you have to so you can afford to continue podcasting? Are you doing so because you would just like the extra money? Or are you doing it because everyone else is doing it? Once you know why you are putting in advertising, the question of "How much?" becomes a little easier to answer.
The best publicly known advertising deal in podcasting by early 2006 was not brokered by one of the advertising networks. It was brokered on eBay. The auction of 1 week of advertising on Rocketboom sold for $40,000. This means after eBay's roughly 1.6% cut (http://pages.ebay.com/help/sell/fees.html), Rocketboom took home 98.4% of the $40,000. This is a much better split than any ad network is offering. Granted, Rocketboom was in a unique situation where it had over 150,000 subscribers. But it does reinforce the statement earlier that sponsors and advertisers are attracted to audiences.
Rocketboom was not the first podcast to use eBay to auction off advertising, but it was the first to get a multiple-thousand-dollar sale. In early 2005, a couple of podcasts tried auctioning off advertising. One of the first podcasts to sell advertising on eBay was Hometown Tales (www.hometowntales.com). Its first sale was for $80 for 1 month's worth of advertising. At the time, Hometown Tales had four shows a month with about 1,000 downloads per show. So the CPM was about $20.
However, for the most part eBay auctions of sponsorships and advertising spots have resulted in less than stellar CPMs, with some being downright ugly. Chances are, unless you have well over 10,000 subscribers to your show, you are going to find it difficult to get anyone excited about bidding for a chance to advertise on it.
The success of the Rocketboom auction is clearly helping drive more podcasters to eBay to try and sell advertising space. However, it is not clear yet whether it has helped drive potential advertisers to eBay to place bids on those auctions.